To give you a flavour of Malema’s oratory, consider this official statement made during soon-to-be President Zuma’s rape trial of women who are raped:  “when a woman didn’t enjoy it, she leaves early in the morning. Those who had a nice time will wait until the sun comes out, request breakfast and ask for taxi money.”

The ANC said nothing about this.  Malema has become a divisive figure and represents all that is going bad in South Africa.  However, for the moment, the courts still work and today (miracle of miracles), they found Malema guilty of “hate speech” and instructed that he pay a fine of $5,000 to a women’s shelter for rape victims.

Malema is currently standing trial for a more recent event where he sang the very charged ANC struggle song, “Kill the farmer, they are rapists.”  This song has already been declared as “hate speech” in a previous case and the sentiments behind it, and nominal “encouragement” that the ANC provides in venting these thoughts, has led to South Africa having an astonishing rate of farm murders, where farmers and their families are regularly (i.e. some 65 violent attacks since November 2009) slaughtered by criminals.  Does this matter?  Well, as little as five years ago South Africa was a net agricultural exporter.  No longer.

South Africa’s courts are in a precarious situation but they still appear to have some level of respect for the law.

Last week, the wife and I went out for dinner to a new restaurant in our neighbourhood.  The food was awful and the service insulting.  Afterwards a few of the patrons gathered outside.  One man was particularly engaging and inspired us to take action.  We formed an angry mob, set fire to cars in the parking lot and threw stones and burning wood through the windows of the restaurant.

A few days later we went back to the restaurant and – this is the bit you’re going to find outrageous – their service had NOT improved!

Afterwards I led the riots.  We destroyed nearby shops and looted what we could.  Next week we’ll go back and see if they’ve recognised our concerns.

All of this may seem a somewhat surreal way of grappling with a bad customer experience. After all, if it was so dreadful, why not just refuse to go back?  If enough people stay away, wouldn’t the restaurant close and someone else have the opportunity of making a better go of it?

It would seem to make sense.  In the midst of municipal elections in South Africa, voters in numerous towns rioted and vandalised businesses in protest against a lack of service delivery by ruling African National Congress councillors.  Once the votes had been tallied, those same rioters returned those same councillors with an overwhelming majority.

This sort of errant behaviour isn’t limited to South Africa’s fledgling democracy.  Protestors at global summits often attack local businesses when expressing their frustrations.

Democratic governments often assume that Democracy is some natural order that people gravitate towards.  The US has been genuinely surprised that Iraqis and Afghanistanis didn’t become instant democrats when their previously autocratic rulers were removed.  Europeans appear authentic in their conviction that increased aid and negotiation will convert even the most recalcitrant of dictatorships into wealthy democracies.

The people at the receiving end of voting and aid don’t seem to see things the same way.  Their confusion, and the contradictions of the participants’ objectives, are what gives rise to conflict.

Consider the rural, traditional, approach to conflict resolution and discussion.  Whether it be the loya jirga of Afghanistan, the imbizo of Sub-Saharan Africa, or even the folkmoot of ancient Germany, all have a common pattern and purpose.

This is not democracy, it is agreement.  The participants at these gatherings expect to remain in negotiation until all agree.  This can take time.  Members of such a gathering will meet for days to discuss matters of group importance.  If there are people who disagree then the majority do not impose their will on the few.  Rather, they offer compromises until, eventually, an agreement is reached that suites everyone.

This isn’t something that happens only in rural backwaters or amongst unsophisticated societies.  The World Trade Organisation has the same approach to negotiation.  The Doha Round of trade talks started in November 2001.  No-one has any idea when they are likely to conclude, if at all.

Such a leisurely approach to law-making and arbitration can only work where the pace of life is slow and the complexity of relationships is moderate.  If the majority are subsistence farmers then a discussion that affects water rights or requires collective action does demand that everyone agree.  Where the pattern of life has changed, as division of labour creates increasing social complexity, such collective collaboration is impossible.

Complexity requires that individuals negotiate solutions for themselves and only when such processing reaches an impasse does one involve higher authorities.  Complexity also imposes time-constraints.  Others get on with their lives and leave the debatants to their problem.

Where faster solutions are required courts and calls to standard legal frameworks ease litigation.

Even the process of national rule has been converted from a process of negotiation with an hereditary ruling class to one of periodic and total renewal through general elections.  This is only the most obvious end of the chain of democracy.

The United States, the United Kingdom, did not become democracies because the “people” suddenly decided to have set elections.  They became democracies because their complex societies needed a fast and stable way of changing leadership and trying new ideas without having a war every time the prevailing tyranny fell.

If an entire town had to get together to discuss the poor offerings at their only restaurant and numerous ideas were proposed, shot down, and reproposed, nothing else would get done.  Far easier to simply allow anyone to open a restaurant and let individuals make up their own minds as to where to spend money.

Once people get used to this casual act of opinion-forming the obvious next step is to allow similar shopping amongst political representatives.

The problem in the world’s unstable places is one where the forms of democracy are imposed from the top while the institutions of individual interaction still offer no choice at all.

Aid agencies divide up countries into individual fifes.  They don’t compete for beneficiaries through innovative and diverse offerings.  They merely dish it out.  Even where businesses do exist, they are indistinguishable and collusion in pricing and offerings is normal; whether it be the regulated mobile phone services, or even the local grocery store.  Poverty offers little choice and little experience of choice.

With a foundation like that, it is unsurprising that people would rather negotiate with the rulers they know than try anything new.

Even nations with complex patterns of labour division have doubts about distributing choice all the way down to individuals.  Market collapses, such as the 2008 credit crisis, appear to reinforce the view that some things are best left to collective decision-making.

This reflexive return to centralisation is likely to be reversed.  A single person can only have strong opinions on a limited number of things.  A centralised decision-making system would have to have strong and consistent opinions on everything.  This isn’t possible and any act of centralisation must be to the detriment of individual choice, overall economic activity and democracy.

The real social divide is not of wealth and poverty, but of choice and monopoly.  If governments, social activists and aid workers are genuinely determined to promote democracy around the world, then the best way to start is through promoting consumer choice at its most basic level.

A person who has a real choice of business offerings will learn that changing a mind does not have to involve physical conflict.  And democracy really can be built one restaurant at a time.

The advantage to humans of being able to organise, teach and use weapons to catch food may initially have been slight.  That marginal advantage has allowed a single species to migrate, settle and dominate their entire planet; something unprecedented in all of Earth history.

The study of human evolution covers a period of six million years, during which a semi-upright-walking woodland ape eventually developed tools, learning, and culture, and survived ice-ages, earthquakes and climate disruption.  Adding to the complexity of this epic tale is that there appears to have been overlap between at least two intelligent species of human-like creatures in the last 50,000 years.

Dr Chris Stringer leads the Department of Palaeontology at the Natural History Museum in London’s research into human origins. “Very soon, we will have the genome for Neanderthals.  That will then allow a three-way comparison between humans, chimps and Neanderthals.  This will give us a better view of the six million year split between humans and chimps, and of what made us and the Neanderthals different from each other,” he says.

“The Neanderthals were really unlucky.  When modern humans moved north into Europe about four to five thousand years ago, the climate was at its most unstable.  The North Atlantic regularly switched between being frozen over and thawing, and some data suggest that these events sometimes happened in less than 10 years.”

“The Neanderthals had survived previous ice ages by simply giving up territory and moving down south.  Now they met early Cro-Magnon humans.  So, just a slightly different timing of events could have led to Neanderthals surviving, and perhaps our species going extinct instead.”

The Middle East was the biggest area of overlap between the two species as they moved back and forth, along with climate change.  Neanderthal relics there that are 120,000 years old show burial traditions.  There is also evidence that Neanderthals cared for each other.

“Archaeologists found the skeleton of a Neanderthal that shows signs of healing from an injury. His skull was damaged and he would have been quite seriously disabled, but he survived for years afterwards.  Now for a Neanderthal living in the mountains of Iraq to survive with that sort of disability implies a level of complex organisation and social support.”

Part of the reason for looking after the elderly is simply that – in a world without writing and libraries – they act as a store of knowledge from the past to the present.  Caring gives a survival advantage.

There is a debate as to whether Neanderthals died out because of environmental change, or because of being outcompeted by modern humans.  The reality is probably something in-between.

Neanderthals are believed to have lacked complex symbolic language skills and our species was just that little bit more intelligent.  “The concept of symbolic language, of understanding and planning for the past and the future, that – I believe – is a modern human invention.”

Both modern humans and Neanderthals developed the use of weapons for hunting, but these were hand-held spears.  When one band of humans developed throwing weapons they were therefore able to hunt better and also achieve victory in any conflict with other humans such as the Neanderthals.  Perhaps modern humans were able to retain, transmit and develop this knowledge better than the Neanderthals could?

