Saturday, 1 December 2012

Leveson's Prescription

Leveson's Prescription

While I was impressed by the thoroughness and clarity of Lord Justice Leveson, I have not so far been impressed by the discussion of the Leveson Report [1]. Leveson calls for "regulation that is itself, genuinely, free and independent both of the industry it regulates and of political control". But he also says " Guaranteed independence, long-term stability, and genuine benefits for the industry, cannot be realised without legislation." [2]  At that point half the Tories (including David Cameron) seem to have stopped listening, and started talking about 300 hundred years of press freedom, and inveighing against statuary regulation.

This is maddeningly frustrating. The protesters have clearly not read the Report; they do not even seem to have read the Leveson Statement [2] which Justice Leveson read out at lunchtime on Thursday. So let me quote a  few more lines of that statement:
"It is important to be clear what this legislation would not do; it would not establish a body to regulate the press; that is for the press itself to do.
So what would this legislation achieve? Three things.
(i) It would enshrine, for the first time, a legal duty on the Government to protect the freedom of the press.
(ii) Secondly, it would provide an independent process to recognise the new self-regulatory body and thereby reassure the public of its independence and efficacy.
(iii) Thirdly, it would provide new and tangible benefits for the press." [2]
Leveson stops short of drawing up the Code — which he says is the duty of the Press. And he stops short of drawing up the Legislation — which he says it the duty of the Government. I agree. So, Mr. Cameron, get on with it, or get out of the driving seat.

Perhaps those MPs nervous of an attack on press freedom could reflect on the laws surrounding the operation of the medical profession, which go back to the reign of Henry VIII, but do not result in Parliament interfering with medical practice nor over-ruling the opinion of the medical profession. However, such law clarifies the circumstances in which medical malpractice is treated as a civil tort or a criminal offence (a crime).
There is already considerable law concerning libel and defamation, most of it common law, some of it statuary; and it is there to protect freedom of speech, as much as to limit it.



Thursday, 29 November 2012


I do not think I have ever lost a pair of spectacles in my garden. I always find them eventually. I have got  much better at searching; my eyesight weakens but my strategy improves. The other night I searched, with a torch, in the dark and in the rain, over and over in the places where I had stooped, or bent double for extended periods. And next morning I found the spectacles 7 miles away in North Seaton!! (where I had left them on the tea tray after recorder playing). Yet still I go on looking, as I have got used to the idea now of them being lost.

L. Cawstein

Tuesday, 20 November 2012

Ash die-back

Ash die-back

There is a lot in the news at present about the appearance of ash die-back disease and its threat to the health of our British woodlands. There are a number of interesting points raised.

The pathogen

The pathogen is often identified as Chalara faxinea, an ascomycete fungus. It then turns out that this is simply the vegetative form of a fungus known as Hymenoscyphus pseudoalbidus  in its sexual and spore-forming phase. It is the spores produced by the latter that attack the leaves and stems of our ash trees; and so far this sexual and thus spore-forming phase of the pathogen H. pseudoalbidus, has not been identified in Britain. So, though confusing, there may be some point in having two names for the same genetic species. [1]  We shall continue to be attacked from across the sea, but there is just a faint chance that we can escape full-scale infestation if the sexual phase fails in Britain.

The source

As of 16th November [2] there are two types of infected site in Britain: [a] woodlands, [b] nurseries. Woodland sites where infection has been noted are confined to the east coast, and focussed on East Anglia (though spreading northwards to Northumberland and Fife). The strong impression is that spores are blowing in from Northern Europe. The nursery sites are dotted around the whole of Britain, wherever there is a nursery unfortunate enough, or pathetic enough, to purchase stock from the continent. The saddest part of this whole story is the realization that this staple tree of the British landscape, a tree that can be found seeding itself all over our gardens, hedgerows and field-margins is being bought in from abroad because we are too lazy to produce our own seedlings for sale.

The weather

In general, fungal diseases need warm moist conditions for the germination of spores. Once the mycelium is inside the plant tissue, the atmosphere is a negligible factor in growth. My experience is that 2012 has been an outstanding year for high moisture levels during the 6 months of 'summer'. It would be a relief if the whole question of Ash Die-back disappeared with a fine dry summer in 2013.


Two excellent websites provide information of considerably better quality than the common press and radio:




L. Cawstein

Thursday, 15 November 2012

Programme Notes Nov '12

Lieder ohne Worte, Book 1, opus 19b      Felix Mendelssohn (1809 – 1847)

1. Andante con moto;   2. Andante espressivo;  3. Molto Allegro e vivace;

4. Moderato; 5. Piano agitato;  6. Venetianisches Gondellied (Andante sostenuto).

This, the first of 8 volumes of short piano pieces, was published in 1832 without the title "Songs without Words ", but its companion (opus 19a) was a set of six songs with words. The famous soubriquet may have originated with Felix's older sister Fanny (who also wrote similar pieces). The 6 pieces in Book 1 were composed between 1829 and 1830 by the 20 year-old; 4 years after the magnificent octet and Midsummer night's dream overture. (In 1829 Mendelssohn also conducted the first performance of the 'St. Matthew Passion' since Bach's death, and made his concert debut in London.) These short tuneful pieces became very popular with the piano-playing public, and the concept of Songs without Words was adopted by other composers. (Alkan produced 5 books of "Chants", each ending with a barcarolle in further homage to Mendelssohn.) These pieces were not meant to suggest words; the music (as Mendelssohn explained) is not too ambiguous for words, but too precise; they resemble songs musically in having a strong melody presented over a (usually) rippling accompaniment.

