Archive for the ‘Economic & political’ Category

We Are All In the Matrix

Sunday, December 26th, 2010

The matrix shimmers.  The world shifts an iota and your eyes refocus. 

You see the world for how it is: gone is the incessant background hum of electronic equipment, the drone of internal combustion engines as they parp around the globe and the clickety-clack of the railway tracks; gone are the sharp lines of black roads criss-crossing the landscape and the lines of telegraph poles plonked through fields and over hills; gone are the houses, shops and industrial buildings; gone are the bright lights blaring from shops and overhead street lamps.  And the sound and voices on the television screen run out of synch.

You see the green leaved trees generating oxygen, clouds and streams and rivers bringing freshwater to nurture the earth and feel the clean air against your face just waiting for your breath.  Birds fly in the sky during the day and small Pipistrelle bats flit about at dusk.  Fish swim along the rivers and in the sea.  And everywhere insects, spiders and bacteria dominate air, land and water.  Nature lives, nature feeds, nature breeds and real life rolls ever forwards just outside your focus.

As man has sought to control the world, he has created his own paradigm, his own artificial physical, biological and virtual world to live out his dreams.  A world that enslaves his soul in the chains of hard labour as he pursues the distant glistering of money; money that powers the political engine and feeds the daily hit of consumption of geegaws.  We have created our own cage on earth, climbed inside, locked the gate and thrown away the keys.

The lights change and you must drive forwards.  You must make some money to pay to live, even as living offers you no freedom.  You cannot escape as the price for freedom is set too high, ensuring serfdom for you and generations to come. 

Yet you can live on with a smile knowing that there is another reality out there, a better place, a sweeter life outside of the matrix, away from our self imposed life inside this thought experiment, this artificial model created by our lords and masters.

Should We Encourage People From Countryside To Cities?

Saturday, September 11th, 2010

…Self doubt gets you thinking.  I am still thinking through my concerns about Fairtrade and I wonder whether I’ve got it arse over tip. 

People who live in the countryside are relatively poor compared to people who live in an urban environment, but is that because there are, firstly, too many people in the countryside trying to eke out an incremental profit from cash crops to keep themselves above water, and secondly you actually are richer and better off just by being in a city or town. 

There is a strong argument that workers shifting from rural Amazonia and moving to Manaus (the regional capital of the Amazon region) to carry out industrial activity have taken farmers out of Amazonia and so reduced pressure on deforestation, allowing those remaining in the countryside to farm more efficiently and spread their profits across fewer people, while simply the act of going to a city has improved their personal finances.  So rural-to-urban migration is good for everyone financially and great for the environment! 

There is a strong case (and made by people much cleverer and knowledgeable than me) that people living in the slums of big cities and the favelas of Latin America are one of the most dynamic and happening economies of the world.  These are people getting on with life, generating income and stepping up out of poverty.  These places are not the pits of despair that we all once thought and continue to be taught.  Okay, they’re not perfect but they’re significantly better than rural poverty.  And city dwellers have less children, so women are liberated from their historical rural position as child-bearing machines that must cook, fetch water and bring up children.  City life gives them freedom and the creative energy of the fairer sex is a massive force for good and economic improvement.

So should we be encouraging rural-to-urban migration rather than preserving current rural farming structures.  Urban living is better for the environment as it is more efficient on the world’s resources.  Urban living is better for women.  Urban living reduces overpopulation as people living in towns and cities have less children – overpopulation is effectively a rural problem.  Finally, when people move to the city it reduces the amount of people living in the countryside and so reduces the burden from humanity on the countryside and nature quickly recovers – yes, the rainforest does just simply regrow when people leave it be. 

Lastly, is our nostalgic lova affair with the countryside and rural idyll and farming (I don’t know if it is just an English obsession, and I mean English in this case as I cannot speak for others here) simply wrong and something that just makes us look via rose tinted glasses at all rural farming, believing that this must be a great, wonderful and rewarding life for everyone in the countryside, rather than something most farmers just want to escape from, and be liberated from the back-breaking, never-ending drudgery of subsistence living and would rather become housekeepers, labourers, doctors and accountants or whatever is available in the nearest mega-city.  Who are we in the developed world to deny those in the developing world from wanting to live a better life with loads more consumer stuff to ease their daily grind?  Who are we (the great polluters and destroyers of the world) to deny the rural poor a new start and free women from the potential prison of a rural life?

I suppose what I am saying is that if farmers cannot make a living wage from growing sugar or tea or vanilla or fruits or rice, shouldn’t we encourage more of them to move to cities so then less people grow these crops, so then there is a relative shortage of supply over demand and then prices will go up until farmers can then earn a living wage or more.  Are we not just perpetuating an imbalance of excess supply over actual demand by offering a bit above market prices via Fairtrade?

In stark figures, a rural farming family in Madagascar earns $600 per annum, with Fairtrade vanilla they can earn $2000 per annum, but what could they earn were they to live and work in the capital city of, for example, Madagascar – Antananarivo – and perhaps their family size might also fall*.  So isn’t it better to get them to migrate to the cities where education and public services are better and they will have a lower impact on the environment?

I honestly don’t know the answer, but it remains a dilemma that is constantly fighting itself out between my heart that says “yes to fair trade and ethical food” and my head that says “yes to free trade” and reducing levels of rural farming and shifting population towards the cities.

As in everything in life, the answer I suggest is a fudge – we need to trade ethically to ensure that those farming now are not disadvantaged and abused hence Fairtrade, while at the same time providing incentives for people to move from the villages and rural economy into the nearest cities, and then to ensure that cities become as economically vibrant, socially responsible and environmentally sustainable as possible.  But I will probably never answer this quandary to my own personal satisfaction, so will remain racked by doubts and indecision.

* I asked The Foreign Office and World Bank for help on numbers here, but the former could not help and the latter never deigned to answer or acknowledge my request.  That is a worrying starting position for Madagascar.