Dr Stringer points out that chimps and gorillas do overlap, but tend to ignore each other in the wild even though they fill similar biological niches.  Chimps and gorillas are, in evolutionary terms, many millions of years apart.  Humans and Neanderthals are perhaps only 400,000 years apart, and it is uncertain how they would have interacted.

Whatever happened, though, Neanderthals couldn’t change fast enough to keep up with both the fluctuating climates and the newcomers, and after more than 10 thousand years of coexistence they became extinct leaving us as the only human species in most of the Old World.

The study of human origins challenges the closely held beliefs of the widest possible group of people: from extreme racists, nationalists, and religious fundamentalists, to ordinary people who wish to hope that the universe offers more than the random and chaotic.

The movement of humans out of Africa and the continual process of climate change means that humans would stretch out, and die back, repeatedly.  Yet modern human political and social groups are determined to fix origins in their modern borders.  They want to be British, or Aryan, or African.  In evolutionary terms, we’re just human.

Racism brings people into conflict with science.  But so does religion and, more recently, opposition to the impact that climate change could have on the nature of life on earth.

Even those who support science like to point out that nature gets there first.  A recent paper in Nature Photonics shows that Stomatopod crustaceans are able to sense the difference between left and right circular polarized light with an accuracy of just ±2.7 degrees over the visible range.  The best human-made device clocks in with an accuracy of ±9 degrees.

Maybe, but it probably took the Stomatopod millions of years to develop its solution.  Humans developed their solution in mere decades.  And, more importantly, science-based investigations are allowing us to unlock the mechanisms behind just about any natural solution we require.  The combustion engine is now approaching its theoretical efficiency.  Solar energy panels are a long way from that point, but it is happening.

Science may not have all the answers, but it does know how to go about finding them.

Professor Chris Stringer will give the Nelson Mandela Science Lecture at University of the Western Cape on Tuesday, 24 November as part of the observance of the 150th anniversary of the publication of Charles Darwin’s “Origin of Species”. The lecture will start at 1pm. Enquiries visit AfricaGenome.com

Nick Griffin, the leader of the tiny British National Party, has a very low profile outside the UK. Their best political showing has been to pick up two seats in the European Parliament, when they polled 6% of the UK vote in that election in June 2009.

They are a minority party and are unlikely to ever lead political thought in the UK, let alone Europe.

Griffin has never appeared on public television to either promote or defend his party. The BBC, acknowledging that he now represents a small, but distinct, subset of the British population, invited him onto their long-running political panel discussion show, Question Time.

Outside, angry demonstrators gathered to protest Griffin’s arrival. Hundreds of police battled hundreds of protestors. 25 broke through a barrier and managed to make it inside the BBC buildings before being dragged back outside. By the end of the evening, three policemen had been injured and six protestors arrested.

What gives?

The reason for this excitement is the platform espoused by the BNP. They demand that all “foreigners” be deported and that the borders be closed to immigrants. They’re a single-issue, racist party. That’s it.

There has been more than enough written about the BBC’s decision to invite the man that many Brits find personally offensive onto the public broadcaster. I’m a foreign-born Brit, and Jewish, so hardly someone that the BNP would allow as a member, but I believe that the BBC did the right thing.

Watching Griffin bumble about, claiming not to be a Nazi or a racist is amusing stuff. It allows his poison to be drawn and his opinions to be challenged, debated and held to account.

Unfortunately, that process is somewhat drained knowing that he had to fight his way through a lynch-mob just to get into the studio. Griffin may be a Nazi, but he’s a brave Nazi.

Breeding Headlines Breeding Extremists

There are a lot of people, both politicians and pundits, who make their living by catering to the fears and phobias of marginal groups. Until the coming of the telecommunications age, if these nutters wanted a mainstream platform, they’d have to pay for it themselves. It would cost a lot.

The Internet changed all that. Now even the most isolated loony can get a message out to other isolated members of the faithful. They can organise, communicate and incite each other to further levels of apoplexy.

But even this wouldn’t have much penetration into the lives of ordinary people.

Except for bloggers looking for something to write about.

Newspapers have long known the importance of a good headline. The film The Shipping News has the following exchange between Quoyle (Kevin Spacey), who is learning how to write for a local newspaper, and a colleague, Billy Pretty, played by Gordon Pinsent:

Pretty: It’s finding the centre of your story, the beating heart of it, that’s what makes a reporter. You have to start by making up some headlines. You know: short, punchy, dramatic headlines. Now, have a look, [pointing at dark clouds gathering in the sky over the ocean] what do you see? Tell me the headline.

Quoyle: HORIZON FILLS WITH DARK CLOUDS?

Pretty: IMMINENT STORM THREATENS VILLAGE.

Quoyle: But what if no storm comes?

Pretty: VILLAGE SPARED FROM DEADLY STORM.

The problem with this approach is that it leads to a selective understanding of events. When compounded by the rapid accretion of millions of “me-too” copies of the same story, it amounts to a “conversation” and swiftly becomes accepted wisdom.

It also becomes the benchmark for future headlines to rise above. This breeds ever-more hyperbolic headlines and hypes up the emotions of ever more people.

It is also an easy and cheap way to manipulate the mass media (which is what bloggers are these days) into giving away free advertising for a very small and indifferent bunch of nut-jobs.

All that a fledgling fascist has to do is make some inflammatory remark and watch the inevitable response from the blogosphere drive up awareness of his message. He can feed back into that opprobrium by simply selecting from some of the more extreme opposition comments and feed those back to his own support base.

What this does is remove the capacity for debate and push both opponents to the absolute extremes.

Coping with extremism in the blogosphere

Clearly progressive bloggers don’t set out to provide a platform for fascists and wing-nuts anymore than the BBC set out to promote the agenda of Nick Griffin.

The BBC’s approach is the best, and probably most difficult. It is to invite Griffin to present his own ideas and let him defend himself in a reasoned and reasonable debate. That debate couldn’t happen because it had become a moral crusade before he even arrived.

The violent protests show people that Griffin and those most opposed to him are equally thuggish and unpleasant. The true outrage and horror of the last 24 hours has not been Griffin, but the lack of respect for the institutions of the state, the press and the law exhibited by those claiming to defend it.

Now, it’s a tough job asking everyone with a loudhailer to speak softly, but that is precisely what is necessary.

Never before has the capacity for organisation and response to civil disagreements been so all-encompassing and speedy. Yet democracy and free speech is exactly all about giving the most unpleasant fringes of society a good airing.

Sunlight is a fantastic disinfectant. But baying for the blood of those at the edge just drives them and their supporters further away. They may express their fears badly, but not allowing them to express their fears at all will mean that they are never acknowledged, discussed and recognised.

Fighting extremism with extremism simply makes everyone a nut-case.

You remember that story, don’t you? Was all over the press in July 2012? Oh, wait, that hasn’t happened yet. Still to come, so to say. Let me get my thoughts arranged.

It was in 2009 that airport security added the new full-body x-ray scanners to their arsenal of devices to humiliate and traumatise travellers. Sarah Barrett, head of customer experience at Manchester airport, says, “This scanner completely takes away the hassle of needing to undress.” Because we’ll do it for you.

Now, before you tell me that the images could hardly be described as pornographic, let me direct you to Two Girls One Cup. If this is sufficient to cause some people to immediately discombobulate themselves in their trousers, I’m fairly sure that security camera images will be hot-stuff. Plus, imagine the job advert:

“Wanted: mature individuals to look at images of naked strangers of all shapes, sizes and ages for hours at a time while alone in a secluded booth; don’t worry, it’s not child porn if you do it for security reasons.”

Now don’t get me wrong. I fully appreciate the security difficulties faced by the world’s major transit authorities. There really are people out there who are out to kill us. But there are lots of ways to cause mayhem in a public place without resorting to actually getting on a plane.

And, we live in the information age. If the image exists then the image is public. Telling us, as Sarah Barrett does, that, “The images are not erotic or pornographic and they cannot be stored or captured in any way,” is just so much bullshit. Give that security guard a camera-phone; oh, wait, he has one already.

Yes, the technology is possible. No, this is not an acceptable use of that technology. Find another way.

If beating terrorists involves giving away all the privacy, confidentiality, liberty and respect for the individual that we are supposedly fighting so hard for, then we’re not really beating the terrorists.

Maybe it’s just that this technology is lazy. These images should be digitised, processed and then only random bits shown to security for final analysis. There are ways to ensure that this is entirely depersonalised. Otherwise profiling is likely; age, gender, even cultural origin are likely to be visible in these images.

