The Trouble with Democracy

The British election will be held in about May, perhaps earlier seeing that Brown and the Labour party are growing in confidence, after narrowing the Conservatives lead by around 5 points, which means there is a great possibility of a hung election, where no party has an outright majority.

Democracy, for all it is worth, is ruining Britain by the day. Politicians are there to tell the electorate what they want to hear, at the same time as doing favours for their industrial friends who will vote them into power. Median voter theory tells us that politicians aim to select the 'median' set of voters in the country, and then look at swinging policy in their favour. In Britain, the median voter is about age 45, so, the more or less elderly.

One of the main election topics is pensions. Since the median voters are fairly old, they will be very interested in how the government is going to look after them in their old age. Thus, the government inevitably promises increased pensions/better care etc. The only trouble is that it is the youngsters who bare the brunt of this policy, and to make matters worse, they 'aren't interested in politics' and would rather spend the time enjoying themselves. The effects are only felt later in life.

Another aspect of politics is that of 'rent seeking' where select individuals and groups lobby goverment to pass laws in their favour. An example is the automobile industry or CAP (common agricultural policy). It really is rediculous. How can a few farmers (i.e. less than 5% of this country) benefit so much at the expense of the rest of the population? Why couldnt the government instead to favours for haid dressers, or corner shops? The reason is that these groups have voting power and will get the government into power.

So what happens, is there is a 'spiralling' of spending, to appease the median voters which simply increases borrowing or taxes and sooner or later, well, surely the country goes bust. Europe is on the brink of bankruptcy. For all the good that democracy brings, I think there are better alternatives.

Student Elections

I am still trying to understand the rational for holding student elections at Brookes. Year in, year out, those running for office put out campaigns (see link) setting out their manifestos about how great they are going to make the university and better our lives as students. My concern, is firstly, how can the electorate, i.e. the students who vote, hold the committee accountable for their promises, if they are only in power for one year-perhaps by some student riot or something which will undoubtedly be quelled by the newly funded Brookes 'community officers'. But, for this to happen, you have to get the students out of bed (who are probably hungover). Secondly, how are they going to get the money to put their plans in order when it seems the university is cutting costs everywhere (including shutting down the SU)? So, when the ballot boxes open, it should be a good opportunity for some well earned sleep.

http://www.thesu.com/news/index.php?page=article&news_id=133313

Valentines, Cuppers and Montaigne

Is Valentines Day genuinely about love and red roses, or simply commercial exploitation? According to the Card Association, more than a billion dollars worth of cards are sold on the occasion, second only to Christmas Day in that regard. Apparently, Valentines Day is mostly a UK/US thing, with much of the world partially dismissing the occasion. It is a day when it is lonely to be single, as all your friends are cuddling away in their rooms, but then again, an opportunity arises, since most people out on their own, are single... Anyway, my valentines evening consisted of going to Rauls, a cocktail bar in Oxford which was pleasant, apart from the fact that two cocktails went for 13 pounds (2 hours worth of work). Well, at least Mr. Darling will be putting some of the days proceeds into closing the budget deficit!

Since being back in Oxford, 'Cuppers' the inter-collogial rugby tournament has being going on. By default, St. Peters got through to the quarter finals, but were well and truly shown our place, by a very strong Keble, who put a-wait for it-76 points past us! Anyway, a loss was expected, and we more than made up for it in the pub later that night...

I have been reading a book called 'How to Live' which is a series of essays by Montaigne, a French philosopher from the 16th century. I will be putting weekly synopsis on my blog, as I think it has useful lessons for all of us.

Film review-Mugabe and the White African

I was fortunate enough to have watched 'Mugabe and the White African' whilst it was in Oxford last night, and to have the directors there to answer questions after the film.

It was a sell out crowd and we just managed to get seats in time. The documentary was 100% real time, i.e. nothing had been reconstructed, and some of the filming was done in dangerous circumstances, such as when Campbell had an argument with Webster Shamu's son (which he must be kicking himself for now after noticing he was being filmed because of some of the ridiculous statements he made). Particularly alarming was when Ben Freeth's parents received the phone calls to say that Mike and Ben had been abducted and they didn't know the wherebouts of.

The film brought out the worst of the country-so much so that it made it seem like a completely failed state, which it is not-but perhaps, this was necessary to get the appeal. Similarly, as one of the people in the audience pointed out (whos father in fact received land under the reform process) that not all land went to the black middle class elite. Another comment was that the film could be perceived to be sticking up for a white racist? And perhaps, most importantly as the title of the film would suggest-is it possible for a white to be classed as an African? Ben would say yes, but Mugabe, no.

All in all, a brilliantly made, albeit emotional film, and nice to have a bit of the spotlight on Zimbabwe! I am doing my independent study on land reform on Zimbabwe, and so it was an apt excuse for some work and also a bit of entertainment at the same time!

lottery cursed

It is said that if Warren Buffett lost all his money tomorrow, he would be able to make it back pretty quickly (or most of it). When you hear that someone has won the lottery are you jealous? Last week, a middle aged man won 56 million pounds in the euro millions lottery. Today, I saw that someone has had to put his 9 million pound mansion up for sale because he has gone broke. (see link below).