A Big Shout Out To Small Business Owners

Monday, September 6th, 2010

We, the small business owners and micro-entrepreneurs, are the forgotten, ignored and trodden upon solid foundation of the British, American and every other economy in the world.  We employ most of the employed people and generate much of the new, ground-breaking discoveries that have shaped the world.  We pay huge amounts of employment taxes, local business rates and tend to have greater loyality to our fellow local businesses, supporting local support services rather than going for the national groups.

However, big Government pays little heed to our plight.  They presume that all business is big business with unlimited amounts of time and deep financial pockets, and so able to consume all the new bits of legislation, digesting and understanding the intricacies of what the legislature has to say for itself, while carrying the financial burdens of increased local and national taxes to pay for quangoes, pensions, sinecures and further layers of bureacratic inefficiency.

Sometimes it feels as if no-one really gives a damn nor that they will ever give useful help or advice.  They criticise; god, isn’t everyone good at telling you what you should have done, what you have done incorrectly and what they would have done better, but practical, helpful, apt advice never seems to be available.  Armchair advisers rarely seem ever to do anything themselves; yes, they have worked for big businesses or government, but actually to have done something starting from scratch and doing it all themselves, those people are really few and far between, then few (if any) of those ever have time to give you any help.

In spite of their best efforts, the lobbyists for small companies are pretty ineffectual as they do not have real, small business entrepreneurs at the centre of government that understand the difficulties of small businesses – what did Alan Sugar know about small business, having built a large empire and so assuming that all small businesses grow like big oaks from a small seed; most of us just run around in a never-ending wheel, getting tired but not much further forward despite our heavy exertions and great, grand schemes.

Nor am I talking about the bright and sparkly, sexy start-ups that find media favour on TV programmes like Dragon’s Den, nor techie startups that can find early stage capital from Enterprise Ventures like Yorkshire Seedcorn and live by cash-burn and flip on to a new buyer, rather than building a profitable, cash-generative business.  Our newspapers are full of these successful, media savvy small companies. 

I mean the small retailers, the pie makers, the painters and tilers, the gardeners and the tea shops, as well as the small butchers, brewers and shoe shops etc etc.

We toil.  We busy ourselves.  We strive.  We have business dreams.

So from us, we say well done, you are all doing a great job.  It is damn hard and at times soul-destroying, but carry on and you never know we might all become successful one day. 

But do not expect any useful help from Government, bureaucrats and bankers as they do not genuinely have your best interests at heart; you are just there as cannon fodder to win elections, to tax so they can create new jobs, to busy themselves with in inventing mindless regulations to tie you in knots and waste your valuable time and so prevent you growing your sales, and to charge humungous arrangement fees and overdraft rates when you need leaner margins and overextend loans to you on low rates just when you should not be taking them.

This is a big shout out to all small business owners.  You are doing great.

Exercised About Barclays Settlement With US Authorities On Sanction Busting

Wednesday, August 18th, 2010

I have become increasingly bemused by the story about Barclays agreeing a settlement with the US authorities regarding violations of US sanctions against Cuba, Iran, Libya, Myanmar and Sudan.  The amount of the settlement was about $300 million (£192 million), which seems remarkably low, even though a lawyer from the Justice department stated that the settlement was “beyond what they [Barclays] earned” from the business transacted.

However, it is not the piddling amount that is exercising me, rather the fact that the story is a complete non-story.  Barclays broke the law in the US, yet we all just shrug our shoulders and regard it as a non-story, but if your neighbour broke sanctions or was involved in money laundering, I am sure that firstly, we would be thrown into gaol, but also treated with scorn by friends and family.

Where are the politicians nowadays who would stand up like Edward Heath when he denounced Tiny Rowland, the mining baron, as the “unacceptable face of capitalism” in part for breaking sanctions against Rhodesia.  Our economies and political systems are now so inextricably linked with the big mega-banks for financing governmental projects and deficits that they dare not complain or criticise.  What a damp squib it has been so far with the post-financial crisis review of banking across the Western world, and so (I guess) it will remain.

Have business and corporate morality really fallen so low that we just accept corrupt behaviour as an expected corporate norm?  Is business all about money and nothing else whatever the underlying basis of the transactions?  Perhaps it is and I am just a naive fool, but I hope there are some out there in the ether who try and conduct their lives – personal and business – with some basic ethics.

Electoral Systems For The UK (Part 2)

Sunday, August 15th, 2010

…This follows on from last week’s blog

Are these systems used in the UK?

First-past-the-post (“FPTP”) is the system that has been central to British voting in elections for many years and remains the status quo method for General Elections in the UK and local elections in England.  Alternative Vote (“AV”) is the main system used in Australia and for by-elections in the Northern Ireland Assembly, and is the proposed alternative to FPTP being proposed for UK General Elections.  Party Lists (“PL”) is used in Britain for European Elections, i.e. to elect MEPs.  Single Transferrable Vote (“STV”) is used for most elections in Northern Ireland and has been used for local elections in Scotland since 2007, as well as being the main system used in the Republic of Ireland.  STV is also the preferred system of the Electoral Reform Society.

Is it easy to understand?

Complexity is one of the arguments used to argue for the status quo.  However, I feel that it is an intellectually arrogant position to hold and which effectively says most of the electorate is too dumb to understand some of these alternative systems, so we must not use them; football league tables, betting odds, the rules of cricket, Strictly Come Dancing and how to use a mobile phone are all mysteries to me, but no-one has ever said that they should be stopped. 

From my point of view, the FPTP is undoubtedly the simplest system, but it is also a result the crudest – a truly blunt instrument.  However, I understand the rationale for AV, PL and STV and what these electoral processes are aiming for, and I can work out simple scenarios for how individual constituencies could play out, even if I would not want to work out the detailed algorithms.  Therefore, while the detail can get a bit complex, I do not think that the concepts are that difficult, and isn’t a bit of sophistication in order for such an important influence on our day-to-day lives?

Linkage from representative back to constituency

For me, this is an important one, and even though many MPs have no genuine affinity back to their constituents, it remains for me one of the crucial strengths of FPTP, and so would be of AV.  However, while I originally felt this was a make-or-break point, I now feel that it is really a matter of balance, so I would not want to see vast multi-member constituencies as in Israel where there is one constituency for the whole country nor would I want to see a closed party list where voters cannot make a choice for a particular individual, albeit we don’t really ever know that much about them in the UK anyway.  Whereas I am no longer averse to having two or three member constituencies that better reflect the political views of most of the people within a geographic area.