Estampes ('Prints') L.100 —— Claude Debussy (1862 – 1918)

i. Pagodes;  ii. Soirée dans Grenade ;  iii. Jardins sous la pluie

Estampes is French for 'Prints' — as in 'Japanese prints'.  These, in Japan, fell so far out of fashion as to serve as wrapping paper for the export of other goods to Europe, but on arrival in France excited artists to a craze of Japonisme. Critics have described Debussy as an impressionist composer, and, though he disliked the term being applied to him, it is hard to avoid when he gives titles like Pagodas and Gardens in the Rain to short piano pieces. If he is not explicitly imitating the sound of rain, perhaps he is evoking the mood or "impression". These Estampes (number 100 in Lesure's chronological catalogue of 141 works) were written in 1903, in the middle of Debussy's middle period; after his successful opera Pelléas et Mélisande, and before La mer and Images. While his private life remained outrageously Bohemian (his deserted wife attempted suicide in 1904), his musical style was maturing; his abandonment of classical harmonic rules and invention of new juxtapositions of notes are distincive features that simultaneously attract his admirers and repel the others. (Steinway's 'sostenuto' (or 'sostenente') pedal suspends only those dampers that are raised when the pedal is pressed. The effect is far subtler than the muddy blur achieved with the sustaining pedal, even when 'half-pedalling'.)


Andante spianato et grande polonaise brillante (opus 22)    Frederyk Chopin (1810 – 1849)

Chopin's short life almost exactly overlapped that of Mendelssohn. He left Warsaw in 1830 to seek fame, carrying with him some Polish soil in a silver cup, but was outraged in 1831 at the Russian invasion, and never returned. Though his father was French, Frederyk never spoke French fluently, and wrote his diary in Polish. After Chopin's death his sister carried his heart back to Poland. The Andante Spianato in G major (spianato means smoothly) was composed in 1830 while Chopin was still at Warsaw Conservatoire. Its intense sadness is broken by a chordal section, almost recovers, but ends on gentle chords. The grande polonaise brillante (in E major), was also begun in Warsaw in 1830 though finished in Vienna in 1831. It was an entirely separate piece, in a different key, and is for piano and orchestra. (The polonaise is by way of being Poland's national dance; formal, strutting, pompous, it was traditionally the opening dance in student balls.) Three years later, in Paris, Chopin played the Andante Spianato as a piano introduction to the Grande Polonaise. In1836 both were arranged for string quartet, and only in 1838 was today's piano arrangement of the combined piece made.


Sonata in A major, (D. 959) —— Franz Schubert (1797 - 1828)

i. Allegro; ii. Andantino; iii. Scherzo (Allegro vivace); iv.Rondo (Allegretto)

This is Schubert's second last piano sonata, or so it would seem from the Deutsch catalogue. In 1828, besides working on the string quintet, the Swanengesang songs, and a Mass, Schubert was writing 3 piano sonatas simultaneously; in C minor, B major, and this one in A major. (See:'s_last_sonatas for a very full analysis of Schubert's 3 last sonatas.) For more than a century the consensus seems to have been that Schubert's formal sonatas were not his best piano works. Schubert offered them to Probst who turned them down and it was Diabelli who first published them in 1839. In this A major sonata both the outer two movements are unusually long at 15 minutes and 11 minutes respectively. Though Schumann (in 1840) coined the phrase "heavenly length" as a compliment, Tovey in the nineteen thirties criticised precisely their length and spoke of  "mere repetition". Here, the finale perfectly illustrates Schumann's point, for the wonderful melody is welcomed with the same joy every time it returns. But repetition and "heavenly length"  are clearly part of Schubert's intention. Throughout the work, recognition of the many recurring elements is very rewarding. For one example (though there are very many), the crashing chords of the opening are remembered at the climax of the slow movement; and the work ends where it began, with those same fierce chords; perhaps tying the work into a unity, or perhaps an invitation to go round again, like the pins on a barrel organ.


L. Cawstein

Sunday, 11 November 2012

Positive Money 2

Positive Money 2

"Do we need a Clarity in Banking commission (CBC)?"

A major flaw in our British (and American) financial systems is that credit has been offered recklessly to "sub-prime" borrowers. Bankers do this because it brings them reward without penalty (from the consequent debt default). Three remedies suggest themselves: (1) Control or limit the ability of banks to offer credit; (2) restore the penalties for bad lending by allowing bank crashes; (3) decrease or remove the incentive for excessive lending. Most of the talk in the media has been about the Vickers Report's "Ring Fencing", or separating (somehow) what they call the "High Street" side of the business from the "Casino" or Investment banking. (Vince Cable is said to favour ring fencing.) However, not enough detail and no clear mechanism has yet emerged [Lovegrove,]. (What assets are inside, what outside the fence? To whom do the assets belong? What ratio  of capital/assets is suggested — 10% or 20%? How high is the fence? How can a "high street" bank be legally and financially independent from its "parent bank"? We cannot even stop "independent" banks from mutual back-scratching!)  Positive Money (PM) is a pressure group advocating a reform of the banking system in this country. Together, Richard Werner, the New Economics Foundation, and Positive Money have prepared a lucid and comprehensive submission [Ref.1] to the Independent Commission on Banking that would meet two of these three remedies. Their submission advocates a clear separation of the two types of banking; considerably more drastic and more clearly thought through than the Vickers white paper.

Two aspects of the Positive Money case against the present banking system cause considerable surprise: (1) the fact that 97% of our purchasing power (M4 or broad money) is virtual money not backed by real deposits and is created out of nothing, at the whim of the commercial banks, and (2) that the money we deposit in our bank is not our money, it becomes the banks' money and its product belongs to the bank. Of course, the banks are contracted to give it back on demand (with or without a notice period); but, while they have it, they can choose where they invest it. In the scheme developed in the Submission, the money in a customer's 'Transaction' (c.f. current) account remains the customer's money, it is 100% backed by real Bank of England deposits, it cannot be lent out, and it bears no interest.

