Friday, 14 January 2011

Student Fees


People often ask me "Dan? What is your view on the student fees situation?" Well, finally, I will tell you!

Uncap them. Uncap them completely. There are a few separate issues at play here, and almost all of them would be fixed by uncapping fees entirely whilst maintaining the current funding system of loans to people.

The system as it has now been changed to, means that if you earn an average of £28k over your life, you'll pay exactly the same overall as you would now. If you earn less than that, you pay less. If you earn more than that - which is likely, really; remember, this is an average - you pay more. So we end up in a situation where the rich (relative, but....) pay more and the poor pay less. And yet this is considered regressive...

Another funny thing is that people who are against the changes often consider a graduate tax as an effective alternative. This current system IS a graduate tax! If you don't earn anything, you don't pay anything? If you earn more, you pay more? If you don't pay anything, no one hounds you? All of those are equally applicable to to the new system as they are to a graduate tax. It's no different, in my mind, to an income tax, except it has a ceiling. I know that next year I'm going to pay roughly £11k in deductions from my income. Does this mean I'm in £11k of debt? No, because until I get paid my monthly salary, I won't have to pay any tax, and when I do it's taken immediately from me. Just like my student loan repayments. It really is no different.

BUT I want the fees uncapped. Why? Because at the moment lots of science and engineering departments are closing down. This isn't because people don't want to do them, it's because they cost a lot to teach. This has two effects. Firstly, it means they can't get enough funding as the caps are a funding straight jacket. The new system doesn't give them a great deal money, so they're still in the same position is just now the students are paying for it rather than the government, by and large. This means they close. But the second effect of is is that, despite the caps being merely caps, it means everyone pays the maximum precisely BECAUSE universities cant get enough money. Humanities subjects cost a great deal less to teach than science subjects. In a free'ish Market (ie uncapped fees) universities wouldn't need to gouge History and Geography students in order to subsidise the more expensive degrees, so the cost of those would go down (relative).

So there we go. As long as the same funding exists as now, there's no need for anyone to not go because of their income. If people have a problem with the cost of the burden this will put on people in the future, they should consider income tax. Under the new system, I'd pay 9% on everyone above £21,000. Also, I'd pay 20% on everything over £6,500. Also, I'd pay 20% on top of every non-essential purchase. And road tax, and petrol, alcohol and tobacco duty, and council tax, and and and and. I think taxes are way, way too high. I think a lot of them should be gotten rid of. I don't think the one that's actually directly related tl what you take from the state is one that should go.


Wednesday, 12 January 2011

Cuts and Banks

They are, rather predictably, the issues on everyone who has a view on
'stuff's mind right now; the cuts, and the banks. In both cases, the
questions appear to boil down to 'are they going the right way?' and
'do we even need them?' If you're not too big on the whole reading
thing, I'll summarise now by answering simply 'yes' to both questions.

But, because national finances and economics are a fairly daunting
topic for even the most bored but aspiring Eton student, I shall begin
by sketching out a brief outline of the two problems we have - and it
*is* two issues. Don't let sneaky ruffians tell you they're the same

The first is the recession. Most recessions in the last century
occurred as a result of increased inflation. This is when a currency
effectively devalues. The 'inflation' here refers not to the value of
the currency, but to the supply - that is to say, that the government
has either printed, or the central bank has lent out to other banks, a
bit too much money. The more money there is sloshing around like this,
the less it ends up being worth, as there is no wealth to back it up.
If the Qatari government buys £10bn worth of fighter jets from a
British company, that's £10bn coming into the country in exchange for
goods, which bolsters the net worth of the UK by that much. If that
same British fighter jet manufacturer, instead, went to a bank for a
£10bn loan - and received it - they would still have as much money,
but because it's just a loan and not actually in exchange for any
product, all it's done is increase the number of pounds in the
country, which in turn devalues them all slightly.

Do this over and over and eventually no one wants to lend you any
money, because the currency you're using to pay it off with is
becoming worth less and less. This leads to recessions, in which
usually the value of things falls back down to what they actually are,
thus house prices falling (homes are particularly susceptible to this,
due to the fact that basically every home bought is done so with a
mortgage, ie a loan, as opposed to, for example, a packet of Rolos.)
Therefore, in these instances, the recession isn't so much a problem
as it is the cure. The problem was an I flared currency. The cure IS
the recession. What governments can do to help in these situations are
make the cost of hiring employees lower, by decreasing company-side
national insurance etc. This is a cure for the symptoms, but as I just
mentioned, the recession itself is a cure and doesn't need to be