Are votes valued?

This question covers a number of issues, but at its heart is a very important problem – while we are all told it is important to vote, most members of the electorate believe that their vote has no real influence on which party wins the election.  This is because under FPTP the winner takes all, even if the winner gets less than 50% of the votes (in fact almost all MPs are elected on less than 40% of the vote); therefore, the views relating to the “losing votes” are discarded and their votes “wasted”.  Therefore, even if a party consistently wins 20% of the electoral votes across the country, it may get no MPs into parliament if it comes second or third in every seat.  This results in general dissatisfaction with the whole political system, but also creates many of the undesirable side effects of FPTP:

  • Small amounts of votes can have big impacts on election results, so many policies are targeted towards capturing these marginal “floating” voters rather than the greater body of public opinion, while boundary changes take on special political poignancy and can encourage “gerrymandering”;
  • Tactical voting can become the order of the day, whereby voters vote against who they dislike rather than for whom they actually want, i.e. voting becomes negative rather than being a positive choice.

Therefore, if voting is so important, it then must follow that everyone’s vote should be valued.  As a result, FPTP cannot be advocated as the most desirable system, because it ignores the majority of votes in almost all constituencies.  The questions then move on to which system best balances the need to give value to each vote, and so most voters political viewpoints, while keeping some physical link back to a geographic place.

There are many detailed points for and against individual systems, but the above are the key criteria for me, and I feel that the debate boils down to the following key questions:

  • Do the various proposed systems work? Yes
  • Can the logic of the systems be explained in relatively simple terms? Yes
  • Are most votes valued? No for FPTP, but yes for the other three
  • Is there a link from a geographic location to representative? Yes for FPTP and AV, and can be for PL and STV
  • Should we have a single member constituency or multi-member? Now this is the real question and this is where the political debate should really be, rather than on which system is best.  My own view is that we should have multi-member constituencies of three MPs which would give all parties the potential to get a seat in each constituency, so each part of the country would be worth fighting for.  More than this and you start to lose the linkage back to constituency.  But in the end it becomes a matter of individual judgment.

The big negative against PL and STV seems to be the argument about unstable governments and that you do not get a definitive result for one party.  However, my counter-arguments would be that surely it is more important to have votes that have value and are not wasted than governments that are voted in on low percentage votes of the electorate, and that the coalition in Britain at present happened under the FPTP system and it seems an eminently mature and sensible bunch of politicians.  My biggest issue with the STV and AV system is that I personally do not think that your second or third preference votes should have as big a weighting as your 1st preference, but then there follows a hair-splitting debate about by how much?

So let’s look at a practical example.  For my own benefit, I have assumed that you merge my three local constituencies and I have used the 2010 results:

2010 results for Thirsk, Skipton/Ripon and Harrogate/Knaresborough

  Thirsk/Malton Skipton/Ripon Harrogate Total
                 
Conservative     20,167 53%     27,685 51%     24,305 46%     72,157 49%
Liberal Democrat       8,886 23%     17,735 32%     23,266 44%     49,887 34%
Labour       5,169 14%       5,498 10%       3,413 6%     14,080 10%
UKIP       2,502 7%       1,909 3%       1,056 2%       5,467 4%
Liberal Democrat       1,418 4% - 0% - 0%       1,418 1%
BNP - 0%       1,403 3%       1,094 2%       2,497 2%
Independent - 0%          315 1% - 0%          315 0%
Youth - 0%            95 0% - 0%            95 0%
Currency - 0%            84 0% - 0%            84 0%
      38,142 100%     54,724 100%     53,134 100%   146,000 100%

The first thing you notice are the variations in number of voters, however Thirsk & Malton was a quirk in that this constituency was more like a by-election in that voting was one month later, and so after the result of the General Election in 2010.

The second point is that while it is strongly Tory in this rural area, the Liberal Democrats do get a very good section of the electorate and are especially strong in Harrogate & Knaresborough.  So if you were to divide the enlarged constituency up to give 3 MPs, you would definitely give 1 to a Conservative and another to a Liberal Democrat, giving each one-third an MP to voice their political views, whereas currently you have 3 Conservative MPs.

The final point is what do you do about the third MP.  Now that’s where you need to get a mechanic that is fair in the distribution of the final chunk of votes.  Under STV, the balance of Conservative votes over the threshold (36,500) would be transferred to other candidates, which would go where?  There’s the rub, as they might actually all go to UKIP rather than Labour.  Under the PL system, I would have thought that you would get 2 Conservative MPs and 1 Liberal Democrat MP, but please correct me if I am wrong there.

Overall, I am pleased that I have looked in more detail at these different electoral systems as my point of view has changed.  Whereas I was an advocate of FPTP, I now feel that it is a broken system that must be changed.  However, I also think that this referendum is a waste of time, because while the sop is that this is potentially the start of changes to the electoral system, I feel that the questions being asked are wrong and do not really address the core issues.  Furthermore, I do not think that the detailed mechanics of the electoral system is actually something that should go to a referendum, rather it should be hammered out, debated and equations worked out by a committee of experts.

I think a referendum is needed, but that the question should be different, but absolutely fundamental to how Britain is governed.

All the major electoral systems have been devised and work, plus many of them are practised in the UK and other parts of the world.  Similarly, all systems have their issues, but none of them insurmountable, and while they are interesting for politicos, they are pretty boring for most people and (I believe) not crucial to the debate.  Therefore, whichever system is chosen can probably do a good job, so long as fair and sensible criteria are set for determining which system to chose.  So the electorate should not debate the intricacies of each system, but they should be asked to set the agenda for the bureaucrats.

So the question comes down to what should be the brief.  I feel that some of this has already been debated by the 1998 Jenkins Committee, which was set the following eminently sensible criteria:

  • The maintenance of a geographic link between MP and constituency
  • The need for stable government
  • The desire for broad proportionality
  • An extension of voter choice

I am not convinced by the last point as I feel that voter choice is pretty wide already, rather the issue is that, because of lack of proportionality and wasted votes, minority views do not get representation.  So I would change extension of voter choice to “minimisation of wasted votes”.