The money that a customer wishes to bear interest they transfer to an 'Investment' account, whereupon it ceases to be their money, for a period. If customers wished all their spare money to bear interest, this system would not differ greatly from the present system. However, should a commercial bank find itself in difficulties with assets less than liabilities, it does not need (on this reformed scheme) interbank lending in order to honour cheques drawn on the Transaction accounts for they are all 100% backed. It is true that it might not be able to pay back all its customers' "invested" money, but investors would soon learn what fraction of their money to keep safe, and what fraction to lend out at interest. Such a 'bad' bank would lose customers, but could be allowed to fail; the day-to-day operations of the transaction account (shopping and receiving wages) could continue. The bank would not need a bailout. If a bank did go bust, it cannot lose the assets in the Transaction accounts, because they were never in the hands of the bank but were deposited with the Bank of England; in 24 hours these assets could be made available via an alternative bank.

This seems to me to be a real ring fence that separates high-street from casino banking. The Vickers' ring fence seems partial, the change in reserve ratio from 3% to 10% (or 20%) should certainly add some stability, while reducing 3-fold (or 7-fold) the amount of assets the bank could play with; but it is a half measure, and it leave the deposited money in the hands of the bank — as at present.

The remaining approach to reforming the banking system would be to tackle the question of the motivation of the commercial banks. Banks exist to take deposits, to make loans and to employ staff, not solely to maximise profit on shareholder capital. The customer wants a bank that can offer throughout the country the full range of online, telephone, and counter services and hole-in-the-wall dispensers. If a 'better' bank were to emerge on the high street that offered 100% reserve banking, would customers flock to join? Only (I suspect) if it offered all the rest as well, which means either a very big bank or some (enforced) co-operation between banks.

Also, but separate, there is a demand for small domestic loans, mortgage loans for house-purchase, and advice on investment and insurance. It is unfortunately clear that banking staff are not morally equipped to give impartial advice, any more than doctors are when their income depends on their advice; we have scandal after scandal about mis-selling of insurance, hidden commission, etc. We learnt on a recent Radio 4 "Bottom Line" [2] that Danish banks are better than ours at clarity, and that Dutch pensions yield 50% more than British pensions because of the lower commissions taken in the Netherlands.

Perhaps the country needs a Clarity in Banking Commission (CBC), something easily accessible like OFCOM, where complaints and queries are pooled and advice give. A better informed public would then force down fees, and force up quality.









Wednesday, 7 November 2012

Interest and Usuary

Interest and Usuary

Here is an idea which, in my ignorance, I believe to be original. For decades I have wondered at the problem of distinguishing between Interest and Usuary. Ever since Sunday School I have understood that usuary is a sin, a position that Christianity maintained till the renaissance; till 1545 in fact, in the English-speaking world [1]. And it is a position maintained still by some sects and by our Islamic neighbours. But the taking of interest on lent money (as we happily do every day of our lives) is usuary, so where is the sin? Taking to much, perhaps?

It is a commonplace that high interest rates are regarded as justified if there is a high risk of default. But it has always seemed to me that, as the principal is paid back so the risk declines. Once the borrower has paid back a sum equal to the amount initially borrowed, the risk becomes zero. Not only does the present risk become zero (so higher rates of interest cease to be justified); the previous high rate of interest become unjustified as well (though initially justified). Current lending contracts are not framed in this way. Currently the lender sets a rate which remains in force even when the principal is repaid. In such a case, only Shylock would demand the letter of the 'bond', and call it justice.

So here is the idea. All interest in Britain should be fixed at bank rate, or (if you like) at 2% above bank rate. Anything above that must be regarded as repayment of capital. It is perfectly OK for a credit card company to demand repayment at the rate of 20% per annum, or 30% per annum if it likes, but when it has got its money back there is nothing more to pay, except the interest on the loan for the duration of the loan.

Suppose you borrow £100 at 20% (as on a credit card). If you pay nothing for 4 years, by compound interest your debt will have doubled. So pay £20 per year for 5 years. At that stage you will have paid £100, but the lender will say that you still owe £100, because you have only been paying the 'interest'. So instead you pay £30 per annum. It will take you 14 years to pay down your debt, and you will have paid a total of £420. That (I submit) is not interest but usuary. Were the rate set at 20% because of RISK (when bank rate is 0.5%), I argue that 5 payments of £20 should suffice to bring the risk down to zero, and therefore interest rate (for the whole period) down to something more like 2.5%. A further payment at that stage of £12.5 would suffice to settle the interest due (on £100 for 5 years at 2.5% p.a.).

A bank offering these terms would make less money, but would probably have plenty customers. Maybe this resembles Islamic banking practice.

