Tom Streithorst
City limits: the sector must shrink
The outcry at proposals recently floated by FSA chief Lord Turner in Prospect suggests that the City knows they would be effective. The City does not fear “regulation”; regulations can always be circumvented. But a Tobin tax, an infinitesimal levy on all financial transactions, would squash the profitability of much of the short-term trading which swells investment bank profits without doing anything to create value in the real economy.
For the past 30 years, the economics profession has been in the grip of a dangerous delusion, namely that all financial transactions are intrinsically beneficial, in that they create “deeper, more liquid markets.” The credit freeze that began on 9th August 2007 tells us that this liquidity is more apparent than real, that in moments of danger, when markets really need liquidity, it just evaporates. Without the liquidity “fig leaf,” the rationale of social and economic benefits for much trading activity becomes impossible to maintain.
The current financial crisis gives us a chance to return to an earlier understanding of the purpose and function of financial markets. Finance exists in order to most efficiently transform societal savings into productive investment. It is a deal between the present and the future; forgoing consumption now in order to invest in capital goods which will spur productivity, thus allowing greater consumption at a later date.
The explosion in the size and profitability of the financial sector since the early 1980s has almost nothing to do with the creation of capital goods. Real investment as a share of GDP has declined even as financial sector profits have gone through the roof. Arbitrage, intra-day trades, short term purely financial self-referential transactions, which do nothing to create real investment and do nothing for the real economy, would all be priced out of business by a Tobin tax.
The financial sector has grown too big. It needs to shrink. The Tobin tax will do that, without hurting the rest of us. That’s why the bankers are getting apoplectic in the Financial Times. Finance needs to stop being a parasite on the real economy and once again return to its traditional role of creating capital goods and so increasing worker productivity. That is how finance can make all of us richer.
Tim Kelsey
Brian Jarman, emeritus professor of general practice at Imperial College, is a kindly looking man. He is famous in medicine for designing the statistical model that was used to pay GPs (the Jarman Index); leading the campaign to keep Barts Hospital open; and, 15 years ago and perhaps most notably, devising a way of predicting how likely patients are to die in hospital. That analysis revealed that death rates in England, even when controlled for variables like a patient’s age or class, differed by up to 76 per cent.
Death rates are not universally accepted as the best way to measure a good hospital. But tragic events keep bringing the issue back onto the agenda. In 2001, the Kennedy inquiry into children’s heart surgery at the Bristol Royal Infirmary found that up to 35 babies may have died unnecessarily during the early 1990s. The inquiry called for more surveillance of hospital performance. This year just such an analysis uncovered another scandal at Stafford General Hospital, where receptionists rather than nurses were deciding which patients needed urgent treatment when they came to A&E. The healthcare regulator found that 400 lives may have been lost; deaths which smarter analysis of data might have prevented.
Yet the spread of such analysis in our health service has been painfully slow. Because Jarman’s original methodology used data taken from confidential patient records, the secretary of state for health had to give formal consent for its publication. This was refused for years. Politicians of both parties were nervous: how would the public respond to evidence that the NHS is a dangerous postcode lottery? Only in 2001 did health secretary Alan Milburn take a different view and authorise the publication of the hospital standardised mortality ratio (HSMR) in the Good Hospital Guide. (My company, Dr Foster, publishes this guide and provides other data about the quality of local health services.) Since then, better use of data has slowly begun to change the ways the NHS is run. Walsall hospital, for instance, had the highest death rate in 2001, recording 1,080 deaths when it should have had only around 830. By 2004 it had improved its performance dramatically through a number of innovations in clinical practice and probably saves more than 275 lives a year as a result.
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Joy Lo Dico
It’s the summer holidays again, and time for the annual British migration south, east and west. But this is 2009. We already watch television on the iPlayer, make new friends on Facebook, “work from home” over the internet. So the next logical step— bypass the hell of Heathrow and reduce your carbon footprint in one fell swoop by taking your holidays online too.
Google’s Street View, which merges photographs taken of streets in cities across the globe to produce a close likeness of the world in 3D, sparked off heated debates about privacy when launched in March. But as a “holiday” provider it’s matchless: go to Google Maps, zoom in, pick up a little orange avatar man and you can have London, New York, Paris, Rome or even Scunthorpe at your fingertips—all for the price of a broadband connection.
Literalists will argue that it’s not the same as going on a real holiday, and it isn’t. Sure, you can traipse over Florence’s Pontevecchio. (Streetview is so sharp that you can even go window-shopping in the little jewellery shops along the bridge.) But you can’t feel the Tuscan sun on your skin.