So you might ask what is there left to debate by the electorate.  Well there is one fundamental question and I feel this is the key question: 

  • “Does the electorate want multi-member constituencies, or not?”

We all want fair elections.  We all want our votes to mean something.  But the key systemic debate is should we have single or multi-member constituencies.  And while I believe multi-member constituencies would help fairness and proportionality, it would be a big change, from which would flow how best to run an election. 

A vote for single member constituencies would mean a debate between FPTP or AV, while for a multi-member system, the debate would be PL or STV.  Once you have decided on this key point, therefore, it becomes simply a matter of mechanics, so while the Electoral Reform Society prefers STV over the PL system, both work, are fair and provide proportionality, so would be better than the status quo.

My own view is for three member larger constituencies, but thereafter I am not especially concerned about whether we vote via the PL or STV system, so long as these work, which they do.  I find PL easier to understand, but am really fairly ambivalent between PL and STV.

Electoral Systems For The UK (Part 1)

Sunday, August 8th, 2010

I was roundly castigated for being a political ignoramus with my first look at electoral reform, which was probably sound.  However, far from being deterred, I still want to continue to try and understand the debate in spite of the heckling, and see if I can get to grips with the issues, arguments, and general blah! blah! blah! about this crucial issue. 

I am not sure that I have progressed much further, but here is how I see it; I ask for some patience as you read it as it will be posted over a few blogs rather than just one, with the first being about the main types of voting, then the next a general discussion and my conclusion.

Nuts And Bolts Of The Voting Systems

First-Past-The-Post

First-Past-The-Post (“FPTP”) is the current system in the United Kingdom.  With FPTP, you divide the country up into as many constituencies as you want representatives (i.e. one representative per constituency), then get voters to make their choices and the elected representative in each constituency is the one that gets the most votes, however small the margin between first place and second place.

Alternative Vote

The Alternative Vote (“AV”) system is used in Australia for its House of Representatives and most of the Legislative Assemblies of it States and Territories.  AV is an extension of FPTP in that you still divide the country up into as many constituencies as you want representatives, so AV still results in one representative per voting region, but it enables voters to express their preferences for alternative representatives if their own initial choice cannot win.  So when voting, you rank the candidates in order of preference until you can no longer express an opinion, ranking them 1, 2 etc.  When the votes get counted, if one of the candidates gets a clear majority, i.e. someone has been ranked 1st by more than all the other 1st preferences combined, then they are elected.  However, if no-one has a clear majority, the count starts analysing the preferences of the weaker candidates: in reverse order, you take the candidate that came last and then determine the 2nd preference, i.e. alternative vote, for those who voted for the bottom candidate and allocate those to the remaining candidates and recount, continuing this process until one candidate has over 50% of the votes, and so becoming the elected representative.

Party Lists

Proportional Representation is what I always called the Party List system per the Electoral Reform Society.  PL is, also, the system already used in England, Scotland and Wales for electing MEPs, taking an open party list approach.  The basics of PL are simple: starting with a multi-member constituency, the voters vote, then you work down the list of votes cast to elect representatives in proportion to how many votes each gets until all the representatives’ positions have been filled. 

The complexities in this relatively natural system relate to how you actually construct the system:

(i)                  Voting lists – these can be open or closed, i.e. you vote for candidates who are named on the ballot paper (“open party list”), or you vote for a political party without knowing who the candidates are (“closed party list”), then after the election the political parties work out which candidates they want to represent you in their order of preference;

(ii)                Shape of the constituency – in PL, all constituencies are multi-member, and the larger the constituency and so the greater the number of potential representatives, the more proportional the end result, i.e. the more representative the MPs are of the voters’ actual voting preferences;

(iii)               Minimum voting percentage – most countries (except for example the Republic of South Africa) set a minimum threshold that the minority parties need to exceed before they can get any representation, which seems to be predominantly in the range of 1.5% – 5%. 

(iv)              The final wrinkle is how you actually calculate the number of seats to give each party, which (while fundamental to the actual system) is largely irrelevant to the discussion of the best voting system as the detail can be decided afterwards through an analysis of the various mathematical calculations together with a bit of political horse trading.

Single Transferrable Vote

Single Transferable Vote (“STV”) is used in Northern Ireland for Assembly, European and local elections, most elections in the Republic of Ireland and local elections in Scotland.  In 1917, STV was, also, chosen by the House of Commons for roughly half of constituencies with the remainder to use AV, but this never passed through the House of Lords and was dropped.  It is, also, the preferred choice of the Electoral Reform Society.

STV works on the basis of multi-member constituencies with representatives found via a quota system; representatives are determined by calculating a quota that successful candidates must reach to be elected for each constituency and then working out those candidates that get over that threshold in the constituency. 

Under STV, voters put a number “1” against their first choice, a “2” against their second choice and so on until they no longer have any views.  They can stop at any point, so do not need even to make a second choice.  All the valid ballot papers are then counted up and the threshold calculated as the number of valid ballot papers divided by the number of people to be elected plus one.  So per Electoral Reform Society, “with 100 ballot papers and 3 places to be filled, the quota would be 25”, i.e. 100 ÷ 4 (3+1).

Next, the votes have to be allocated to candidates and to available places to be filled.  This is done by sorting the ballot papers firstly into first preferences.  If any candidate has more first preferences than the quota they are immediately elected.  The next stage is to transfer any surplus votes for those elected candidates, being the difference between a candidate’s actual vote and the threshold, i.e. if I got 33 votes, then 8 of my votes could be transferred to other candidates.  But to prevent the argument as to which votes to transfer, all my votes are transferred but with a reduced value per vote and then allocated to second preference candidates.

After allocating all second preferences, the votes are counted up again and you see who has passed the threshold and then allocate them to places.  If they have not, then the candidate with the fewest votes is excluded and their votes transferred to voters’ second preferences.  This process of reallocating surpluses and excluded candidates’ votes, plus re-counting continues until all the places have been filled in descending order.