Leave the embarrassing personal pictures to teenagers posting on Facebook. The rest of us are just travelling, nothing to see. And nothing we want you to see.

Click here to view the embedded video.

To quote from a recent BBC article:

Lee Ki-Churl, a corporation official, said he expected Tanzanians to benefit from the deal. “Some African countries export fruit and import fruit juice, or export olives and import olive oil, simply because their past colonialists did not teach them how to process food,” he told the AFP news agency. “We plan to set up an education centre for Tanzanian farmers in the food-processing zone in order to transfer agricultural know-how and irrigation expertise to them.”

I think it is both patronising and ignorant to assume that Africans don’t farm the way modern western farms operate because they are uneducated.  This almost seems to imply that Africans are too stupid to help themselves.

I’m not a purist when it comes to the “rationalism” of markets (the theory that every price includes all available information to reflect that price), but I do believe that in relatively unsophisticated African markets there are good reasons why farmers do not farm or invest in productive capacity:  weak rule of law, ineffective property rights, high taxes, bribery and corruption all add up to ensure that the cost exceeds the benefit of investment.

Anthony Mills, a soil scientist at the University of Stellenbosch contacted me regarding the difficulty of conducting development in Africa.  “The Zambian land tenure system is particularly problematic.  By law the land is owned by the President.  In practice it is owned by the chiefs.  The land is consequently probably even further from private ownership than in most developing countries.”

Yet, without any due acknowledgment of the political and legal environment standing in the way of growth and development, international projects duly waste cash on major interventions.  In 2004, the UN launched the Millennium Development Villages project in an effort to demonstrate how the goals for the Millennium Development Goals could be realised.

Promises of the Millennium

Millennium Promise was co-founded by the economist Jeffrey Sachs and the philanthropist Ray Chambers. The project work of the Millennium Villages are overseen by a Scientific Council composed of leading scientific and development authorities at the UN Millennium Project and The Earth Institute at Columbia University, both of which are headed by Sachs.

The project is a miserable example of the patronising and objectionable way in which development in Africa is imposed, as if like manna from a benevolent West.

The project hasn’t “failed” in the way a business would fail.  Jeffrey Sachs hasn’t been forced to live in a homeless shelter, and the villages themselves aren’t derelict.  My concerns have to do with the nature of the promises, and of the results.  My analysis is based using only their published information and claims (on their sites: http://www.unmillenniumproject.org/ and http://www.millenniumvillages.org/).

Their objectives are an overwhelming mish-mash of wants and desires:

“In its first 18 months, the MVP’s five main objectives were to: (i) Provide universal access and free distribution of long-lasting, insecticide treated bed nets to fight malaria; (ii) Achieve significant increases in staple crop yields; (iii) Ensure universal access to functioning health clinics; (iv) Increase primary school enrollments; and (v) Provide community access to improved and year-round water for consumption. In addition, the MVP emphasized cross-cutting interventions focused on addressing gender inequality; on community mobilization, participation and leadership; and on infrastructure for transport, energy, and information and communications technologies (ICT).”

“The Millennium Villages seek to end extreme poverty by working with the poorest of the poor, village by village throughout Africa, in partnership with governments and other committed stakeholders, providing affordable and science-based solutions to help people lift themselves out of extreme poverty.”

Ending extreme poverty is a known quantity.  Numerous countries have done it (from South Korea to Brazil) and what is required mostly boils down to accountable government and rule of law, plus sound economic principles premised on enforceable property rights.

So much for the background.  Let’s look at the viability of these projects themselves.

The region chosen

“Ethiopia, Ghana, Kenya, Malawi, Mali, Nigeria, Rwanda, Senegal, Tanzania and Uganda.”

According to a quick check, the bottom 20% earn roughly $350 to $450 per annum in this region.  I’m being generous here, since the MDP aims to work with the absolute poorest which the UN usually defines as people earning less than $1/day.

“Between 1990 and 2001, the number of people in sub-Saharan Africa living on less than $1 a day rose from 227 million to 313 million, and the poverty rate rose from 45 percent to 46 percent. Sub-Saharan Africa has the highest rate of undernourishment in the world, with one-third of the population below the minimum level of nourishment.”

This implies a total of 62 – 63,000 villages (at their requirement of 5,000 people per village) who fall into the project scope.

The investment

“Each Millennium Village requires a donor investment of $300,000 per year for five years. This includes a cost of $250,000 per village per year (5,000 villagers per village multiplied by $50 per villager) and an additional $50,000 per village per year to cover logistical and operational costs associated with implementation, community training, and monitoring and evaluation. Note that this level of external support is fully consistent with the 2005 G8 commitments for official development assistance to Africa by 2010. The other $60 per villager per year will come from village members, local and national governments and partner organizations, making for total funding of $110 per person per year.”

This is a fudge.  Firstly, sure, the global community may have promised a grand total of $50billion in support, but that usually has strings attached, and includes a wide range of other bilateral investment.  So the full amount isn’t available.  Secondly, most African governments don’t spend their own money on internal development.  Thirdly, the villages have no money (since that is the reason they were chosen).  One way or another, all of that $110 will have to be donated.

That means we are investing $550k annually for each village over a five-year period (i.e. $2.75 million).  To reach all villages in the scope requires an investment of around $172 billion.

The return on investment

So much for the background.  One of the things I’m often asked on African tourism development projects is, “Does this town/area have good tourism potential for development?”  My answer is always this:  “Are there men and women by the side of the road selling curios?  If not, then no.”

People in Africa are not poor because they are ignorant of their own needs, or of how to earn a living.  Neither are they really victims of circumstances beyond their control.  Given the right environment, Africans are as capable of supporting themselves as is anyone else. When the Zimbabwe currency was worth less than spit, inflation was several trillion % and nothing was available for sale. A few months after the Zimbabwe government abandoned the Zimbabwe dollar in exchange for the US dollar everything is available, investment is happening and production is shooting up. Zimbabwe may even be entirely self-sufficient for food again by the end of next year. And that is without any major international intervention.

So, as far as the MDP villages are concerned, my first question is this:  “Are other villages visiting the MDP villages, becoming inspired, and copying this model?”

The answer is: No.  No-one is copying the villages.  No private investor has turned up and offered to do something similar.  Scratch that, George Soros turned up and made a spot donation of $50 million in 2006 to fund 33 villages.  But that is hardly investment.

There are a whole host of reasons that I can spot:

1. The investment changes nothing about the legal and economic situation in the country at hand; governments are still corrupt, infrastructure is still non-existent.  Even if the MDV were to produce a major food surplus, who would they sell it to and how would they get it to market?
2. The project makes a great deal of the village-based ownership structure.  This is a collectivist / communist system.  If no-one owns it, then there is little incentive for individuals to work harder, since everyone will get the same outcome.  Like most projects of this nature, the output will continue as long as the expensively-paid consultants are around, then it will return to its base level.  The only reason the Kibbutz system has lasted 100 years is the donations of both the Israeli government and of outside donors.  As soon as the Israeli government cut funding, then the Kibbutzim started to close.  Now only those most hardy (or the very few who have major industries earning revenue) are still functioning.  But at least the Kibbutzim were self-created.  The MDPs rely for their energy on do-gooder outsiders.
3. Who owns the investment?  If something intangible like a “village” owns the products of individual labour and investment, then what does a person with ambition do?  Can he/she sell their stake in the village and use the money to go to university, or buy a house?  Who decides on what the profits (should there be any) be spent on?

Even in the best-case scenario, all that you achieve is that a group of famished and unhealthy people are less famished and less unhealthy.  For an investment of $2.75 million.  Is it really sufficient to take people from earning $1/day to say $2/day?

What else could you achieve with that money?

You could build a nice, labour-intensive factory for $2.75 million.  Imagine the impact of 62,000 new factories on the central African economy?  And imagine all the things that would be required for such a thing to happen … roads, rule of law, healthcare, education.  All of which would be affordable if millions of people were earning proper salaries.

This isn’t happening.  There are no investors in Africa beyond a few resources and the inevitable mobile telephony.  Africa is 2% of the world economy.  To put the MDP investment in perspective ($110 per person), foreign direct investment in Africa is worth only $19 per person per year.

Whitey Basson of Shoprite, a major African retailer, put it best last week:  “It takes 15 inches of paper to cross a border in Africa.”  Africa’s countries are regularly ranked as the most appalling and corrupt places in which to do business.

The MDP villages do not change that situation.  The agricultural techniques behind the project may be sound, but the economics are a failure.

And, if the economics are a failure, then what is the point of the project?

Rule-makers claimed that this protected European consumers from poor quality, but it is hard to argue that a lump on the side of a potato alters its flavour or nutritional value in any way.  A welcome respite came on 1 July 2009, when 36 classes of produce were deregulated.