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Danny Kruger
Of all our members, Foster is the only one who lives with his kids and their mum; of all our members Foster is the only one up on a charge of domestic violence. He’s on remand in Belmarsh, sitting out the summer, brooding on a crazy morning in Colchester back in April.
Foster has form here. He too was brought up by cohabiting (indeed married) parents, he too saw his father hit his mum. He first went to Feltham at 15; from then till 24—three years ago—he was wild. We met him in Wormwood Scrubs and cast him as a righteous but angry father in an August Wilson play; he played his dad with grace and passion. Since he finished that stretch he has—we believe—stayed straight: some building jobs; long sad periods on dope and the dole; occasional plays and youth projects with us. The day after the madness, he was due for a job interview we’d set up with a teaching agency. But the anger remains. It bubbles up in long dark sullen moods and explosions of rage that speak of some grand foundational injustice; something so terrible, real or imagined, in himself or others, that the only response he can find is violence.
Sitting in his orange bib in the visits room, Foster tells us what happened. It’s sub judice but the details include two young women swigging vodka, pushing their prams through Colchester on a hot Tuesday morning; Foster shopping for a shirt and tie for his interview, getting furious with the girls; back home, an argument and a tussle, then a call to the police and a chase through the fields; a helicopter, CS gas, the works.
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Tim Harris
Few sporting records are likely to be broken at this summer’s athletics World Championships in Berlin. But the event could be the most significant in the history of drug detection in sport.
The competition, which starts on 15th August, is the Olympics’ evil twin—or perhaps more accurately its wicked stepsister—a biennial potboiler, intended to keep athletics fans’ eyes square during odd-numbered summers. The significance of this year’s event is that it will be the first big tournament to trial the new “biological passport,” developed at great cost by the World Anti-Doping Agency (Wada).
Founded ten years ago, Montreal-based Wada’s mission is to decide what drugs should be illegal in sport and to fight their use. Its new passport system will make the biggest change to the way cheats are identified since the first patchy out-of-competition tests began in the wake of Ben Johnson’s bust at the 1988 Seoul Olympics.
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Philip Hunter
You are dreaming that a hippo is charging towards a lake, and you are caught between the two, about to be trampled to death with no avenue of escape. Then all of a sudden you realise this is just a dream, turn around and the hippo stops in its tracks, turning into a gently grazing horse.
This phenomenon is known as lucid dreaming: we are aware that we are in a dream and may have some control over its course. It has been thought to provide a link between reason and emotion, or even spirituality. Indeed it appears that in the perfect lucid dream, there is a harmony between reason and emotion, with conscious awareness in the background keeping a watch over, but not interfering too much, with the unfolding dreamlike action. At least 60 per cent of people have experienced lucid dreams sometime in their lives, but only around 20 per cent do so regularly—once a month or more.
Over recent years more precise scanning of neural electrical activity, combined with greater knowledge of brain structure and biochemistry, have fostered substantial progress in understanding the mechanisms of lucid dreaming. Significantly, it shares similar patterns of neurological activity not only with its two close relatives, near-death experience and out-of-body experience, but also with a range of psychotic conditions. These include schizophrenia, states of paranoia and the not uncommon depersonalisation disorder where sufferers feel they are observing their own actions from outside and often describe their waking life as like a continuous dreamlike state.
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John Naish
Can you really trust science? Perhaps not. In a worrying report published in June, a third of medical and scientific researchers admitted to committing scientific fraud, and nearly three-quarters said that they have witnessed deliberate warping of data to show desired results. Only a very small proportion of these cases are known about fully—thanks to the lack of effective policing of the drugs industry—but medical fraud could affect anything from mild asthma medication to treatments for serious cancers. (See Jim Giles’s account of the Vioxx scandal, Prospect, November 2008.) Yet a crucial chance to tackle the problem is being squandered—thanks to resistance from the heart of academia.
When research fraud hits the headlines, it typically involves outrageous cases, like the South Korean scientist Hwang Woo-Suk’s fabrication of stem-cell research that purported to treat diseases like Parkinson’s, or Norwegian researcher Jon Sudbø’s faked cancer trials in the Lancet in 2005. These, however, are the tip of the iceberg. The real damage to scientific integrity is wreaked by the everyday, routine distortion of results by researchers anxious to bolster their careers, appease academic bullies or justify research grants.