This recession, however, was different. Our currenc didn't explode in
inflation as per the norm on the eve of a recession. That's because it
wasn't an inflationary recession, it was a debt based one. Over the
last 15 years or so, many governments around the world pumped a great
deal of money into their economies in the form of low interest rates.
These mean it's a lot cheaper for high street banks to offer loans to
people and businesses, which in turn creates growth. So far, so good.
The problems come when these loans trickle down to a few people who
can not reliably pay back their loans. In the US, the Clinton
administration put through a bit of vote-winning legislation that
effectively forced banks to lend to poorer families to help get them
on the property ladder. These people are grateful, which wins the Dems
votes, and figures of first time buyers going up is good for polls
too. The problem is that, well, banks make their money from loans. The
interest they charge is their income. So, given this, you have to ask
why the banks weren't voluntarily lending these people money in the
first place, and why it required government legislation to force them

The answer is that they were too risky. These groups failed the banks
tests of credit worthiness, which meant the risk of them defaulting on
the loan - not paying it back - was greater than the possible benefits
warranted. When the government effectively forced them too, they
created a demographic that have its name to the now infamous
'sub-prime mortgage collapse' - also known as 'trailer trash that
can't afford their mortgages stopped paying their mortgages and lost
their houses' which subsequently caused the whole house of cards to
fall down, so great were the banks liability in this group.

The US wasn't the only place that this occurred. Greece and Ireland
and Spains construction booms were financed using money that didn't
really exist, and when no one bought them - or, rather, the native
equivalents of the sub-prime mortgage Market did - again, the whole
thing collapsed. These all set off Domino reactions in the world of
finance, with people being less willing to lend to others, making the
whole system seize up. Debt is, after all, vital in any growing

So that's one problem. That's why businesses went bankrupt and why
lots of people in the private sector lost their jobs. This is,
however, different to the cuts.

The cuts are a result of a generation of spending being higher an tax
receipts. Since the recession, our deficit - the difference between
how much money the government gets in taxation and how much it
actually spends - has increased at largely a similar rate to how it
was increasing before the recession. It got a bump from the additional
people seeking welfare and the less people in work, but essentially it
was following an almost exponential progression. Bailing out the banks
were scarcely even considered here (for the simple reason that the
majority of the £850bn figure that gets banded around is actually
liability, and not how much we have actually spent, and the fact thay
the shares we have in Lloyds etc are still ours, and when those
companies become ready for sale, it's likely we will make a profit on
them - we didn't trade the money away for nothing, we got assets for

In short, our spending was vastly largely than our tax revenue for 8
of the 10 pre-recession budgets, getting larger every time. Thats why
we need to cut now. This would have caught up with us sooner or later.
The recession being debt-based was the catalyst that has forced us to
deal with this now, but blaming the recession for the cuts is like
blaming a surgeon for cutting your skin whilst he was operating on
your alcohol-soaked liver to stop you dying. The cuts need to occur
because, even without the recession, we were spending more than we
had, to the point that now, our annual interest payments - not
reductions in the deficit, or even reductions in the debt - are over
£80bn. That's more than our entire education budget. Every single
year. And yet people seem happy to call those endorsing cuts the
selfish ones.

The two issues are, whilst not isolated, also not the same thing. If
we hadn't been spending above our revenue for a decade, we wouldn't
need to be cutting now, recession or no. This may seem obvious, but
it's surprising how many people seem to think it's not. It was the
nasty bankers and their bonuses that enabled the government to borrow
so much for so long in the first place - and now they're the first
being accused of greed, rather than the UK tax payer.

I'll end it here because my trains nearly at my stop, but hopefully
this gives a fairly good indicator of my views on the cuts and banking
issue. Next post? University Fees!


Hello lightness, my old friend.

Ho ho ho, it's that time of the year when every blog and Twitter
entity hilariously asks the question "When is it appropriate to stop
signing emails with 'Happy New Year!'?"

Happy New Year.

I apologise, as seems to be the theme for my last several posts, for
the disgusting delay in posting this since the last load, but my
political fire has been reignited. Most of my posts were from before
the election, when I had a list as long as the distance between the
Green Party and sound fiscal policy (haw haw haw) worth of things the
government were doing that annoyed me. After the election, this list
was cut significantly by the government simply not doing a great deal
of anything, and has remained short by my general agreement of what
they have started doing.

But this means, as per the clockwork routine if British politics, it's
time for the slightly leftish, sane but wrong, socially democratic
wings of the press to malt their sensible cocoons and explode in a
gorgeous butterfly of absolute financial monstrosity and lunacy. As
such, I have a new target, and it's for this reason that my
aforementioned political fire (read as: vitriolic hate) can be
reignited, with an almost endless supply of disgusting shit being
spewed by people who, obviously, don't understand the world as much as
a 22 year old white male whom still lives with his dad.

So, with that said, hello and welcome again.