European risk-aversion is built on the complacency that comes with good fortune. Companies have accepted high taxation, used for social entitlements, in exchange for protectionist agreements.

The credit crisis has exposed an interdependency that confounds unemployment targets, raises prices, and leaves state finances mightily exposed to the experiences of a small number of national champions.

With their political and economic support in disarray, lobbyists have had a ready ear amongst politicians.  The most successful are from the motor industry.  France, Italy, and Germany, amongst others, have all launched scrappage schemes to support the sale of new cars.

The argument for this favouritism is straightforward.  Motor manufacturers are large employers and they are in danger of collapsing under the weight of their inventories and falling consumer demand.

 With state support, car makers get to sell new cars and governments get to promote employment and investment, while also reducing carbon emissions from old cars.

There are many arguments against the subsidies.  Many people would have bought cars anyway.  The sales period has simply been compressed, leaving a precipitous drop later.  All tax payers are subsidising new cars for a few.

These are fair comments.  But they are misleading, giving the impression that supporting an economy involves supporting specific industries within that economy.

Governments are meant to be custodians of a nation’s wealth, both present and future.  An investor who only ventures his own money can take as many risks as he likes.  One who represents the multitude needs to take greater care, ensuring that their risk is evenly spread.

Unfortunately, like compulsive gamblers, governments have chosen to bet once more on a small number of industries in the hopes that they’ll recover their losses with a new throw.   By biasing their support, governments are stating, unequivocally, that they believe consumers are wrong and should be paid to keep buying things they may not want.  That Germany and France are now, tepidly, emerging from recession will only reinforce the view that such guess-work is brave leadership.

Yet the crisis is a tremendous opportunity to confront voters with the need for substantial economic restructuring.  While the crisis has focused people’s attention, politicians have the space to introduce a plethora of reforms that have been held in abeyance; from raising the retirement age, to healthcare reform, to ending innovation-sapping and trade-distorting subsidies.

Markets may fail, but their capacity for constant reinvention and experimentation ensures that new ideas can become successful as old ideas are found wanting.  The bounty coming out of the stimulus bills could have been used to gracefully collapse obsolete industries and pay for the retraining and further education of those with a chance of finding new jobs, or covering those who cannot.

By choosing a single winner, governments have yet again put off the difficult decisions for later.

Competition at international sporting events is fierce and the pursuit of an edge, sometimes measured in hundredths of a second, leads some to cheat.  Steroid abuse aims to increase the strength, speed and endurance of what is natural.  But the androgens created by the body are not set to any standard.  Some people do genuinely produce more than others.  Figuring out what is normal and what is not is difficult.

And, sometimes, something else is going on.

In 1966, Erika Schinegger was the world champion women’s downhill skier.  The young Austrian was preparing for the Olympics in 1968 and a hoped-for gold medal.  However, 1968 was no ordinary year.

The politics of the time saw Communist countries forcing significant anabolic steroids on their athletes in an effort to ensure victory.  The concern was not just for the future of competitive sport, but also for the health of the athletes.  The East Germans, in particular, were serial abusers.  Manfred Ewald, architect of their doping scheme, was convicted and jailed in 2000 for his part in this.

Besides doping, though, many male athletes were entered as women to ensure an additional level of success.

Schinegger was one of the first Olympic athletes to undergo a gender test.  She discovered, to her shock, that she was actually male.  She was disqualified and had a sex-change, becoming Erik, a man.

Gender is not as simple as visually inspecting a person and deciding whether they are male or female.  Much of what we are comes down to the expression of our genes.

For hardened racists, it can be somewhat troubling and disconcerting to discover that we are both all and no races.  That a person who may live in Europe and whose family has been there for generations has components of their genetic code that prove incontrovertibly that they have African ancestors.

This doesn’t matter unless you enter a situation where hard rules are enforced, like South Africa’s racial rules of the Apartheid era.  The same is also true of gender.  It doesn’t much matter unless you wish to have children, or to compete in sporting events.

During the fertilisation of an egg by a sperm, the female egg has its X chromosome complemented by either of an X or Y chromosome from the sperm.  This results in a typical XX or XY paring.  However, in one pairing per thousand, something slightly different happens.

According to the Textbook of Sexual Medicine, “During the first weeks of development, genetic male and female fetuses are anatomically indistinguishable, with primitive gonads beginning to develop during approximately the sixth week of gestation. The gonads, in a bipotential state, may develop into either testes (the male gonads) or ovaries (the female gonads) depending on consequent events.”

The most common cause of sexual ambiguity is congenital adrenal hyperplasia (CAH), an endocrine disorder in which the adrenal glands produce abnormally high levels of virilizing hormones.  This results in genetic females (XX chromosomes) producing male characteristics as they become extremely sensitive to male hormones.  Conversely, a genetic male (XY) could become insensitive to androgens, resulting in female characteristics.  And there are a wide range of other variations.

Milton Diamond, a prominent gender researcher, says this, “Foremost, we advocate use of the terms “typical,” “usual,” or “most frequent” where it is more common to use the term “normal.” When possible avoid expressions like maldeveloped or undeveloped, errors of development, defective genitals, abnormal, or mistakes of nature. Emphasize that all of these conditions are biologically understandable while they are statistically uncommon.”

In other words, while some of the impacts of these gender events can be disturbing for some, and statistically rare, they are all normal aspects of our genetic makeup.  Far from making race and gender simpler, modern genetics has made pure categorisation almost impossible.

All of this may be scant support for Caster Semenya as she undergoes the public scrutiny which has followed her victory in the 800 metres at the World Championships.

In every-day life, it certainly doesn’t matter what gender she may be. 

In the brutal world of competitive athletics, it is important.  This has nothing to do with the politics of gender or race, but it does with the arbitrary limitations required of competitive sport. 

Life is full of arbitrary definitions: from the legal voting age, to official retirement, to age categories for sporting events. The International Association of Athletics Federations (IAAF) is enforcing its rules no less arbitrarily, but those happen to be the known rules for international competition.

The debate about racism or sexism is pitched as being about accepting predefined stereotypes and labels, not about chucking them in the bin.  Race is an arbitrary measure of human difference.  So is gender.  Yet we don’t throw away the labels, we just force people into them and then demand tolerance of people because of those labels.  Isn’t that discrimination as well?

The real hope of this current row over the gender of one person is that maybe we can start accepting people for what they are, rather than in stereotyping people and then choosing whether to accept or reject those stereotypes.

[Cross-posted from Africagenome.com]

Further reading

http://en.wikipedia.org/wiki/Intersex

http://www.guardian.co.uk/sport/2008/jul/30/olympicgames2008.gender

http://en.wikipedia.org/wiki/Sexual_differentiation

http://www.guardian.co.uk/sport/2009/aug/23/caster-semenya-athletics-gender

http://www.thetimes.co.za/News/Article.aspx?id=1055314

It was a big project and received support and funding from big governments.  As with all such projects, it would be difficult to measure exactly how rapidly such a project could be run and at what cost.  Pitched as being equivalent to landing a man on the moon, 15 years and a budget of $3 billion seemed completely appropriate.

In 1998 a gauntlet was thrown down which had the impact of an earthquake in a glassworks.  Craig Venter, and his firm Celera Genomics, declared that they would produce the genome in a fraction of the time of the public effort, and for only $300 million.

In 2002, the genome was completed, ahead of time and under budget.

How much does any good cost?  What happens if the good concerned is expensive and important?  Back in 1990, governments felt justified in financing the Human Genome Project because, it was felt, private companies would see no value in the results and could not carry the cost.

Craig Venter and his investors thought differently.  That Celera Genomics lost a fortune on the endeavour is unimportant (except for the investors).  By competing with the state, the company saved taxpayers a fortune.

And there’s the problem for single-payer entities; without competition it is frequently impossible to calculate what something should cost.  The original, publically-funded, approach to sequencing used “heierarchical shotgun” sequencing, in which small chunks of DNA are sequenced and then reassembled.  It is slow and methodical.

Venter’s team used “whole genome shotgun sequencing”.  It was the innovation that allowed sequencing to proceed faster and cheaper.

Costs aren’t static.  Competition drives not just cost-saving through streamlining of processes, but also innovation in the processes themselves.

Healthcare is considered no less a public good than the human genome.  There are numerous ways in which governments attempt to finance this good.  The effects are difficult to measure, given the scale and lack of symmetry in implementation.

The most heated discussion is that in the US.

The Economist has an in-depth analysis which I won’t go into, but I will summarise.  The US system costs 16% of US GDP, and leaves some 15% of the population uncovered by healthcare.  The UK system of national health covers everyone, and costs 8.4% of GDP.  Life expectancy in the US (a crude measure of the benefits from healthcare) is 77.8 years, while in the UK it is 79.1.