Interestingly, the Electoral Reform Society suggests reallocating the whole of any surplus from the first round, but only the last batch of surpluses from later rounds.  It views this as a matter of expediency, which seems bizarre as it inconsistently claims that taking a bit more time and using a computer programme is a small price to pay for the increased fairness and complexity of STV in the first place.  Also, I am not sure why this is called Single Transferrable Vote as while an elector does have a single vote, it is not really that single vote that actually counts as it can be reallocated after being counted once (albeit at a reduced value), while it may, also, be your second or third preference that is chosen.

Hybrid Systems

There are various hybrid systems ranging from AV+ to Total Representation, however these seem to be overly complex and do not really improve on the systems as above.  I have not considered them further, but you can find out more about all the systems at the Electoral Reform Society.

Constituencies

It is interesting that the Coalition is including a question about constituency sizes in the referendum questions for 2011, and that the Labour Party is getting itself into a tizz about this second question.  Also, being in an area that has been boundary-changed twice in the last 15 years, I feel particularly sensitive about this issue.

Having thought a bit about electoral reform now, the nature of your constituency is vital.  To make it fair, each elected representative must relate to almost equal numbers of constituents, so (taking into account movement of people) the shape and size of constituencies should be checked every 2 elections or 10 years.  Secondly, the size of the constituency must not get so large that constituents become so diverse that their very specific local issues get lost in the bigger picture.  So it is a balance between number of constituents, equality and overall size.

That is easy in principle, however you then need to make sure that there is some geographic logic to it as people (or at least me) feel a regional kinship to certain places and geographic regions and you must pay heed to these.  For example, you could create a huge constituency of Yorkshire, but I feel no linkage to South Yorkshire and the issues for Sheffield are not the same as for little old Ripon.  On a more micro scale, we are now part of the Harrogate constituency having been part of the Vale of York, yet my issues are rural, small town rather than those of Harrogate which are more suburban and looking towards Leeds, so for me Vale of York was better.

Also, and I will come to this towards the Summary & Conclusion stage, the referendum question should perhaps be simplified to one of single member or multi-member constituencies, rather than what the voting system is itself.

Voting Itself

This is another key issue.  In the end, not enough people are engaged in the political system often enough, which then causes questions of legitimacy of elections.  Which is the most popular political party when most people do not vote, even though politicians impact all our lives hugely?  Is a government’s mandate legitimate if turn out is low?

It would be possible to make it a legal obligation for people to vote, however this has implications on personal freedom.  The only way I can see that us, the people, will become more engaged in politics and care about voting is if politicians engage with the electorate more, respect them more and make the political system smaller, less bureaucratic and recreate it on a more human scale rather than being a huge, amorphous beast that has no master and no heart.

Discussion follows in next blog…

I Just Don’t Get Ocado Business Model?

Saturday, July 3rd, 2010

I am fascinated by Ocado and its upcoming flotation.  Why you might ask?  Well, it is because Steenbergs is having a go at becoming an online retailer, but obviously on a micro, mini scale compared to Ocado.  But also, I just don’t understand their business model at all, because to me they are a courier business pretending to be a retailer.  And a courier with one big customer, who can also compete against them.

I will try and explain what I mean. 

The first thing we decided when we started was to outsource transport as it’s a commodity business with few barriers to entry and adds no value to your brand/business.  Obviously, bad delivery service can be a problem (and occasionally is for us), but I am glad we do not have to worry about routing vans, filling empty vans on their return journeys and optimising routing.  If we were involved in delivering chilled or frozen products we might need to consider it, but we have also steered away from those for the moment, while there are third party distributors who provide frozen deliveries and might (I suppose) do chilled if the volumes were right.

By ignoring transport and just seeking to get that cost down, we were able to focus on the core parts of retailing which are buying and merchandising.  The buying process allows you to build an image of how you look to the customer and the world out there, and (perhaps even more importantly) work on your retail margins by working on your volumes and (if you are Tesco or Sainsbury or Waitrose) your suppliers to squeeze out better margins. 

Secondly, you can work on your merchandising, including developing your own branding, so for example 98% of chilled sales on the high street come from own label and 40% of Sainsbury’s sales are own label, while the discounters have an even higher percentage.  And for Steenbergs, our own original core of Steenbergs Organic spices, herbs and teas remains what brings people into our site.

But Ocado does not do this side of retailing, outsourcing much of it to Waitrose and then agreeing to limits on how much non-Waitrose it can buy in.  So it misses out most of what real retailing is about.

Further, there is no obvious exit strategy for Ocado shareholders, as John Lewis is sitting there as a poison pill.  If you take over Ocado, Waitrose can walk and would probably want to walk (assuming that the buyer is another retailer) and you would have the headache of needing to rebuild your supply chain.  Similarly, John Lewis is never going to pay big bucks to take the whole business in house.  Then on top of this Waitrose has its own online shop and has been allowed to compete directly for customers within the M25 region, leaving Ocado with the whole of the rest of the UK to cover.

So what is Ocado?  I think it is a glorified courier business that is masquerading as a real retailer, and one that has a single major customer, which is not fully tied into supplying Ocado.  Plus if you want to buy Waitrose products, you can still go and visit a Waitrose anywhere in the UK and even buy online then collect in store. 

Although it pains me to say so, the Tesco model is much, much better.  Here, Tesco Direct complements its supermarkets with deliveries in any catchment coming out of the local store.  As a result, local store managers and workers can see Tesco Direct as boosting local business and widening their retail catchment, i.e. Boroughbridge and Ripon do not have Tescos but you can still get deliveries from Tesco Direct which will come from stores in Thirsk or York or Leeds.  Whereas Ocado actually do the opposite as it competes against your local Waitrose, as the distribution chain is separate, so why would the store manager of Waitrose in Harrogate or Hexham want you to go to Ocado?  They wouldn’t would they, so they are not going to genuinely promote competition that would effectively reduce your annual John Lewis bonus.  Note that Warren Buffet has increased his shareholding in Tesco in the last few months – what does that mean?