L. Cawstein

Tuesday, 6 November 2012

Positive Money

Positive Money 1

"Is your money safe? Or is it being used by your bank for risky investments?"
Positive Money ( has been tireless over the last 12 months in putting out its message that British banks need reforming. Their presentations focus on the surprising fact that 97% of the current supply of circulating money (broadly defined) was generated not by the Government, nor by our central bank (The Bank of England; which is a quasi-private company**), but by the major commercial banks — those hotbeds of irresponsible greed.
Rhetorically, that is a great move; it staggers the average reader. Even to a casual glance the system seems flawed. We want to know who 'owns' the 97%, all that virtual money typed into your current account when you are given a loan? And who benefits from it; you, the depositor, or the bank? But, on second thoughts,  what exactly is the flaw and what (therefore) the rememdy?
One flaw is that the decision to extend credit (create buying power) is in the hands of the "irresponsibly greedy". Bankers offer credit where they should not, because doing so brings them reward without any penalty from the consequent debt default. Positive Money's remedy is to take from the commercial banks the power to create money by extending credit.  Another remedy would be to contrive that making loans was less remunerative to the commercial banks (an idea I develop elsewhere). A third would be to return the penalty for bad debts to the place where the bad lending decisions were made (rectify risk-asymmetry, or 'moral-hazard' as it is comically dubbed). If it be the depositor that initiates the gamble called 'investment', then there would seems to be no requirement to make good his losses. However, if it is the commercial bank that chooses the risk and makes the gamble, then the bank should loose when the debts go bad. They should NOT receive a bailout from the state; perhaps a loan that will cripple the bank until every last penny is paid off.
Another flaw is that there is productive debt and unproductive debt; unproductive debt can never be paid back; except by using money from productive debt. (I have explored this distinction elsewhere, as have others). Unfortunately, unproductive debt (as in house purchase) often appears to the bankers as more attractive, because less risky. The mountain of debt grows ever bigger.
How (we ask) is the Positive Money remedy to be implemented? Their case is fully and clearly laid out in their submission (See:, but that requires 2 hours of concentrated study, and then 10 more hours of debate. Perhaps they should develop the next layer of their argument in the form of explosive rhetorical slogans. What is wanted now is a stream of snappy one-liners like their point about money being 97% virtual, 3% real. Perhaps:
"Is your money safe? Or is it being used by your bank for risky investments (without your permission)?"
Who will push throught this reform?
Not the banks for sure. Nor perhaps the average citizen. We have got so used to free banking that we are likely to resent even a small fee. The expectation that banked money will bear interest is deeply ingrained in our society; we equate "banked" money with "invested" money. Shakespeare's clown, when given a penny asked: 'Would not a pair of these have bred, sir?' ". Sorry,  Feste my friend; it is not as simple as that. You must buy a hen, or a field, or some tools if you want 100 pennies to turn into 105 at the end of a year. Or your may let someone else buy the hen, but choose that someone wisely. With the Positive Money plan, banked money is safe, but does not breed; it will sink slowly in value with inflation. 'Invested' money, on the other hand, will rise or fall with the success of the venture; but on average should rise, a little. After 100 years of safe banks (Overend, Gurney & Co crashed in 1866, City of Glasgow in 1878), we came to assume probity and caution in our commercial banks. Alas!
So, who will want to keep their money in the safe bank where they will get no interest and will pay an annual fee; and who will want to lend their money to a 'safe' investment bank, and get interest at 3%, or 4%, or 6%, tempting the banks to offer ever higher rates.
It is true that stabilizing the money supply, increasing competition by allowing customers to swap banks easily, and restoring risk symmetry (eliminating 'moral hazard') are all aims that the government should wish to pursue if it can face down the banking lobby and the voting public. Let us hope.

** The Bank of England, founded by a Scotsman in 1694, is to the Government and the commercial banks more-or-less what the commercial banks are to the man-in-the-street. For 300 years privatly owned and operated, it was nationalized in 1946, but given 'independence' in 1997; it is wholly owned by the Treasury Solicitor on behalf of the Government of the day, but its activites are under the direction not of the government but of a board of independent directors.

L. Cawstein

Monday, 5 November 2012

Open Letter to Bashar al Assad

Dear Sir,

The world looks on in anguish as it sees Syria flounder deeper and
deeper into trouble. I wish I could offer my services as a negotiator,
for which I have only two tiny qualifications: [1] I have no official
position in any country, but [2] a small amount of training in
conflict resolution.

My starting position would be: [1] that Assad is still the only legitimate Head of Government of Syria; [2] that his claim to be the most widely accepted single figure on the political scene may still be correct. Though his popularity might well be below 50%, it is possible and even probable that no other single leader or party has the degree of support accorded to Bashar al Assad and the Baath party. [3] That therefore his present attempt to restore law-and-order should be respected; it is the duty of a government to maintain order.

However, it does seem bad politics (internally and internationally) to have resorted so promptly to repression and force as a means of bringing law and order to the country. That may be the method used in the past. That may have seemed the method most likely to succeed 12 months ago when the official military forces were all in the hands of the government. However, these are different times, even from 3 years ago. It is undeniable that a government of a country killing its own citizens signals a failure of government. It should be clear to all that the argument or point of view that commands the most emotional support inside a country is that one that should ultimately govern that country. It seems to many (especially in developed countries) that "asking the people what they want" is a safe way of finding which argument is the argument that will ultimately win. And would ultimately win if it came to fighting -- on a level field. It therefore seems (to many observers) that a mistake was made in not offering the people of Syria a vote.

That mistake alone does not make the present government illegitimate. Nor does it seem clear, to reason and logic, that the mistake is irreparable. Why not organize, even at this late stage, a popular vote? It might bring a temporary halt to the fighting. It might support the legitimacy of the Baath Party. It might offer an alternative route out of the conflict.

I would be grateful if you would consider this idea.

Yours sincerely, Cawstein.
L. Cawstein

Tuesday, 9 October 2012

Programme Notes: Dvořák Op. 87 & Schubert 'Trout' Quintet

Variations in E flat major, Op. 44 —— Ludwig van Beethoven (1770 - 1827)

In 1792 when Beethoven, primarily a virtuoso pianist, set off for Vienna to study with Haydn, Count Waldstein encouraged him by predicting he would inherit the mantle of Mozart via the hands of Haydn, and it is worth noting that his first published works (Op.1 & 2) are for the Haydnesque medium of the piano trio. There seems little doubt that our Opus 44 set of variations, ostensibly dating from 1802 or 1803, was actually composed in 1792 shortly before the move to Vienna, the high opus number probably being assigned in 1804 for financial reasons. The theme is original but barely more than an harmonic sequence. It is followed by 14 variations and a coda.