However, in the US five-year mortality rates for cancer are dramatically better than in the UK.

Healthcare in the US is both rapid and effective; however, it is not available for everyone.  This lack of comprehensive care turns up in the life-expectancy rates.  In the UK more people have care, but it is of a slightly lower quality.

The debate in the US has become crippling and ugly.  People with care, no matter what it costs, are scared of seeing that care rationed or downgraded.

Of course, capitalist systems already ration scarce things through high prices.  So the argument of rationing (whether by the state, or through high fees) is moot. 

The structure of paying for healthcare is critical to the debate.  Whether governments, insurance companies or individuals pay for care, the money is ultimately derived from company profits and individual salaries.  The problem isn’t about who pays, but how payment is made.

If there is a single-payer (whether public or private) then competition is stifled and innovation stops.

The sad truth is that the rest of the world free rides on the expense and innovation of the US system.  Healthcare companies generally use the US as the place to introduce their new products, test them out, build scale and then take them to the rest of the world once the costs have been covered.

If the US moves to a single-payer as well, then innovation will plunge.

What is needed is a system that encourages sufficient competition to promote both innovation and cost-containment, without making the competition so extreme that it excludes so many from care.

My first experience with the UK was registering my company and opening business bank accounts. In South Africa, as a local, it takes two months to register the company and another three months to then open the bank accounts.

In the UK, it took 24 hours. And I walked away with a personal credit card, despite having no credit history. This, by the way, after the collapse of the credit industry. Not that I’m complaining.

This vote of confidence allowed me to rent a small apartment just outside the centre of Oxford. I was told that, living alone, I could apply for reduced rates. I’m used to dealing with municipalities. So, I fortified myself with a jug of coffee and a book, and phoned.

An actual human being answered, which was a surprise. I was expecting one of those multiple-guess things.

“Hi, I have just rented an apartment and I live alone. I gather I can have the rates reduced. Who do I speak to?”

I now prepared myself for the inevitable paper-chase. The chap asked for my account number and then followed up with, “Right, and how else can I help you?”

“No, just that,” I said.

“OK, well then, thank you so much for calling and please call again should you need anything else.”

“Wait, wait, wait,” I stammered. “Are we done?”

“Oh, yes,” he said. “All done. I’ll send you a letter just confirming these changes.”

And that is what life in the UK is like. People do their jobs. That is startling. But, I’ll put that in perspective for you in a bit.

Love

My then partner and I struggled with contact. We spoke every day. We were able to see each other on the rare occasions that the broadband connection in South Africa held and we could use Skype. The rest of the time were the daily spoken words. Of love. Of missing someone else beyond the bearing of it. Of hoping and begging the universe that, one day, we will be together.

But it would never be an easy decision for her to leave, for reasons too personal to write about in such a public forum.

In September, she visited, at the tail-end of the English summer. She fell in love, as I knew she would, with the country and the people and the beauty of it all. In a really ugly restaurant that a friend had recommended, with mannequin heads and arms fighting out of the walls, I proposed.

It wasn’t romantic, but it was inevitable.

I returned to South Africa in April to be married.

A year away had changed me. The edge that I had – that protective screen – was gone. I could see, for the first time, how brittle everyone in South Africa is. How you act to protect yourself from others. How close to the surface the violence and rage is.

In the UK, if someone stops you in the street to ask for directions, you’ll probably tell them and chat briefly in friendly conversation. In South Africa, outside of a few obvious tourist spots, you will be pushed away with a look of fury and fear.

I felt like I was suffocating. I hated it. I was scared and worried. I only wanted to get away. To be safe.

My new wife and I would be leaving for the UK together. Starting a new life. But first, we would have to settle the old one.

We queued at the Department of Home Affairs for our official marriage certificate. It took a whole day to move, slowly, through the queues. There were only two people assigned to handling a queue of 70 people. Behind them, papers were piled randomly, yellowing, damp and rotten. Dozens of people sat in the open office and drank tea, oblivious to doing their jobs.

“Your certificate will be ready in six weeks,” we were told.

“When will it really be ready?” I asked.

“In three months.”

“Really?”

“Maybe.”

I left the documentation with my parents. It is now four months since we put in the application and Home Affairs tells us they have no record of the application (despite receipts, copies of applications, copies of receipts of applications and my father’s regular calls to verify progress) and can we please apply again. I’m thinking it’ll be easier to simply get remarried in the UK.

A few months ago, frustrated beyond measure while waiting for an identity book – without which a South African cannot work, cannot live – a young man walked into a Johannesburg Home Affairs office and held the entire management at gunpoint for several days. It is a mark of the national despair with bureaucracy and inefficiency that he was celebrated and cheered as a hero.

Work

South Africa has a new glass ceiling. It is a limitation on professional work. The country has an appalling skills shortage. But the shortage is not of top analysts, engineers or scientists (which they don’t have either) but of artisans and managers. In summary, the layer of people who are sufficiently skilled to even understand the intense and intellectually-driven computational analysis that I do no longer exist.

I’ve discussed this with colleagues and my business partner. South Africa is still a grand investment destination for capital assets (mining, plant, machinery) but definitely not if you are in the services sector. South Africa’s income inequality is legend. But it is very distorted.

Relative to their efficiency and productivity, both the unionised unskilled and the CEO manager-level are overpaid and underworked. The skilled level of professionals are underpaid relative to any measure you care to name. That is why the bulk of them are emigrating.

Companies in South Africa are conservative and unlikely to try new approaches to risk management (my profession). My only work in the last two years in South Africa was the equivalent of license-plate manufacturing.

In the UK, I travel extensively. I have worked with some of the largest companies in the world where my ideas and opinions are listened to, discussed and frequently employed. It is, professionally, one of the most fulfilling periods of my life.

Life

A month ago, South African newspapers were crowing about the sudden return of many expatriates to the country from the UK. “Life isn’t as good over there,” was the general consensus.

But, again, let’s put that in perspective. A person who graduates with a weak high-school certificate is in the minority in South Africa amongst so many who don’t graduate at all. You are considered “skilled” and in demand in labour-intensive businesses.

The 25% of long-term unemployed South Africans are, in fact, unemployable. They have no skills or abilities that are of any use at all. If the government hadn’t introduced minimum wages and minimum rules of employment, perhaps they could get a job in a Chinese-style sweatshop. That — without debating the merits or concerns of such an approach — isn’t permitted.

So they remain unemployed.

This gives many South Africans a false sense of superiority. Graduates arriving with these qualifications in the UK find that they are not in the middle, they’re at the bottom. For, even in South Africa, these are the absolute minimum requirements to secure work. But here, the majority have these skills.

Young South Africans find themselves competing with Indians and Poles and Australians for the same jobs. Many give up.

Yet the highly skilled, such as myself, are in demand. My wife was employed only a few weeks after starting to look for work here, and is still receiving job offers. An astonishing number of local businesses are owned by South Africans; all doing very well.

Skills are skills, even in an economic downturn.

And the quality of life is outstanding. Certainly, there are issues (and I could spend hours writing about the dismal performance of state-run healthcare) but life is treasured here.

And that is a good thing.

The last year has been difficult, but it has also been rebirth.

—

Return to Part 1: One year an immigrant: a resolution

I have seen snow before, but never lived in a place where snow thrusts itself into your daily life. The familiar landscape of fields, farmlands and wilderness was utterly transformed. I could see just how much wildlife lived around me. Bunnies hopped. Deer loped. Birds scratched.

I took a morning off, just to go see what the massive Port Meadow would look like. I got only a few yards on my bicycle before becoming glued in the snow. So I walked. It was magnificent.

I arrived in Oxford at the end of April 2008, leaving South Africa for good on 27 April: Freedom Day. Ironic. The day that South Africans celebrate as the day of the start of majority rule has now become my own private memorial to personal liberty.

A pain that only has one resolution

I have a friend who owns a micro-coffee roastery back in Cape Town. He has burned millions of rands over the past few years as he tries to get South Africans to enjoy high-quality coffee. It is killing him, that slow awful and agonising murder that the self-employed experience. Every day you are reborn and die again.

Business people aren’t the only ones to experience this pain. Maybe you had a relationship like that? A love which is on fire and filled with light and colour and texture, and agony. For you never quite connect in the most critical places; that of mutual respect, adoration and compromise. One of you is making all the running while the other lives exactly as they please, ignorant and immune to the consequences.

It’s a destructive relationship. You put everything you can in, but you’re burning yourself out.

Maybe that relationship turns around. But there comes a point where, no matter how that relationship ends up, it no longer has meaning for you.

