Category Archives: Politics

Musings on political and economic matters.

The privatisation of the NHS

Free Online PicturesNow that the government’s plans for the privatisation of the NHS have become clear, I thought I should pen a quick guide to help the modern entrepreneur take advantage of the opportunities arising:

  1. This is essentially a scheme that allows you to divert large quantities of taxpayers money into your own pocket through the dividends, bonuses and executive pension opportunities open to you and your fellow board members. Remember to contact your tax advisor for information on the many tax avoidance schemes that you might be able to use.
  2. It will of course be necessary to pay yourself a salary high enough to ensure that you aren’t tempted to transfer your services elsewhere.
  3. Don’t worry if things go belly-up as the government is not about to let an NHS service provider go bankrupt. Instead they are likely to hand over even more public funds in an effort to keep your company afloat, which of course you can continue to divert into dividends, bonuses and executive pension schemes.
  4. Don’t worry too much about the quality of the service you actually deliver. Even if things get so bad that some of your employees are prosecuted and end up in jail, it is highly unlikely that you will be held to account.

And of course, if it does all go wrong, or the derision of the press becomes too uncomfortable, you can always retire to the tax haven where you’ve deposited your well-earned takings.

Banker bonuses: a customer’s view

So far the debate on banker bonuses seems to have focused on two areas: the unfairness and inequality that the bonuses represent, and the value (or not) that they add to the businesses they run. The first represents the view of society as a whole, questioning whether anyone is worth a million-pound bonus on top of their million-pound salary. The second represents (or is supposed to represent) the view of the shareholders, who are putting it in perspective with the billion-pound profits of the banks they own.

However I think there is another equally valid perspective, namely that of the customers. Let’s see how well they’ve done there: Continue reading

The nature of debt

A stranger is staying at a hotel in a small town high up in the mountains for a few days. Shortly after his guest has eaten breakfast and left for the day, the hotel owner notices that he has left his wallet on the table. Business is bad, everyone is in debt, and the baker has refused to sell the hotelier any more bread until he pays the £100 that he owes. The hotelier can see that there are five £20 notes in his guest’s wallet, and after wrestling with his conscience for a short while, steals the money and takes it down the baker, who restores the hotelier’s line of credit.

The baker is particularly grateful to the hotelier as he happens to owe the butcher £100, so he takes the banknotes across to the butcher’s shop and settles his bill. The butcher in turn owes the local garage £100 for repairs to his car, so he uses the money to pay off his bill. The garage owner realises that he can now pay the hotelier the £100 he owes for the meal bought last weekend, so he pops into the hotel and gives the money to the hotelier. Moments later, the guest returns. The hotelier, seeing him come through the door, quickly puts the £100 back in the wallet and hands it back to the guest.

At first sight, there is something odd about this tale. Everyone in the town appears to have paid off their debts and yet, at the end of the day, the stranger still gets his £100 back. How can this work? Where did the money come from? Continue reading

Games theory

Although often discredited, Games Theory can still shed light on human behaviour. What follows is an extract from a work-in-progress:

Game TheoryGames Theory is the study of situations where two or more players interact in accordance with a set of rules, and in particular where such situations arise in our political and economic life. Surprisingly it is fairly recent, generally considered to date from 1928 when John von Neumann’s book Zur Theorie der Gesellschaftsspiele (‘On the Theory of Parlour Games’) was first published. This was followed in 1944 by Theory of Games and Economic Behavior which Neumann co-authored with Oskar Morgenstern.

There are essentially two types of games. Zero-sum games are those where one player wins and the other loses. Typical examples include tic-tac-toe (also known as noughts and crosses), chess, poker and football. Rather more interesting are non zero-sum games where outcomes include the possibility of both players improving their situation. Perhaps the most important non zero-sum game in the economic world is the act of shopping. Sellers only sell their goods when they regard the money being offered as having greater value than the goods itself. Buyers only buy when they regard the goods as being worth more than the money asked. If both sides can agree a price then both walk away from the deal as winners. Continue reading