Piano Quartet No2 in E flat major, Op. 87 —— Antonin Dvořák (1841 - 1904)

i. Allegro con fuoco, ii. Lento, iii. Allegro moderato, grazioso, iv. Finale. Allegro, ma non troppo

Dvořák 's 2nd Piano Quartet (in E flat major, Op. 87), was written in 1889, 14 years after his 1st venture in this medium, and was premiered the following year. So it is contemporary with the 8th symphony but precedes his "Dumky" trio, and his trip to America (1892-5). The quartet, while not devoid of Bohemian folk influences, exemplifies his earlier Brahmsian and Germanic outlook. Very classical, very structured, it is nevertheless full of the tuneful melodies that make Dvořák a favourite with audiences. In the first movement the piano appears in opposition to the strings, and, to hold its own, plays octaves in the right hand. The second movement is dominated by a singing melody of such sumptuous languor that it could only be played on the strings, and indeed on the cello. This gives way to a sequence of melodies in different keys, tempi, and moods, before returning finally to its (remote) home key of G major, and the original cello melody. The 3rd movement is the most 'folky' with its Ländler-like 3/4 time signature, the extended interval of the harmonic minor, its Cimbalom-like tremolos and its syncopations. The finale, like the first movement, is a structured sequence of motifs and progressive key-changes. The work overall is a highly original (but little heard) masterpiece of the chamber music repertoire, uniquely positioned between exploring the structure of music and indulging the moods of the romantic.


Piano Quintet in Amaj, D667 (The 'Trout')  —— Franz Schubert (1797 - 1828)

i. Allegro vivace, ii. Andante, iii. Scherzo & trio, iv. Theme & 6 Variations, v. Allegro giusto

Composed in 1819, the 'Trout' quintet gets its name because its 4th movement is a set of variations on a song Schubert had written two years earlier; a pretty tune laid over a rising triplet figure that is the basis of the song's accompaniment.  However the quintet's unusual instrumentation was because Paumgartner wanted a companion piece using the same instrumentation as the Hummel quintet written 17 years earlier. (The bass, uncommon in classical chamber music, was nevertheless popular in Vienna at the time, often tuned F,A,D,F#,A (so-called "Viennese tuning"), and often plucked; perhaps a stray from the gypsy band.) Schubert here produced a work less tightly constructed than his final great chamber works, but, at 22 years old, he was already completely confident in his originality. The 'Trout' has a unique sonority, with the pianist's hands playing in parallel octaves riding high over the bass-rich strings, or alternating with them. Its modulations are also unusual, for besides the common A→E transition we get A→D and  A→F (perhaps suggested by (and exploiting) the "Viennese tuning"). In the second movement we get sequential chromatic transitions (Fmaj→ Fmin→ Gmaj→ Amaj→ Amin→ Fmaj); and a very arresting Gmaj→Amaj modulation. The 4th movement (Dmaj) states the 'Trout' theme on strings without the triplet accompaniment figure. It is only in the Allegretto (effectively a 6th variation) that we get theme and figure combined as in the song. (A pretty movement; but the original song goes deeper.) The finale is a happy collection of melodies and motifs built out of the previous movements.

L. Cawstein

Saturday, 29 September 2012



Is pre-distribution still an idea without a back-bone?

Pre-distribution is the catch-word of the week. But at this stage it is nothing more than an empty aspiration. It would indeed be nice if we could 'even out' the rewards of work before collecting income tax rather than after tax has been collected; then 'welfare' could be earned, rather than doled out as an act of charity. OK, nice idea; but how? Even if you accept the analysis [1] that what is needed is a strengthening of the bargaining power of labour, you have still not got us further forward than we were in 1979; for then, after a decade of strikes, the country voted in a Conservative government explicitly bent on breaking union power. O'Neill and Williamson are right to point [2] to the German concept of Mitbestimmung (i.e. Co-determination) as a possible way through that silly impasse, just as I was right to do so two years ago in this blog [3].
However, I went further than merely wondering why we in Britain did not force boards of moderate and large companies to accept a certain amount of labour representation, as was done in Germany and Sweden in the seventies. I showed how a very simple rationale could determine (with logic and justice) exactly how much voting power should belong to labour and how much to capital. In brief, if the annual wage bill of a company is x and the annual interest (or dividend) paid on its capital is y, then the ratio (labour:captial) of voting power on the board should be x:y.
There will be objections to allowing a just and logical amount of labour power to determine the fortunes of a company, just as there were objections to allowing a propertyless and uneducated electorate to vote in parliamentary elections. But, to our credit, we (as a country) got over that hurdle. And with patience I think we shall learn to accept Co-determination. Thus one objection to my formula will be that if mal-administration causes the business to go bankrupt, capital will lose all and labour will lose nothing, for labour has no stake in the company. To which one must answer that labour will lose its livelihood, which is worth (to it) exactly as much as capital is to the capitalist. If labour finds itself too ignorant or too foolish to interfere in the running of the company, it will surely have sufficient wit to find a proxy that is competent. If not, that business will founder and others will survive.