I’ve been through a few of those. Personal, business and ideological relationships that I put my soul and spirit and determination into. Even where they worked I found that the success was ashes in my mouth.

South Africa had become like that to me and the only solution was to leave. Frank McCourt who, more than any recent writer, has done so much to lift the “glamour” of poverty had this to say:

“Very little is written about poverty…You see part of it. You see Dafur. You see Chad. That’s African poverty…you see this all the time. You almost become accustomed to it…you can send in rice…but that doesn’t heal them…beware of giving energy to desperate people. They are going to use it.”

Beware of giving energy to desperate people. Good advice. But, when I left, I also left behind a life, friends, favourite places, favourite things, and my fiancée.

Putting it in perspective

I had a long chat with a Swedish chap who was complaining, “Don’t you find England dangerous? I hate the public transport and I never feel safe. By the way, what’s South Africa like?”

I looked at him, dumbfounded. “If this is how you feel about the UK, you’ll probably not want to get off the plane when you arrive in SA.”

So, my perspective is coloured by a comparison to a country with one of the highest per capita murder rates in the world, the highest rape rate, a government so corrupt that the cabinet now is dominated by convicted (and accused) fraudsters who have dismantled the judiciary and appointed apparatchiks to head up the newly emasculated state departments.

There’s a joke about Jacob Zuma, the morally suspect new president, which goes like this.

President Zuma suffers a heart attack while having sex with his seventh wife, a 14-year-old school-girl from the rural North. He gets taken, by accident, to a public hospital, but the doctors are out on strike and the nurses are all asleep in an unused theatre and he dies without ever receiving attention.

He ascends to Heaven and stands at the Pearly Gates where St. Peter greets him.

“Welcome to Heaven,” says Saint Peter, “Before you settle in, it seems there is a problem. We seldom see a Communist around these parts, so we’re not sure what to do with you.”

“No problem, just let me in; I’m a good Christian; I’m a believer,” says Comrade Jacob.

“I’d like to just let you in, but I have orders from God Himself. He says that since the implementation of his new Affirmative Action Policy, you have to spend one day in Hell and one day in Heaven. Then you must choose where you’ll live for eternity.”

“But I’ve already made up my mind. I want to be in Heaven,” replies Zuma.

“I’m sorry … But we have our rules,” Peter interjects. And, with that, St. Peter escorts him to an elevator and he goes down, down, down … all the way to Hell.

The doors open and he finds himself in the middle of a lush golf course. The sun is shining in a cloudless sky. The temperature is a perfect 22C degrees. In the distance is a beautiful club-house. Standing in front of it is Thabo Mbeki and thousands of other Communist luminaries who had helped him out over the years; Tokyo Sexwale, Peter Mokaba, Tony Yengeni, Schabir Shaik and thousands more. All the ANC leaders are there, everyone laughing, happy, and casually but expensively dressed.

They run to greet him, to hug him and to reminisce about the good times they had getting rich at the expense of ’suckers and peasants.’

They play a friendly game of golf and then dine on lobster and caviar. The Devil himself comes up to Zuma with a frosty drink, “Have a tequila and relax, Jake!”

They are having such a great time that, before he realises it, it’s time to go. Everyone gives him a big hug and waves as Zuma steps on the elevator and heads upward.

When the elevator door reopens, he is in Heaven again and St. Peter is waiting for him. “Now it’s time to visit Heaven,” the old man says, opening the gate.

So for 24 hours Zuma is made to hang out with a bunch of honest, good-natured people who enjoy each other’s company, talk about things other than money and treat each other decently. Not a kanga, or scantily-clad woman amongst them. No fancy country clubs here and, while the food tastes great, it’s not caviar or lobster. And these people are all poor. He doesn’t see anybody he knows and he isn’t even treated like someone special!

“Whoa,” he says uncomfortably to himself. “Robert Mugabe never prepared me for this!”

The day done, St. Peter returns and says, “Well, you’ve spent a day in Hell and a day in Heaven. Now choose where you want to live for Eternity.”

With the ‘Deal or No Deal’ theme playing softly in the background, Zuma reflects for a minute … Then answers: “Well, I would never have thought I’d say this. I mean, Heaven has been cool and all but I really think I belong in Hell with my friends.”

So St. Peter escorts him to the elevator and he goes down, down, down, all the way to Hell.

The doors of the elevator open and he is in the middle of a barren scorched earth covered with garbage and toxic industrial wasteland, looking a bit like the eroded, befouled informal squatter camps around South African cities, but worse and more desolate.

He is horrified to see all of his friends, dressed in rags and chained together, picking up the roadside rubbish and putting it into black plastic bags. They are groaning and moaning in pain, faces and hands black with grime.

The Devil comes over to Zuma and puts an arm around his shoulder.” I don’t understand,” stammers a shocked Zuma, “Yesterday I was here and there was a golf course and a club-house and we ate lobster and caviar and drank tequila. We lazed around and had a great time. Now there’s just a wasteland full of garbage and everybody looks miserable!”

The Devil looks at him, smiles slyly and purrs, “Yesterday we were campaigning; today you voted for us.”

—-

Continue to Part 2: One year an immigrant: so you see…

“A judge is not supposed to do that. It’s not for judges to decide on foreign policy. They don’t run government and they don’t run foreign policy. There is separation of powers. They run the judiciary. I don’t comment on the judiciary.” (This after a judge in SA’s constitutional court sided with the current minister of health that it was unadvised to prevent the Dalai Lama from visiting).

“Tutu does not run government. Remember, he said he was not going to vote. If it were up to him, there would be no elections next month.” (In response to Archbishop Desmond Tutu declaring that he would now boycott the conference.)

Which got even the usually intelligent finance minister, Trevor Manuel, involved: “Is he just the spiritual leader of the Buddhists in Tibet or is he the one who on March 28 1959 established the government of Tibet in exile in the same way Taiwan was established to counter the legality of a single China?”

“The reason why the Dalai Lama wants to be here is to make a big global political statement about the secession of Tibet from China. He wants to do it on the free soil of SA,” Manuel said.

“I am sure he is welcome to come at any other time but we should not allow him to raise the global issue that will impact on the standing of SA. Quite frankly this has nothing to do with the PSL (Professional Soccer League). It is a matter of the relationship between states and that is what we have to stand up for.”

But, back to the continuing lunacy of the foreign minister:

“Foreign policy has to be discussed and has to be understood. But at the end of the day we can’t all conduct foreign policy. I’m not casting any aspersions on anyone. But the truth of the matter that foreign policy has to be conducted at one level and has to be co-ordinated.”

“China cannot bully us. But of course, they also have their own interests. As a country, they will further their own interests. But we are not hiding the fact that we want to have good relations with China – like everybody else in the world.”

“Human rights are also about jobs, education and shelter. You can’t divorce economic interest from human rights. Our [Bill] of rights is much more broader than that of many countries.”

“But when we took a decision on his visit we looked at what is the national interest -which includes making sure that the country runs, human rights, in the broad sense, are protected, people have food, shelter and jobs. What brings stability is the combination of each of all these rights.”

Which earned the following response from Professor Geir Lundestad, director of the Norwegian Nobel Institute:

“We are disappointed that the South African government did not stand up to Chinese pressure, particularly bearing in mind the strong support the ANC got from abroad and the Norwegian Nobel Committee in its historic struggle against apartheid.”

And my take: claiming that denying the Dalai Lama entrance to a conference to discuss peace and global harmony is actually in the DEFENCE of human rights is the sort of double-speak gobbledygook you’d expect from a government with absolutely no respect for human rights. Claiming that Desmond Tutu, one of the greatest humanists alive, is in favour of the destruction of democracy because he WON’T vote in a political system that has become nothing but a collection of favouritism and corruption is just spurious bullshit.

About the only ANC/government representative who has said anything approaching sense is the current Health Minister, Barbara Hogan (who has now earned the ire of the unsackable Dlamini-Zuma): “Just the very fact that this government has refused entry to the Dalai Lama is an example of a government who is dismissive of human rights. I believe [the government] needs to apologise to the citizens of this country, because it is in your name that this great man who has struggled for the rights of his country… has been denied access.”

The government decision was, said the Dalai Lama, “another manifestation of one of the fundamental challenges to world peace as a whole: namely, a lack of understanding and mutual respect”.

“I believe religious, social and political leaders throughout the world have a responsibility to ensure principles triumph over the obsession with money and power.”

Except for the missing word “unearned” in front of “money and power”, I have no problem with those sentiments.

He was discussing AIG, and apologised later for the heat of his language. Many people probably feel that he was too polite.