In fact, if you put HG4 5GZ into the Waitrose web site it tells you can shop online and pick up from store (in Harrogate) for groceries and home direct kit, while it says the delivery service is not available in our area.  There is no linkage or push to Ocado, which cannot deliver to us but Tesco, Asda and Sainsbury do.  If you are in London, say Moray Road, it does push you to Waitrose stores first and then Ocado for now, but from next year Waitrose can deliver direct within the M25; is the float being done now before any cannabilisation in sales from Waitrose next year?

Of course, Ocado will get away with it and it will eventually make a small profit, but (in my opionion) it’s investing money in the wrong part of retailing, i.e. distribution rather than buying, supply chain and merchandising.  It’s a southern phenomenon that shareholders and investment bankers in the south will see day in day out in vans parping around London looking busy, but it isn’t really out here in the styx; it just doesn’t really exist in the heart of England and Scotland where much of the nitty-gritty profits of retailing are being made.

Steenbergs already makes a real cash profit and its retail site is growing strongly year on year, but we are doing that by using internally generated cash to build the business; it will take longer, much longer to make us any money, but it does seem a more solid way to try and make money out of retailing.

Is There An Easier Way To Save The Planet?

Saturday, May 15th, 2010

I worry about the planet.  I worry about poverty.  I worry about freedom.  I want the world to be a better place, and I want the planet to be fit healthy and beautiful for my children when they grow up and for their children and so on for many thousands of years.  But I also worry that I should just lighten up, stop worrying about it all as the world, nature and people will just sort itself out and be fine. 

Let me use an analogy.  I love the poem by Robert Frost called “The Road Not Taken” as it has always meant something deep and personal to me.  It has made me think that toil and struggle are good and worthy things and that sometimes you need to go for the trickier and harder path as it will be worth the effort in the end and you will get to some promised land, a better place.  You know… Martin Luther King’s Last Speech where he exhorts his people that he has seen the promised land:

“We’ve got some difficult days ahead. But it doesn’t matter with me now. Because I’ve been to the mountaintop… And I’ve looked over. And I’ve seen the promised land. I may not get there with you. But I want you to know tonight, that we, as a people, will get to the promised land. And I’m happy, tonight.”

But what if when I get to the end of the path, I come to the raging, roiling bleak expanse of the North Sea and simply have to turn back home back along the same road and the sun has gone in and the weather has turned dark and brooding and bodes a stormy evening. 

And what if everyone else has followed the easier path and found a nice pub at the end or been even more easy-living and gone to Newcastle Airport and flown to sunny Mallorca where they are enjoying a drink in the sun, or gone to work and are  now making a fortune in hustling, bustling Mumbai or Shanghai or Dubai.  Or perhaps they’ve driven along the motorway down to London and got a real job, or taken the ferry and gone to New York for a new life.  Who’s the mug then? Is this overgrown path just an overgrown path that leads nowhere, a Road To Nowhere?

Yes, perhaps I should relax and go with the flow.  Nah, that’s just not me, but maybe I could be more chilled about some things and maybe there is an easier way to save our planet…

I Just Don’t Get Proportional Representation

Thursday, May 6th, 2010

As we’re potentially heading for a hung parliament or a very closely matched parliament, I wanted in my mind to consider the idea of proportional representation as it is something that’s going to be on the table in any post-election discussions that involve the Liberal Democrats.  As I see it, the Liberal Democrats want proportional representation as they perceive it to be a fairer way to allocate power based on the proportions of votes received by each party, while the Conservatives are against it and want to stay with the first-past-the-post system as (arguably) they do better under that voting method; the Labour Party seems to be fudging their position as they are currently pro first-past-the-post but have been against it in the past.  This suggests that Labour would deal on it, so the possibility of a referendum or legislation on voting reform must rank very high.

Now in my mind, I see that first-past-the-post is a simple and logical concept.  You divide the country up into small parcels then get each parcel to vote for who they want to represent their interests politically; the smaller the constituency or parcel gets the more representative the elected person is of the wishes of the constituency until you get down to a constituency of 1 person who represents themselves.  What’s good about this system is that the constituents get who they vote for and in return the MP must look after the interests of the constituents firstly to ensure re-election and secondly as in the UK you vote for MPs and not for governments or prime ministers.  I know that most people believe that we vote for political parties and prime ministers but that’s actually not really the case as we’re electing our representative, i.e. MP, in the national parliament.

However, the third party (i.e. Liberal Democrats) argue that this is unfair as the number of MPs does not correlate back to the percentage shares of the vote.  This is because the Liberal Democrats tend to come second everywhere and so get a relatively high overall vote but don’t win comparatively many constituencies.  My quick analysis of the 2005 election is in the table below:

  First past post Seats Overall votes
Labour 55.1% 356 35.3%
Conservative 30.7% 198 32.3%
Liberal Democrats 9.6% 62 22.1%
Others 4.6% 30 10.3%
Total 100.0% 646 100.0%

So by going for an extreme version of proportional representation as you get in Israel, where there is one constituency for the whole country and then the vote is apportioned by share of total vote, the Liberal Democrats and the other parties would double their MPs within the Houses of Parliament.  The downside of this approach is that you allow the extreme parties to have positions in the corridors of power, as well as the more hippy parties like the Greens, so you get the big parties and the rough, smooth and cuddly of the smaller parties.  Also, you completely lose any linkage between voters and their representatives with your local MP being chosen from a central list – in my mind, this would be like having someone from Cardiff representing Harrogate or in an imaginary European Election having a Greek MEP looking after the Yorkshire and Humber Region.

As a consequence, parliamentarians have invented more complex versions of proportional representation that involves the idea of first preference votes where after voting for your initial number one choice the prospective candidate with the lowest score is eliminated and his/her votes reallocated to the next choice candidate on those ballot papers and so on until one candidate gets 50%.  This just seems to me to be a case of people being too clever for their own good in trying to slice and dice the voting system to get an answer that they want, rather than really meeting the needs of the people – a triumph of bureaucrats and the political class over normal people, the hoi polloi.