L. Cawstein

Friday, 28 September 2012

Stoicism and Epicureanism


"that he might make thee know that man doth not live by bread only.." [1]
At first glance the two great philosophical schools of Epicurus on the one hand and Zeno and the Stoics on the other seem rather similar. They both protect their acolytes from the pains of adversity, but they do this in different ways.
Can one fairly say that an Epicurean protects himself as a tortoise does, hunched within his protective shell, while a Stoic seeks protection by aligning himself with the Cosmos (φύσις, phusis, Nature); by being (as he would put it) virtuous. Though Bertrand Russell is massively informative in "A history of western philosophy", I like for its extra dimension the treatment of these two philosophies in Gilbert Murray's  "Five stages of Greek Religion". [2]
Gilbert Murray quipped: "Where the Stoic and Cynic proclaimed that in spite of all the pain and suffering of a wicked world, man can by the force of his own will be virtuous, Epicurus brought the more surprising good news that man can after all be happy."[2] 
The happiness of Epicurus was not based solely on simple bread, cheese and home-grown vegetables for it involved the crucial components of conviviality and human affection; yet it proved not enough. It is Stoicism that captured the moral high ground and won disciples among the highest ranks of Romans, early Christian and renaissance humanists.
[1]    Deuteronomy, 8:3
[2]   Murray, G. (1935)  "Five stages of Greek Religion", Watts, London. (Or free online at:

Sunday, 16 September 2012

Buying Euros on the high street

The Post Office says it is the most popular place at which to buy foreign currency for the holiday abroad. I cannot think why. I found the following rates at the beginning of September. (Remember, you want to get as many Euro per UK£ as possible when you buy them, which is the lower of the two rates quoted on the boards; that may be what eludes that strange majority that flocks to the Post Office.)
At the Post Office ---- 1.1527 Euro/UK£
At the Thomas Cook ---- 1.223 Euro/UK£
Correct rate ---- 1.26153 Euro/UK£

Why, even in the narrow alleyways of central Venice you will get
1.2195 Euro/UK£ !

L. Cawstein

Friday, 17 August 2012



Can both indices be right?

The retail price index (RPI) and the consumer price index (CPI), if correctly constructed to reflect 'the cost of living', and if the data is correctly gathered and correctly weighted, should both show the same rate of inflation, year by year. But they do not agree. The change in the CPI is consistently lower than the change in the RPI. In the last 24 years the RPI has grown 125%, the CPI only 100% [1]. The gap is not consistent, but the lines never cross over. So the Government, irrationally but understandably, pays out on the CPI and claws in on the RPI.

Though each index is constructed with great care and scrupulous openness, it would seem that the 'basket' of items for one index is 'better' than another, i.e. it more closely represents what people in Britain actually spend. If each index correctly represents what the average family spends, they should not differ; except that there is no average family. The CPI is based on the European Harmonized Index of Consumer Prices (1996). The RPI is much older with a data set running back to 1956. There is no mystery regarding the content and manipulation of the data; an enormous amount of information is published online (See references below). An excellent discussion of difference between to CPI and the RPI is given in reference [5].

There are 3 major issues. (1) The clearest (and apparently deliberate) difference between the two is that the newer CP index excludes all references to owner-occupier housing, (thus excluding: council tax, mortgage interest payments, house depreciation, buildings insurance, ground rent, solar PV feed in tariffs and house purchase cost such as estate agents' and conveyancing fees). (2) The next most striking feature is that the CPI employs 'geometric means' as well as simple averages, i.e. 'arithmetic means'. (The logarithm of the geometric mean of a series of numbers is the arithmetic mean of their logs. Thus the geometric mean of 10 and 1000 is antilog (1 + 3)/2 = antilog 2 = 100; while the arithmetic mean of 10 and 1000 is (10 + 1000)/2 = 505.  The geometric mean of a series of unequal numbers is always less than the arithmetic mean.) (3) Thirdly, RPI excludes very rich and very poor expenditure patterns which are however included in the CPI. It is also the case that the baskets are updated in slightly different ways; once a year for the RPI with a 1 month overlap between new and old basket, twice a year for the CPI.

I would suggest that, in-so-far-as people do in fact spend a lot of money on owner-occupied housing, the CPI is essentially invalid. The Office of National Statistics is working on the problem and believes it will have devised a new index by 2013. Regarding the use of geometric means I cannot see why the geometric mean is valid. Let us consider bread. Suppose a loaf can be bought for (£) 0.5, 1.0 and 1.5?  I think that neither geometric mean (0.91) nor arithmetic mean (1.0) is correct. I suspect there are more loaves sold of the cheaper sort, but that is nothing to do with the geometric mean. Surely the sum spent on bread is the product of the price and the number of units sold. The average cost of a loaf can be got by dividing the total cost by the number of units. Only by knowing the number of each type sold can you improve on the simple average. Regarding the inclusion of very rich and very poor in the CPI, I doubt it is a serious improvement. There may be a significant portion of the GDP spent on caviar and large yachts, but by an insignificant portion of the population. Properly weighted (per caput not per £UK), the rich and poor extremes should perhaps be included.

Regarding the updating of the baskets it is worth noting that the current value of each index is related only tenuously to a benchmark year. If the RPI basket in 2012 were identical to the 1956 basket we could indeed relate today's £UK to that of 1956. But the baskets change every year, so the RPI of today can be related only to that of January 2012, and that in turn to January 2011; and so on back to 1956. A systematic error could lead us astray. Even a summation of random errors would allow the Index to wander (like a drunken sailor or a diffusing molecule).

So, it is a complex subject. For the time being, I feel inclined to average the RPI and the CPI. Or simply use the price of a Mars Bar/bag of crisps/box of matches — which after all gives us an absolute benchmark and not a wandering chain.





[4] ONS (2010) ÔDifferences between the RPI and CPI Measures of InflationÕ

[5] ONS (2011) ÔImplications of the differences between the Consumer Prices Index and Retail Prices IndexÕ.