It must be very cathartic to lay all of the blame for the financial crisis at the doors of bankers and investment brokers. No-one has yet asked how it is that a single industry has managed to attract nothing but liars, lunatics, imbeciles and pathological hucksters while the rest of the world is filled with wide-eyed softies who have been taken for a ride.

Point is that the banking community is still comprised of people not unlike any other part of society; in parts filled with kind souls, mournful mutterers, soccer-moms, hipster wannabes, waiting for retirement and whatever other social class you can lay your hands on.

The disaster in the banking sector is deeper than the vapid demonization of a few men, and contemplation of that disaster should give thoughtful people the tremors.

Banking is no less a complex industry than are hospitals, schools, factories, and farms. Where-ever large groups of people are managed in order to produce a product, or serve a customer, only a small number of people are at the coal-face.

Call it the Iceberg Enterprise. You only get to see a small amount of what is really going on.

In order to align all the people at various levels of the organisation with the bits that are visible, we use management theory. So we divide companies up into profit centres and set staff measurable targets, giving them incentives to hit those targets. Then people play by those rules.

From the original “scientific management” of Frederick Taylor, who divided up every part of work processes into tiny, repeatable steps, and measured them (back in the 1880s); through to Six Sigma and Total Quality Management today. Rules guide how people interact in complex business environments.

Setting the Rules

Let me give you a feel for how improbable the results of such rules can be. I studied a number of major European public hospitals for a research project. Each hospital is broken down into a number of cost and function centres. Each department has a budget, and input costs, but they don’t recover their costs directly. This is pretty-much how many companies are structured.

So, the pathology lab has a budget and must minimise their input costs on specimen test kits and pathology devices; each of trauma, out-patient care and the various departments making up elective care have their own budgets; and a trust manages the accounts.

My study was to calculate what causes patient waiting lists to rise. There are many causes, but I’ll give you one. The path lab did their job of saving costs by reducing the cost of a ubiquitous set of blood collection devices. They saved 20% of the unit cost, which equalled significantly less than 1% of their overall costs. The new devices met all the relevant CE-mark certification requirements, but the company that supplied them didn’t offer any training or support as part of the process. Specimen rejections went up, but the devices were so cheap, no-one minded.

However, a rejection isn’t just a new plastic container. It is a whole new test. It is a patient who spends an extra few hours in the hospital, taking up space and time that other patients could have used.

You only need a few extra rejections and waiting times become extremely large.

But everyone is obeying the rules. Costs were saved in one department, earning the purchasing officer his bonus, and costs went up everywhere else.

There have been other rule-based horror-stories: of the policeman who arrested a 10-year-old boy for spraying a friend with a water pistol (because he needed to hit an arrest target); of traffic police blanketing car-parks with fines (to hit their targets); of surgeons refusing to perform risky surgery (lest they endanger their survival target rates).

On a recent project, we were told that a new technology wouldn’t be allowed in a German hospital because the efficiency gains were not permissible by law.

All these rules seem sensible at the time they are written, but the net impact are small inefficiencies that degrade the whole.

Sharpening the Iceberg

One of the most frenetic target-setting parts of any large business is in sales. Reps are given specific targets which they must reach or risk getting fired without pay. Since most of their pay is commission-based anyway, they’re already focused on selling, no matter what.

Every quarter the targets are re-appraised and you can bet they don’t go down.

This is how banking got itself into trouble; massive targets for deal-closure. Staff hit them, at the price of making credit easier and easier to get.

So we demonise bankers.

But most businesses and organisations are structured this way. Charities have professional fundraisers who collect cash in a similar way; no-one ever asks if the charity concerned can actually absorb the cash so-raised. Many cannot, and rot soon follows.

The US health service is one of the most expensive and inefficient in the world. Medicaid is all but bankrupt, and will be finished off once the baby-boomers retire. France pays the highest agricultural subsidies in the world based on income from the EU, paid by Germany.

Everyone is hitting their targets.

Banking just happened to fail first. Unsurprising, really, since banking is at the cutting edge of all these bright new management ideas.

However, in singling out bankers, in treating the problem as if it is only to do with capital and finance, the underlying problem is being ignored.

The fundamental way in which complex organisations are organised and the way in which goals are set needs to be reviewed.

Otherwise, in a few years, maybe we’ll be witch-hunting some other unfortunate industry who today are considered “Masters of the Universe”.

If you happen to be the owner of a unique piece of art, say the Mona Lisa, and you decide to set fire to it, then that is a terrible tragedy, but it is your property.  No government should ever have the right to intervene.

Apartheid in South Africa was a crime against humanity.  You can argue the reasons.  Some say that it was racial prejudice translating into attempted genocide.  Others that it was a violation of human rights of equality and justice.

My take is that Apartheid got its start with the denial of property rights; that one group of people gave themselves a greater right to property than they did to others.  This spurious belief was used to boot black South Africans off their land and replace them with politically chosen beneficiaries of “land reform”.

The new South African government, after 1994, began a tortuous process of their own “land reform” in which the original owners of land – often dispersed and with limited proof of title – would be able to receive a fair hearing and just compensation.  So far so good.

However, the new government, at pains to bring about a transformation of the economy, chose to use this process as a way of ensuring that the majority of agricultural land should be owned by black people in toto.

The government is purchasing land for this purpose and then settling people on it.  Instead of just receiving restitution for the property that was stolen from them, victorious claimants were set up as small-scale cooperative farmers.  These new farmers are not allowed to sell the land they have been given.  They have no title to it and have become no more than indentured peasant farmers; slaves at the pleasure of the state.

The government pegged their success on the financial success of these subsistence farms.  It has been an abject failure.

The people being settled on these farms are now several generations away from the original land-owning farmers.  They have no experience of agriculture, or of how technical the profession has become.  Many of them don’t even want to be there.

“More than 21 properties in the Empangeni and Eshowe districts, and reportedly many more across KZN bought by the land affairs department, lie fallow, producing only weeds, dead trees and choked sugar cane,” according to the Natal Mercury.

The response from the Minister of Agriculture, Lulu Xingwana, has been total fury.  “I have instructed my directors-general to implement, with immediate effect, the principle of use it or lose it,” Xingwana.  “Those who do not use the land must immediately be removed and the land must be given to emerging farmers and co-operatives.”

In other words, people who had their land stolen from them by one government, who decided that they weren’t deserving enough of their property, are to have their land stolen from them again by another government which has decided that they are still “not worthy”.

The first and only objective of land restitution is just recompense for people who had their property stolen.  It was a mistake forcing land as compensation on people who did not want to own land.  They should have been given money.  Whatever they chose to do with that money would have been their own choice.

Instead of accepting the restitution process for what it is, government wants a trophy.  They demand that beneficiaries of the process demonstrate their gratitude to the state by performing and delivering successful agricultural businesses.

That is an outrageous demand and entirely unacceptable.  What’s next?  Snatching private businesses from entrepreneurs who fail to employ an appropriate number of people?

Enough.  Government made the mistake of conflating two independent objectives and is now compounding their error by abusing property rights.  Farmers will always be in the minority of both businesses and land-owners.  Whether those properties are owned by black-skinned people or white-skinned people is immaterial, and should be immaterial to a liberal democracy.

The only matter of importance is whether their property was acquired without force or fraud.  Something that governments are supposed to ensure.

In 1976, the then-Labour government of James Callaghan became the first developed-nation member of the OECD to have to beg the IMF for a bail-out after economic collapse. The top tax bracket was 83%, excluding tax on dividends and interest, while the bottom bracket was 33%. The European Economic Community (precursor to the EU) made an additional $3 billion available on top of the $3.6 billion from the IMF.

The damage of high taxation, high wages and terrible red tape was causing businesses to collapse and, as they fell, government nationalised them.

The Britain that Margaret Thatcher “won” 30 years ago, in 1979, was wracked by daily strikes by millions of unionised workers. Their wage packets, under the Labour government, were being increased by 30% annually but with no concomitant increase in efficiency or production.

The setting for a battle royal was in place. No-one doubted that getting England back to work would require incredible hardship. Few felt it would be possible.

Most of the problems were caused by state expenditure and promises that were completely out of control. When asked, by a very hostile “meet the press” panel on Panorama on the BBC in 1977, whether the Thatcher government would be opposed to unions, she replied, “Unions are not confronting government. Government doesn’t pay for anything. People do.”

“If they’re going to earn their increases then jolly good luck to them, and jolly good luck to anyone who earns their increase. We all need them. If not, then those increases have to come out in higher prices or in higher unemployment.”

It was a turning-point for the economic fortunes of the UK.

Now we are in the grip of an economic crisis that threatens a similar disaster, this time to the world.

The seeds of the credit crisis

There are two crises at work.