Then there’s the maths.  We all have been explained the iniquity of first-past-the-post versus proportional systems as in the table above.  However, there are mathematical issues with all proportional voting systems – if you read this week’s New Scientist, there is a good mathematical analysis of the voting system at http://www.newscientist.com/article/mg20627581.400-electoral-dysfunction-why-democracy-is-always-unfair.html.    The key conundrum is that it is impossible to allocate a whole number of seats in exact proportion to a larger population, and so it is possible that, as you increase the total number of seats available, it will actually reduce the relative representation of individual political parties even when the population is unchanged.  In the end, none of the maths of any of the systems actually stacks up completely, so it simply comes down to your personal judgement about each voting system rather than anything to do with fairness or maths, i.e. no voting system is actually completely fair or perfect for running a country and we as citizens just have to live with whatever are the results that each election throws up -

“So we are left to make the best of a bad job. Some less fair systems produce governments with enough power to actually do things, though most voters may disapprove; some fairer systems spread power so thinly that any attempt at government descends into partisan infighting. Crunching the numbers can help, but deciding which is the lesser of the two evils is ultimately a matter not for mathematics, but for human judgement. (Source: New Scientist with above Internet reference)”

The way I have come up with to characterise the question is via a football team.  Imagine that you are to select a regional team to represent where you live, so I am looking for a team to represent the North East and I can pick people from Newcastle United (obviously the best, but I’m not biased), Sunderland and Middlesborough.  Now for simplicity’s sake, we have 1 player from each team for each position and there are 100 people who will decide on the team we pick to represent the North East versus a team from London, picked from Arsenal, Chelsea and Spurs.  Each voter has to rank secretly each player as their first, second and third choice.  Now the way, they pick them is as follows:

Position First choice Second choice Third choice
1 Newcastle Middlesborough Sunderland
2 Newcastle Middlesborough Sunderland
3 Newcastle Middlesborough Sunderland
4 Newcastle Middlesborough Sunderland
5 Newcastle Middlesborough Sunderland
6 Newcastle Middlesborough Sunderland
7 Sunderland Middlesborough Newcastle
8 Sunderland Middlesborough Newcastle
9 Sunderland Middlesborough Newcastle
10 Sunderland Middlesborough Newcastle
11 Sunderland Middlesborough Newcastle
       
  Newcastle/1st Middlesborough/2nd Sunderland/3rd
Overall vote 45% 35% 20%

Under first-past-the-post, you pick the the team based on the First Choice, which is a mix of Newcastle and Sunderland with a Newcastle Captain.  Under first preference choice, you would pick a team of all Middlesborough players with a first preference vote of 55% (i.e. 2nd column vote + 3rd column vote), and under proportional representation you get 5 Newcastle players, 4 Middlesborough players and 2 Sunderland players. but note that you really are after them in order 4.95 : 3.85 : 2.2, but people and positions do not divide up into neat integers.  In fact, true proportional representation is weirder and you have to vote (in this case) for the team you want but without knowing the players, so in the end you just vote partially, i.e. I vote for Newcastle etc, and then the players are selected from a list that has the top Newcastle players, top Sunderland players and so on in order of preference, so you end up with a team of perhaps 7 forwards, 2 goalkeepers and 2 midfielders, which wouldn’t be much cop. 

Clearly you should go for a team of the best players and then really choose the best captain, so first-past-the-post is the right system while the other two are fraught with problems.  Not least of these issues is which players do you actually choose to represent you after you know that you need to squeeze them in to accomodate the voting quirks.

Now this issue of who represents the constituents is a big one for me.  There is nothing I hate more than to have a centrally chosen candidate foisted on me – I will always choose a local candidate over a centrally chosen candidate or will abstain from voting.  I want someone who knows and cares about the area, an ex-councillor is ideal; someone who will actually come back to the constituency and care about his/her constituents whatever the flavour of political party.  Our MP used to be Phil Willis of the Liberal Democrats and he was ideal – ex local teacher, ex councillor and then put up against Norman Lamont of the Conservatives, who lost resoundingly; under these so-called fairer voting systems Norman Lamont would have won. 

A proportional respresentation system will give you people you don’t know or want to represent you as your MP, plus you’ll never get rid of the leaders or inner cabals, because however the percentage votes are cast you will always get the senior party candidates being given their seats first and then the favoured central party people second, so it is the new blood and interesting non-standard candidates that will not be given seats.  In the end, the candidates will all be London groomed, party groomed and all the mavericks and free thinkers refused seats, so your politics will become greyer and unchanging except for an overhyped moving of the political deckchairs. 

What first-past-the-post gives you is candidates that need to look after their constituents and the chance for us – the electors - to kick them out (especially with changes expected to be put into place after the election) – every election giants are felled by their constituents and this election will see many political giants banished to the wilderness of the real world, or Europe, or the House of Lords.  Under proportional representation these political heavyweights cannot be easily removed, so you ossify a political oligarchy into place.  It is the crude cruelty of first-past-the-post that professional politicians hate as it creates a sort of lottery where the electors can punish sitting MPs and remove them, while political leaders like to be able to plan ahead and know that their key MPs are guaranteed to win, which is what true proportional representation does and so to a lesser extent does the first preference system.

Finally, while the politicians kid themselves that it is the political system that’s the issue, I think it’s the policies and the parties.  In the end, as a elector, I don’t like everything about every party, but rather bits and pieces of policies from each party.  So I like the Liberal Democrats over all, but believe in nuclear energy being important, I like a nuclear deterrent of some sort and hate proportional representation, while I am intrigued by the potential of genetically engineered crops; I like much of Labour’s policies but in the end I believe that an individual should be free and able to chose to keep most of what he/she earns to spend as they wish and then to pass on to future generations, with the individual and family coming way before the state; for the Conservatives, I like their starting point of individuals and families first then the state, but I hate their immigration policies as I come from a family that fled from Denmark from the invading Germans in the 1850s and I don’t know what this Big Society idea is really all about.  My ideal would be a patchwork party that doesn’t exist and I am not convinced that voting reform will create this fictional party, because my views on policies are not up for negotiation.

