Greek Fashion

The most important thing is to see things as they are, not how they look. Charmers are far more dangerous than awkward bumblers, and the best opportunities are rarely the sharpest dressed.

Tsipras, the cool new Greek PM, and his sexy bald Finance minister, Varoufakis, are cases in point.

Varoufakis made Osborne look like the toff he is by rocking up to Downing street like a dad who likes 70s rock music. The meeting went well.

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However, the UK was just a warm-up. Varoufakis then turned up to meet officials from the ECB.

Syriza¬†(the party of Varoufakis and Tsipras)¬†have done excellent work in building¬†their negotiating position. Tsipras’s fiery history of¬†fierce rhetoric¬†gives him ample space¬†to be¬†more reasonable than expected, while¬†leaving little doubt on his mandate to push hard.

Greece actually has more negotiating power than the ridiculous, punitive, 90s-crisis style ‘bail-out’¬†suggests. It’s clear¬†a completely new approach is¬†the best thing for Greece and (a little more contentiously) for their Eurozone partners.

The ECB responded to all this as expected, by beating their own chest. They are now¬†refusing Greek banks access to ECB funding – which sounds worse than it is, given that the banks’ continued access to slightly more expensive, but available, ELA funding.Unfortunately Varoufakis sartorial choices are more consequential here than in London.

After an unproductive meeting Schauble looks old and befuddled, but also like someone who simply doesn’t believe in giving money for free. He is backed by the vast majority¬†of Germans. My personal favourite was his repeat of the offer to send 500 German tax collectors to Athens.

The Eurozone officials should focus on Syriza’s sensible and reasonable policies, rather than the left wing radicalism perception. But on this case, I’ll side with ze Germans. There is no point provoking people. With German opinion so one-sided, perhaps Varoufakis should have left the politics at home, and worn something a little more¬†neutral.

There will be plenty of time for him to look daringly fashionable, and many more opportunities to poke fun at the European Establishment. This perhaps was not one of them.

Supportive editorials by publications like Der Spiegel show many are behind Syriza’s economics. But¬†the young Greek upstarts need to give the elected officials of the North¬†as much popular breathing space as possible. It’s one thing to show up the former Greek government as boring and lame in a fair democratic fight. It’s quite another to¬†pull the same stunt on¬† the Eurocrats that will decide Greece and Syriza’s fate.

Varoufakis is already a hero in Greece and to many in bystander nations like the UK. The real challenge will be to win over public opinion in Deustchland.

Four things wrong with the recent claims of David Attenborough

David Attenborough, who has narrated many of the better moments in documentary film, has warned us that Things Will Only Get Worse. Something about such claims always demands attention: the pessimist sounds prescient and wise. Here are four things wrong with his claims.

1. This Malthusian idea that we can’t feed ourselves is as ridiculous now as it has always been, and even more so since we learnt how to fix nitrogen.

I’d love to write about how supply responses to scarcity almost always overshoot, it’s a little close to what I do for a day job* so I’ll restrict myself to these telling facts:

a) there is a global food surplus;

b) when the world population doubled from 3 billion to six billion (~1960-2000) global food production per person actually increased 20%, and food prices dropped;

c) if agricultural yields in the developing world improved to Western levels that itself would feed billions more (and is slowly occurring);

2. Many of the finer things depend on the achievements of the top tier of a large number of participants. This effect is seen in sport, where a handful of a nation’s best invariably perform better than an equivalent number of a smaller country; in the arts, where only a small number of people create really historically significant artwork; and literature, where there are only so many authors that really have an impact, and again larger countries reap the lion’s share. To some extend this happens in science as well, where having hundreds of scientists chasing a solution to an unsolved question of supreme significance will invariably be more effective than tens, even if success and glory only goes to one.

3. Thirdly his claim that we have stopped evolving is remarkably primitive.

Firstly we are changing genetically – and quite fast. As a simple example, the ability to digest milk came about less then ten thousand years ago.

But more importantly evolution is not some abstract 19th century theory, but grounded in molecular science. If he means our DNA has stopped changing for the better, nothing could be further from the truth, and we are increasingly driving that change rather than leaving it to random mutation.

Genetic engineering might be controversial when it comes to (say) height, intelligence and eye colour in newborns, but gene therapy, and the delivery of changes to your DNA through viruses is finally close to realising its promise.

As a recent example, leukaemia has been sent into remission in a handful of nearly hopeless (but lucky) patients by giving them HIV.

Well not quite – what actually happened was the disease segments were knocked out and helpful sequences added. Since HIV works by reprogramming its sufferers’ genetic code, this is a change that we should be grateful we don’t have to wait to evolve naturally.

The entire field of synthetic biology is at the cusp of revolution. It appears that the field is about to transition from cutting edge science to technology accessible by hobbyists, perhaps like computing in the 60s.**

If this sounds unlikely – it has already begun, as even undergraduates and enthusiasts have created novel organisms with useful properties. The annual iGem competition fields teams of undergraduates who develop novel organisms which can, to take recent examples, detect poisonous metals, convert waste to green fuels and a host of other applications from the realm of science fiction.