L. Cawstein

Friday, 10 August 2012

Deficit Spending 2

Deficit spending (2)

Let us rethink entrenched positions, and seek an intelligent and humane middle road.
My old school friend Howard is boldly, proudly, consistently, and cogently left of centre in his politics. Family background placed him there at an early age, but PPE at Oxford did not deflect him from the path of the 'honest citizen'. I, on the other hand, born and brought up as a Liberal and thus uncomfortably astraddle the fence all my life, have been struggling with the balance between labour and capital ever since I became politically aware with the advent of Thatcherism. "I still hate that woman" said Howard the other day. "Well, we wont fight over that", said I, "but she did curb the unbridled power of the unions that was holding the country to ransom".
Back in 1979 I spent many hours trying to work out which argument was correct; the Tories thought that 30 years of full employment had handed power without responsibility to the unions who were forcing up prices with irresponsible (leapfrogging) wage demands and thus pricing Britain out of world markets. I could see the truth of that. On the other hand, deliberately to contrive unemployment in order to break a strike seemed to me a dirty trick as it imposed real hardship on hundreds of thousands of innocent people who could surely have been won over by simple logic. I resolved my dilemma at that time by concluding that there was no single correct policy; both policies were correct; it depended simply on who you were. If you owned a factory it was 'right' to keep wages low. If you were a worker it made perfect sense to bargain collectively; the 'right to strike' seemed to be the country's only protection against slavery. That solved, I could return whole-heartedly to my professional work as a scientist.
However, in retirement, I can see that I had not resolved the dilemma, but simply ducked it. The country does in fact have to be steered down that delicate line. Our quaint "first-past-the-post" political system in Britain tends to flip-flop the country sloppily across the line every 7 to 11 years. (No doubt in response to, and in synchrony with, the business cycle; though I have not heard anyone say that.) Can we not do better than that? Should we concentrate on cutting the deficit to below zero, and start to pay down the National debt? Or do we attempt to re-stimulate the economy with further deficit spending. Is this just another political football which you boot to left or right on simple class principles? Does anybody understand the economy sufficiently, and in a sufficiently scientific and disinterested way, to persuade all political parties to a common economic policy?
The Conservative way out of a recession is to let rising unemployment weaken unions and lower wages till business can once again turn a profit. This attitude so angers the workers that they demand a Welfare State safety-net and, if pushed too far, the nationalization of the mean of production. Liberal opinion, in my eyes, epitomizes the best aspects of tolerant, caring, humanity (the sort of humanity that staged a sugar strike not for its own benefit but for that of the plantation slaves). Liberals should seek to understand the business cycle, and use that understanding to anticipate and minimize the boom years, and minimize unemployment and hardship in slump years. Not because enforced unemployment is bad for the economy, nor bad for their own 'class'; but because it is bad for people. As, of course, is the Welfare State.
Textbook Keynesian monetary theory points out that when Saving exceeds Investment (because business prospects are poor), money is lost from the system and a depression becomes a recession. Applied to the business cycle, it further suggests that the State should run a deficit when the private sector contracts, restoring its reserves during the preceding and subsequent boom years. Classical monetary theory replies that deficit spending hurts business more than it helps; it raises wages (or prevents their fall), and it raises interest rates.
Should liberals therefore side with Labour and demand deficit spending in the current (2012) recession? I am afraid I do not trust the depth of analysis of Labour's call for deficit spending. I fear that they are re-playing Keynes' own depression of the nineteen thirties. Consider:-
[a]  Britain did not build up reserves during the preceding boom years; it built up debt, (and ran down its gold reserves: ). A glance at the pie-chart of UK government spending shows that not defence, not education, and not even health is running away with the money; it is the welfare budget that dwarfs all the others [1]. We are little better than the Greeks. Currently we spend as much annually on servicing the national debt as on housing and the environment (4% of GDP). Woe if that should double!
[b]  Keynesian deficit spending is indeed damaging to business if there is insufficient slack in the labour market. And indeed, there is no great unemployment in the UK. The British public has shown every indication that it would buy more foreign goods if it had more money.
[c]  British household are not stashing spare money under the bed. The average British adult is harbouring a massive £30,000 debt! If the State wished to borrow money to deficit-spend, it would have to borrow off the Chinese on the money markets; not from its own citizens (as is the case in Japan).
[d]  Most commentators agree that some government spending on infrastructure would be beneficial in the long run. On carefully chosen projects it might also help in the short run, if the allocated wages lower welfare payments and raise tax revenues. Some highly experienced economists are beginning to murmur about possible Government spending [2], and a possible delay of the planned 'fiscal tightening' [3]. But my own assessment is that we do not have high unemployment, and the money markets currently seem surprisingly satisfied at the longer term stability of Sterling. So steady-as-she-goes seems the right course at present. Continue to build houses, roads, and railways; sponsor apprenticeships, tighten welfare payments, and collect taxes.

L. Cawstein

Wednesday, 8 August 2012

Debt 4

Debt (4)

"Non-productive lending by banks is beggaring the country."

It has been said that we shall never get out of the present quagmire of debt in which the Western democracies find themselves unless there is growth. And I guess that is true in a horrifyingly simple way.

If I were to borrow money to build a windmill it would be with the thought that the windmill would earn me 10% per year in flour. I could pay 5% to the capitalist and still my enterprise would be worthwhile. If I borrow money to buy a car, how on earth am I going to pay the money back, let alone pay 5% interest to the lender of the money? Except from another source, so borrowing off Peter to pay Paul.