In the end, if it ain’t broke then don’t change it, so I think it’s best to leave the current system alone.  If the politicians do want to fiddle with our political system, then they must not just change the basic electoral system but they should look at the whole system of governance in the UK in its totality, so they must look at the House of Lords, the House of Commons, the Council Systems and the European Parliaments, including the Council of Ministers (all curently unelected), which of course they won’t do – will they?

Main UK Political Parties On Climate Change And Global Warming

Sunday, April 25th, 2010

There is a general political consensus that climate change is the number one environmental issue and there seems to be general agreement on how to address the problem, now that arch global warming skeptics like Boris Johnson and Nigel Lawson in the Conservative Party have been whipped into line for the election.  However there are definitely differences in emphasis and a big difference in whether nuclear power should be in the mix or not.  Here’s my overview as extracted from each party’s 2010 General Election manifesto.

Conservatives:

CO2 targets: presumably will keep to national targets of reductions of 34% by 2020 and 80% by 2050 on 1990 levels, including 10% in central government carbon costs in 12 months (why not do it for whole of public sector, which would really be something)
Energy mix: 15% by renewables by 2020, but do state that nuclear is key to this as is clean coal, and Feed-in Tariffs for those doing home electricity generation; coal-fired power plants must have carbon-capture-and-storage with 4 already approved to be built; “smart meters” and “smart grid” to help households reduce energy use; allow local authorities to build local heating networks to use waste energy from electricity generation (Combined Heat & Power)
Transport: investment in public transport and looking at building national charging network for electric vehicles
Buildings: £6,500 per household to get home energy improvements paid out of energy bill savings (i.e. consumer pays I think)
Carbon economy: offshore wind farms and Green Investment Bank, but very vague in this area

Green Party

CO2 targets: reduction of 65% by 2020 and 95% by 2030 on 1990 levels, including setting annual carbon budget and allowing trading in carbon units where half of all carbon units are given to adults and rest to industry and public sector
Energy mix: 50% from renewables by 2020 and 100% by 2030; phase out nuclear power and no new nuclear power stations; £20 billion in one Parliament (ie 5ish years) on renewables and create 80,000 jobs; attractive Feed-in Tariffs higher than offered by Labour government for those doing home electricity generation; do not permit new coal-fired power stations; “smart grid, smart meters and smart appliances” to help households reduce energy use; encourage Combined Heat & Power projects
Transport: reduce speed limits everywhere in UK; stop road investment of £30 billion and invest in public transport; renationalise and re-regulate all public transport; congestion type schemes in more places and road user tolls for heavy vehicles; make more food bought locally and so reduce need to shift food around by road;  stop airport expansion to reduce pollution levels; oppose large scale growing of biofuels
Buildings: free insulation for all houses that need it creating 80,000 new jobs and costing £2 – 4 billion a year; introduce incentives for 1,000,000 solar panels on homes
Carbon economy: government intervention to invest in green programmes, some of which mentioned above; green investment bank like other main parties; £5 billion to create 350,000 new trainee positions offering places to 700,000 unemployed people to get people into green energy sector (not sure if these figures are additive or overlapping somehow)

Labour

CO2 targets: reduction of 34% by 2020 and 80% by 2050 on 1990 levels
Energy mix: 15% of energy from renewables by 2020 and keeping nuclear in the mix (they talk about 40% from low carbon sources by 2020 but 25% will come from nuclear and clean coal), and Feed-in Tariffs for those doing home electricity generation; coal-fired power plants must have carbon-capture-and-storage with 4 already approved to be built; “smart meters” to help households reduce energy use
Transport: investment in public transport and looking at electric vehicles
Buildings: through regulating electricity companies, 6 million homes will get insulation by 2012 with every suitable loft and cavity wall insulated by 2015
Carbon economy: creating 400,000 new jobs including development of carbon economy with 70,000 jobs in offshore wind farms by 2020 and £120 million in a Carbon Investment Fund to support wind farms

Liberal Democrats

CO2 targets: reduction of 40% by 2020 and carbon neutral by 2050 on 1990 levels, including push for unilateral move to EU reduction target of 30% by 2020
Energy mix: 40% from renewables by 2020 and 100% by 2050 and no new nuclear power; community owned wind farms encouraged; attractive Feed-in Tariffs higher than offered by Labour government for those doing home electricity generation; coal-fired power plants must have carbon-capture-and-storage; “smart grid” to help households reduce energy use
Transport: investment in public transport, £140 million bus scrappage scheme to replace old buses with new ones; stop 3rd runway at Heathrow and further airport expansion in South to reduce pollution levels; through EU make cars zero emissions by 2040
Buildings: Eco Cash-back Scheme giving £400 back when you install new boiler, double glazing or put in micro-generation kit; £10,000 worth of green home improvements paid for by lower energy bills
Carbon economy: use central government pourchasing power to go for green technologies and products; cut energy and carbon emissions from central government by 30% by 2020
Globally: push for zero net deforestation by 2020, including ban on import of illegal wood into UK for any purpose

Reading the manifestos shows me something interesting – I reckon that New Labour has morphed into the Conservative Party and they are nearly the same thing, however much they argue about the splitting of policy hairs, while the Liberal Democrats have taken up Labour’s place, while the Greens have become the wackier Liberals of the 1970s and 1980s.  It will be interesting what actually happens when people get to vote and whether (because of the expenses scandal) we – the electorate - have the courage to shift from our historic group voting patterns, where we vote by “class” and “background”, ie rural tends to be Conservative and urban is Labour.

My own take on climate change is that the Liberal Democrats have the most practicable and ambitious set of targets, BUT (and it’s a big but), I believe their targets cannot be achieved without the inclusion of nuclear power in the energy mix. 

In some ways, the green movement is to blame for the rise in greenhouse gases because they stopped the growth – and research – in the nuclear power sector, while removal of acid rain gases has bizarrely increased short term potential for global warming, as these molecules have acted as a shield from solar energy – clean fuel will be soon used in global shipping which may result in global warming as their shielding impact is removed, so cleaner air more global warming (there’s always something else, isn’t there). 

So my ideal (from a green perspective) is a parliament that includes the Liberal Democrats with either Labour or the Conservatives, where the Liberal Democrats are given the Environment and Climate Change Portfolio but not the Energy side of things.