4. One final mistake is his support of China’s one child policy.

With appropriate analogies to Japan in the 90s, it is more likely we are at the peak, rather than the crescent, of Chinese power. That one child policy will inexorably lead to a harsher version of the demographic decline that made Japan so economically toothless (though still extraordinarily successful by measures of total wealth, medical criteria, technology penetration etc).

Mr Attenborough seems pleased about the ‘millions of mouths unfed’ – for which there certainly would have been food – when he should be lamenting the artists, scientists, writers and the richness of life in all its messiness that is now lost.

It is a pity David Attenborough is not using his voice to argue the other side. He should stick to the silky-accented oratory that has made him so enduringly popular.

*I could give dramatic examples of how that affects investment opportunities in shipping, resources and undersea cables

**for once this analogy seems appropriate

How Embarassing

I was going to write a blog about how Paulson has screwed his investors, but there’s plenty of time for that and something more interesting came out today.


One of the fundamental studies used to define the politics of the past few years was a 2009 book by the Harvard economists Rogoff and Reinhard (henceforth R&R) called ‚ÄėThis Time is Different‚Äô. Their most politicised result – backed by extensive statistical analysis – is/was that once government debt reaches 90% of GDP growth basically drops to zero.

The conclusions are obvious: government ‚Äėspending‚Äô should be drastically cut to stay below that red line, and it was surprisingly influential.

How interesting that the calculations have now proven false and the selection of data itself unsound.

I always assumed economics departments were full of the same pedants that prowl chemistry labs. Apparently not – R&R conveniently provided their own data and it’s taken until now for someone to actually check their premier conclusion.

The wrong approach anyway

Unfortunately it’s basically impossible to do meaningful statistical analyses on the national data that everyone actually wants to look at. We would all love simple answers to questions like, ‘how many people do I need to fire to hit a total spending number, or should I just not bother?’

As far as I can tell this is intrinsic. For example, there have been only a handful of distinct global cycles in the past century, and each was associated with a ‚Äėphase‚Äô of the economy. How can you compare GDP data for a country that was mobilising for Word War 2 ¬† – prepared laboriously by hand – with today?

It is sheer folly to compress a whole economy into a handful of statistics: GDP, inflation, crude measures of weath, and expect to come up with anything actually useful.

Typically you have to ignore the basically unquantifiable effect of changing political structures and environments to come up with one relationship, say, the impact of debt on GDP.

It’s almost funny

The absurd reality that this argument was used to fire people, cut benefits, shelve investment plans and screw funding for things like basic scientific research. Ofcourse, there book was so successful as it resonated strongly with the times, and in particular a brand of conservative politics, so it wouldn’t make sense to give them too much credit.

But it would only be a mild exaggeration to say their research formed the academic bedrock of respectability for the austerity movement.

A constant irritation

The whole thing reminds me of the ‚Äėstocks v bonds‚Äô debate that got way too much airtime a couple of years ago. These arguments all depended ENTIRELY on your start and end point.

If markets halve over a six month period, it  doesn’t matter how far you go back, you are still not going to get a meaningful answer. To put it another way, when markets double, all your results change. Even if you took an entire century of price history the problem remains.

Even the better ways of doing this kind of research are invariably dependent on the inclusion or omission of a particular decade.

There is no god hidden in the data. Things do happen for reasons though, and wouldn’t it be better to get as broad and understanding as possible, with as much granularity in the reliable data we actually have?

The whole thing depended on the kiwis

Instead, it turned out that incorrect statistics for four years of New Zealand’s history  completely reversed the story.

To be fair (and I read the book years ago) it didn’t seem as they were thumping any particular bible. Unfortunately the same is not true of their supporters and the likes of Paul Ryan who earnestly paraded their research as evidence. Now the facts have changed, what will happen to his opinion?

Austerity for Losers

The moral flavour of the discussion is a little nauseating anway. Those who agree saving is prudent and profligacy immoral (and who could disagree with virtues like that) naturally support austerity, barely bothering to consider the rather numerous differences between, say, a person and a state. 

Not that I have anything against Cameron et al using this to win an election – they are, after all, politicians – but I remember thinking it was kind of silly that they had backed themselves into such a corner. They could have stayed the moral party and still left themselves the wiggle room that they could now use to create something of a legacy .

The state should have cashed in on the weird markets of the day

The crisis was incredibly harmful across swathes of society. It was also an opportunity to invest as cheaply as will likely be possible in our generation, and that opportunity has largely been squandered.

Projects with marginal economics but substantial societal value could actually have been done profitably. Not only woudl that have improved things, but it would actually lower your future tax burden. 

There is a huge difference between money spent and debt swapped for an income generating asset. With the oversimplifications of R&R and their like, this is mostly ignored.

A Settled Debate

Since a number of countries took varied, almost graded approaches to the crisis, perhaps future academics will come up with the right answer to what we should do now, though by then naturally it will be too late.

Most likely they will then write a pithy book, publicise false generalisations and get the problems of their own time completely, utterly and harmfully wrong.