According to Credit Action [1], personal debt in the UK in April 2012 stands at £1.459 trillion (of which mortgage-secured housing debt is £1.252 trillion). To grasp the magnitude of this, you should note that the gross domestic product (in 2009) was £1.396 trillion, while the assets of Barclays Bank plc (in 2011) was £1.459 trillion. On average each adult in the country is £30,000 in debt, largely for their house. Suppose they can pay the interest at 5% p.a., but cannot pay down the capital. Without what the politicians call 'growth' (and I call inflation) these citizens will spend their lives, like a herd of dairy cows, being milked by the bankers for the whole of their lives.

However, since the war, we have got used to a steady 'growth' of the economy. That is to say, the uncorrected data of the Office of National Statistics (a mixture of inflation and 'growth in real terms') shows a strong and persistent logarithmic 'growth' in GDP of some 9% p.a. Look at the data [2]; in the 50 years since 1958, the uncorrected GDP of the UK has grown 63-fold! If correction is made for inflation the growth is a mere 3.7 fold. In other words, the apparent growth of the economy (averaging over those 50 years) is 9% per annum, though GDP 'in real terms' has grown logarithmically at a pauky 2.7% p.a., while the value of the pound has fallen at an average rate of 6% p.a. (largely, no doubt, because of an increase in the money supply). As I have pointed out elsewhere [3], that which the Office of National Statistics calls growth of GDP is very largely inflation.

If that 9% 'growth' were to persist, it would still make sense for our average citizen to borrow £30,000 to buy a house; in 30 years time, when the debt was due to be repaid, it would only feel like £2260.  But, with an economy in stasis and house prices sinking, the average adult will be less able to repay in 30 years than he is today; he is going down the chute. Not the banks, however.

Loans fall into one or other of two categories: productive loans (for the purchase of industrial plant, land, farm stock, education, etc.), and non-productive loans (consumer goods, food, luxuries, accommodation). It makes sense to borrow, or lend, money for the former. It makes no sense to lend for the latter, yet that is the preferred type of loan for the bank. Particularly loans for housing, for, with the (supposed) security of the title deeds, there is very little risk. Banks are neither patriotic nor philanthropic; they are there to make money, even if their activity is bad for the country and bad for the customer. For a decade or two after the war, the lending by banks was under fairly strict governmental control. Perhaps we need to return to such thinking.






L. Cawstein

Monday, 6 August 2012

"Capital Justice"

"Capital Justice"

Open letter in response to a Radio 4 talk by Helena Kennedy – 6th Aug 2012

Dear Helena Kennedy,

Your intriguing talk on "Capital Justice" must (I think) have been chopped around by the producers, inserting unnecessary quotes and bits of even less necessary music. I suggest this with some humility for I acknowledge my weak ability to follow a complex argument at first hearing (and with enormous respect for your integrity, and expertise).

         I suppose you might have started your essay with a question like one of the following:

[a]  Could the law have prevented (or punished) the injustices of the financial crash?
[b]  Surely it is (or could be made to be) illegal for clever people to take money off foolish people (as, for example, laws that regulate the sale of patent medicines).

You might have decided early on that you would end your piece with the Adam Smith quote: " less essential to the existence of society than justice."  This especially as the other authors you quote en route tend to contradict each other.

I think you hinted at, but did not state, another proposition that deserves italics: Commercial companies must never be allowed to get bigger than the Nation State; if they cannot be confined (and controlled), the Nation States must themselves combine till they have sufficient power to exercise control. 

You (successfully) pointed out that people cannot be punished for behaving badly; only for breaking the law; and that the law is made by judges. Yet I would offer another proposition which I submit you significantly fudged: Democracy and "Mob-Rule" are not in conflict; they are in fact the same thing. Justice and morality are generated by the 'demos'. Laws are made by judges in response to justice and morality.

How might you traverse successfully from the question at the beginning to the Adam Smith quote at the end without creating the feeling of wandering in a dark forest seeming to pass the same landmarks over and over? No doubt you wanted to incorporate the quotations you had collected on your tape-recorder; but should you try to contrive a sequence progressively driving at one conclusion, or pair the quotations off so that they negate each other and amount to nothing, while successfully indicating the complexity of the situation?

Much of the miss-selling of mortgages and miss-classification of risk, the ill-considered acquisitions, investments and reward systems — perhaps these do not break the law. It is (after all) still legal to offer money at high interest (because at high risk) against the surety of title deeds (which bear no risk; you win if they continue to pay, you win even better if they default). It is still legal to sell lottery tickets (which is simply taking money off people, giving half back and keeping the other half). Why is this not made illegal? Probably because it is too difficult to make laws that control all the tricky ways of making money, though there may be some lack of will among the law-makers.

However, there are laws against fraud in the United States of America (we heard), so surely also in Britain. And, if not, why not? To rate, as AAA, a bond that is plainly irrecoverable bad-debt, would seem to be fraudulent; so why no prosecutions in Britain? (Here you could usefully inform the lay listener: does the law have to show knowledge of the fraud to make it criminal? Is that impossible? Are there any prosecutions pending?) Paying taxes is legally required; are these taxes being rigorously pursued? If a bank is given public money, is that money ever returned to the State, with appropriate interest? (In which case, what is the problem?)

Could it be that Government is too friendly with the bankers, or too much in awe, or too dependent? Any such suggestion should be taken very seriously, and acted upon. But that (you might say) is a matter of politics, not law. Helena Kennedy loves the law. Some 200 years ago it was perfectly legal to drive a whole countryside to starvation simply by raising rents, and outlawing vagrancy. At the same time poaching a rabbit was made a serious crime simply by declaring the wild game on land to belong, not to nature, nor to the tenant farmer who raised the corn, but to the 'gentleman' who owned the land. Because the law was in the hands of the gentry. However, the law was changed; changed by the demos; changed painfully slowly, and only when the pain became unbearable. The law must go on changing. 

 Yours sincerely, Cawstein,

Longhirst, Northumberland.