What causes some people to lose money so quickly and others to have the knack of making it just as fast? 'Easy come, easy go'. It is a very true statement. All the fat-cats who made money so quickly when Gono was printing money and put it into unsustainable consumptions such as mansions have all gone bust!-drive around Harare and look at how many half finished houses there are! Random events such as winning the lottery are just that-random/chance, whatever you want to call it. And because it is won by chance, it is also lost just as easily, by chance... And those who work hard for money, funnily, actually hold onto it!

So, one wanders how long it will take for Joe Bloggs to flog off his mansion...

http://www.dailymail.co.uk/news/article-1251889/Lotto-Lout-Michael-Carroll-forced-sell-luxury-home-complete-dog-faeces-blood-stained-walls-fleet-smashed-cars.html

http://uk.video.yahoo.com/watch/7002451/18206404

Paul Collier talk

Paul Collier is probably the best known development economist with a specialization on Africa. He has written a particularly famous book 'The Bottom Billion' and just released two more. I have been wanting to meet him for the past couple of years, given my interest in economic development, always knowing that he was just round the corner from me, at the University of Oxford, and finally got a chance yesterday when he spoke at the Oxford Union.

He mainly focused on Africa and resources and said interesting things like how the tax systems in Africa are totally wrong and therefore they get a minute amount of 'rent' from extracted resources. For example, Zambia received very little in tax revenues from copper exports, during the recent boom. When they tried to rectify the problem, the multi-nationals said the taxes were too high, so after some negotiation, they reduced them again. Alas, during the next boom, again, they recieved very little in the way of rents.



He also spoke about his initiative for a natural resource charter (http://www.naturalresourcecharter.org/). An excerpt from the website is shown below:

The Natural Resource Charter is a set of principles for governments and societies on how to use the opportunities created by natural resources effectively. Some of the poorest countries in the world have large amounts of natural resources and these can provide a pathway out of poverty. Yet in the past, these opportunities have often been missed, and resource abundant countries have consequently remained poor.
Natural resources have the potential to be transformative if they are properly harnessed for development. However, the value chain from the discovery of natural assets through to their conversion into a productive economy is long and complex. This is why the process has so often been unsuccessful.

The Natural Resource Charter seeks to provide guidelines and standards to inform and improve natural resource management. It aims to ensure that the opportunities provided by new discoveries and commodity booms will never again be missed.

Which is the right path to follow?

I was reading Gregory Mankiw's blog this evening about his advice to economics student and he came up with this passage from a book.

'when it comes to choosing a life path, you should do what you love — because if you don't love it, you are unlikely to work hard enough to get very good. Most people naturally don't want to do things they aren't 'good' at. So they often give up, telling themselves they simply don't possess the talent for math or skiing or the violin. But what they really lack is the desire to be good and to undertake the deliberate practice that would make them better'

Freakonomics by S. Levitt and S. Dubner

The point should be qualified though... Someone may love playing rugby, or rowing, but if they lack the physical cababilities associated with these sports such as aggression, or stamina or height, then they are unlikely to be able to make a decent career of it, especially with the immense competition of modern day sport. And then there is the important, but often neglected element of randomness, or 'luck' which comes with life. Taleb (Fooled by Randomness) touches on this, and I think it is very relevant. Think of a team manager, who everyone thinks is going to be dismal, but who ends up being really good-is this skill or chance? The Springbok rugby coach comes to mind.... I feel all to often it is chance.

I was deciding whether to do econometrics or not as a module, but dropped the idea because I felt my maths wasn't good enough.. According to Levitt et al, if I really wanted to do it, then I should have done it, and then I would have practiced a lot and eventually got a good grade for it. But, it involved a tradeoff between losing out on time on other stuff which I could have done and spending hours doing econometrics. Besides, did I really want to go into a career of academia and coming up with great theories that never get implemented by politicians? Probably not... although it really is too early to tell.

Onto the final straight

After a long flight back to the UK, I got the bus back to Oxford and was literally freezing cold... The boiler had stopped working due to it being switched off over the holiday, and so we had no hot water or heating for five days! My grandfather's adage was 'suffer a bit' and this certainly was suffering! But, the plumber came and sorted it on Monday and that raised spirits-it's amazing how we often find satisfaction in the smaller things in life...

I didn't have much of a break as lectures started the next day and with the reading already piling on, we're into the last semester! EVER of undergraduate study! pretty daunting, but also exciting I suppose in that you move out of this protected, comfortable environment into the 'real world' as they say... A lot of final years are applying for postgrads-which is not surprising given the recession and few jobs. I am slowly gathering together a plan for when I leave, but so many options-travel, post grad, work???

Well, the plane has been taxying on the runway, and now, is gathering momentum in order to take-off in May. It is all in my hands. From the last set of results, I am just below a first-in order to get into a postgrad, I need to get a first. But with only four marks left, and some challenging modules to tackle, it will be a serious challenge. But then, what is life without challenges?