The true extent of this abuse was glimpsed in Edinburgh University researcher Daniele Fanelli’s report in June, which analysed all the existing anonymised surveys questioning scientists about misconduct. The results, published in the journal PLoS ONE, suggest that altering or making up data is more frequent than anyone had previously estimated. Misconduct was reported most frequently by medical and pharmacological researchers, and involved things like deliberately omitting test results, adding non-existent “positive results,” altering basic test data or cherry-picking volunteers who would respond to tests in the desired manner. This supports growing fears that industry sponsorship is distorting scientific evidence to promote commercial drugs. Huge sums are at stake here: in the US alone, an estimated £18bn a year is spent by drug companies on marketing their products. The pressure on those who develop them, then, is intense.
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Philip Ball
Twittering from Mars
Visitors to the Jodrell Bank Observatory in Cheshire typically take one look at the gigantic dishes of the radio telescopes and ask the same question: what is it looking at? But it’s not just outsiders who wonder that. Astronomers who have been granted viewing time to look at their favourite objects at the big observatories also want quick notification of when the telescopes have done the job. This is just the sort of question for which the micro-blogging service Twitter was invented. And so radio astronomer Stuart Lowe at Jodrell Bank proposes that the astronomy community set up an AstroTwitter service dedicated to letting followers know in real time what the world’s telescopes are up to.
A service like this has already been created for Nasa’s Mars Phoenix lander, which had 3,000 followers by the time Phoenix touched down on Mars in May 2008. By September it had 35,000. Phoenix is studying the composition of the Martian “soil,” particularly to look for clues about the planet’s suspected watery (and perhaps habitable) past. It’s arguable that Nasa’s decision to write the feeds in the first person (”I’m on M-AAAAARS! Now it’s back to work digging for treasure…”) is over-egging the cuteness, but as a public outreach tool the Phoenix Twitter feed was a triumph. Inspired by this, Lowe fantasises about online mash-ups that show the locations of all the world’s telescopes, each linked to its own Twitter stream. And using the recently launched Google Sky, we could see what’s in the telescope’s sights too. No doubt all the big-science installations will be at it soon.
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John Lloyd
You can also read a specially extended version of Prospect’s exclusive interview with BBC director-general Mark Thompson for free on our website here
The BBC is caught in a series of contradictions that may prove fatal. The first of these, about which it worries most, concerns the licence fee. British citizens who have a television set must pay, on pain of fine or imprisonment, £142.50 a year—even if they never watch a BBC programme. From this, it gathered £3.4bn between 2007 and 2008. The profits on sales of programmes and other activities by BBC Worldwide give it a further £118m annually. This money funds the terrestrial BBC One and BBC Two channels, plus the digital channels BBC Three and BBC Four, BBC News, BBC Parliament and the children’s channels CBBC and CBeebies, as well as a vast and much visited website, five national radio stations and new digital additions like 5 Live Sports Extra, 1Xtra (black and soul music), BBC 7 (comedy) and the BBC Asian Network—as well as Radios Scotland, Wales and Ulster, and a network of local stations. It broadcasts to the world in some 33 languages, claims an audience of around 200m with a grant from the foreign office of £255m. It is the biggest broadcaster in the world. Though BBC executives could give master classes in British self-deprecation, modest it isn’t.
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MG Zimeta
To discuss this article visit First Drafts, Prospect’s blog
These are dark times to be a politician or a banker. Hedge fund managers, newly relegated to the social wilderness reserved for sex offenders and arms dealers, may or may not be pleased to now be joined by their MPs. The recent national anger at our political and financial elite has been unprecedented: but are we right in our rage? “Anybody can become angry,” warns Aristotle, “that is easy. But to be angry with the right person, and to the right degree, and at the right time, and for the right purpose – that is not in everybody’s power, that is not easy.” In the furore about the failed morals of our political and financial institutions, are we in danger of compromising our own moral standing, or missing a valuable opportunity to fix what went wrong?
The easiest response to wrongdoing is retribution. Several of our expense-fiddling MPs and senior failed bankers have been subject to humiliating public scrutiny of their finances and lifestyles. Such vengeance can feel good, but it plays to the lowest parts of our own character. And establishing guilt, unfortunately, does not always mean establishing remorse: “I pleaded guilty, a secular plea,” says JM Coetzee’s fallen academic David Lurie in his novel Disgrace. “That plea should suffice. Repentance is neither here nor there.” “I accept responsibility for that which I was responsible,” wrote Sir Fred Goodwin, former CEO of RBS defending his £16m pension after the treasury used £20bn to bail out the crippled bank. “[T]o voluntarily accept a reduction… is not warranted.”
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