The first is caused by a shortage of liquidity. Businesses regularly use short-term finance to cover daily costs like stock, and wages and so on. This allows them to cover the variance between product sales and business expenses. However, the credit crisis has not only reduced the absolute amount of cash for lending, but also made banks and investors with cash somewhat paranoid.

The knock-on effect of limited liquidity has seen consumers stop spending, companies cut production, and millions of people around the world lose their jobs.

Export-driven economies, like Germany, Japan and China, have seen catastrophic falls in production even though they had virtually no exposure to the subprime credit mess.

The second crisis was one that has been around for a while; that of overcapacity and weak business models in a number of large industries. The most obvious of these is the motor industry. GM, Ford and Chrysler were in plenty of trouble long before the credit crisis, however, their marginal businesses have been crushed by falling demand.

All of these things have come together in a moment of horror for legislators and the general public.

There is a lot of debate about how to solve the problem. Where businesses are unable to provide liquidity, governments believe they should step in to ensure that liquidity flows. However, at the same time, governments are attempting to support larger businesses that they feel are “too big to fail” with direct subsidies and bail-outs.

While central bankers look to loosen lending policy, governments are raising big stimulus packages to finance their new industry subsidies.

It is estimated that some $ 3 trillion of additional state expenditure will have to be raised over the next 12 months to support these promises.

This money is not going to come from taxpayers just yet. They will certainly have to foot the bill into the future, but – in the short term – that money has to come from somewhere else.

Paying for the rescue

Ordinarily, the US runs a deficit of around $ 300 million a year (at least, since George W’s tax cuts in 2001) and has a total deficit of around $10.6 trillion, or 76% of GDP (and 212% of annual tax revenues). New spending plans will increase that deficit by $1.75 trillion in 2009/10 alone.

Ordinarily, a few hundred billion dollars can be sold as sovereign bonds on the capital markets. Ordinarily.

These are not ordinary times. There are few investors around with hundreds of billions of dollars to spend all in one go.

Which is why Hillary Clinton, US Secretary of State, was in China “begging” the Chinese government to keep buying US bonds. The Chinese already own around $700 billion of these and may be very concerned that the US could either default, or devalue the dollar, leaving the Chinese with the losses.

China has reserves of around $1.3 trillion in cash, and a rapidly cooling economy as factories fall idle and millions of workers are laid off. They need to get those factories working again.

At the same time, President Barack Obama’s stimulus plan contains obvious protectionist “Buy American” provisions that would further weaken China’s manufacturing.

When debtors fail, their creditors get to set strict terms for compliance. America, as the world’s biggest debtor, now requires the world’s biggest exporters – particularly China, Japan and Germany – to pull together to finance this bailout.

None of them may be completely convinced that the US will not default on the debt, or that a weakened dollar won’t wipe any meaning out of those investments. However, they all need a market for their goods.

Over the next ten years, it is likely that China and India will add some 300 million people to the ranks of the world’s middle class. That is the equivalent of adding another America to the planet.

China might just bargain on building access to that new market and keep its factories running by selling to the US in the short term.

If the US wants China’s money, then expect China to set the terms of any future trade agreements.

The words are those of Francis Crick and James Watson who, in their seminal 1953 Nature paper, correctly identified the structure of DNA and placed it at the centre of genetically inherited characteristics.

In “On the Origin of Species” published almost 100 years before, in 1859, Charles Darwin had first expounded his theories of natural selection. On February 12, it will be 200 years since the birth of possibly one of the greatest scientists of all time.

Darwin was well-aware that his theories would challenge the prevailing views about man’s place in the scheme of things. It took him more than 20 years before he could, eventually, be persuaded to put his work together and publish. Then it unleashed the storm he had been expecting.

As many more individuals of each species are born than can possibly survive; and as, consequently, there is a frequently recurring struggle for existence, it follows that any being, if it vary however slightly in any manner profitable to itself, under the complex and sometimes varying conditions of life, will have a better chance of surviving, and thus be naturally selected. From the strong principle of inheritance, any selected variety will tend to propagate its new and modified form

Gravity, special relativity, quantum theory, thermodynamics … all of these scientific theories are intimately bound with specific people. All have changed the world out of all imagining. Yet only Darwin has challenged the fundamental way in which we view ourselves as human beings.

150 years on from the publication of “On the Origin of Species” – 200 years since Darwin’s birth – natural selection is still controversial. Scientifically, it is now beyond doubt that Darwin was correct. All the building blocks that are required to reinforce his original hypothesis are now in place: continental drift explains how creatures that were once identical were physically separated and continued their evolution independently, DNA shows how the trick is done, and DNA itself has allowed accurate time-frames to be developed to match observation and physical research.

Yet that is not sufficient for many. Arguing that it is a theory, many religious people declare that it doesn’t need to be taken seriously.

Owing to this struggle for life, any variation, however slight and from whatever cause proceeding, if it be in any degree profitable to an individual of any species, in its infinitely complex relations to other organic beings and to external nature, will tend to the preservation of that individual, and will generally be inherited by its offspring…. I have called this principle, by which each slight variation, if useful, is preserved, by the term of Natural Selection, in order to mark its relation to man’s power of selection

Well, gravity is a theory too. Worse, gravity requires a graviton to exist before the theory will be considered proved and the graviton has yet to be found. In fact, few of the supporting sub-atomic particles in the standard model have been found. We’re still out on the Higg’s Bosun which is required to prove mass.

Natural selection, and its basis in evolutionary theory, are infinitely more tangible.

But how, it may be asked, can any analogous principle apply in nature? I believe it can and does apply most efficiently, from the simple circumstance that the more diversified the descendants from any one species become in structure, constitution, and habits, by so much will they be better enabled to seize on many and widely diversified places in the polity of nature, and so be enabled to increase in numbers

What Darwin taught us is sometimes counter-intuitive. That life-forms spread out to take advantage of every available niche that can support life. We find living things in undersea volcanic vents; in sulphurous pools, in the coldest and hottest environments, in the driest and most remote areas.

“Fittest” does not always mean the most admirable creatures survive. “Fittest” means relative to the environment in which the life-forms find themselves. If the entire planet became suddenly dry, then creatures that once survived only at the fringes of life would suddenly be fittest.

And, suddenly, human beings are not at the centre of creation. We have become successful under circumstances that are random. Individuals continue to become successful at random even within the broad expanse of humanity.

For many, it is intolerable that there is no higher judge of order than random distribution, heritable characteristics and environmental chance. Even the non-religious find much that is uncomfortable and antagonising in the theory of natural selection.

Much of modern political theory is an attempt to get away from the battle of natural selection. Economics is a study of the adaptation of markets, individual- and collective behaviour to scarcity. Nothing is so “natural” as business and economic cycles where the strongest, and the lucky, survive.

What Darwin has taught us is that survival goes to those most determined and capable of adaptation; not the most moral, or the most noble, or the most deserving.

During this most tumultuous of historical moments, Darwin still has much to teach us. For those who would listen.

The Truth Commission was unlike any trial the world had ever seen.  In exchange for complete disclosure about all past crimes, both known and unknown, claimants would be given complete absolution.  In the case of this one sweaty white man, his victim had asked that he demonstrate how he had tortured him.

Waterboarding has become famous.  Place a thick, heavy and wet fabric over your victim’s head, and then hold them stationary.  It causes no lasting physical damage, but gives a very real sense of drowning.  Anyone who has ever had a similar experience knows it is terrifying.

That was the least of what the Apartheid government authorised in the name of keeping their power.  “Red Dust”, the film of Gillian Slovo’s seminal book, details one such hearing into the brutal torture and murder of a small-town activist.  If you can find a copy of the film, please watch it, for the ordinariness of the people involved.  The opening music alone will make you weep.

And so we come to the nub.  We expect authoritarian regimes to torture and abuse people.  The violence is there, not to gain knowledge from conspirators, but to terrify the millions, as Mao would have it.

But what to make of it when liberal democracies declare that torture is essential if they are to protect that society?  George W Bush would have you believe that torture has saved thousands of Americans by allowing torturers to extract information in order to prevent future terrorist attacks.

Maybe this is true.  Maybe the only way to find out the exact details of when a train will be bombed, or an airline hijacked and flown into a building, is by beating the shit out of someone who knows.

But have you thought about the consequences of such an allowance?

Who would be your torturer?  Who would break fingers, electrify genitals, smash bones and teeth; not out of rage or passion, but as job?  What sort of person is this?

And do you really want to create a society where such a job is ordinary?

For then you will discover what South Africa discovered, that once the law is extended to allow such people a place, then such people congregate.  If torture is legal, then torturers proliferate.  The law is distorted to honour torturers, to encourage their indoctrination and training.  And your society becomes a dark and evil place.

There is no middle ground.  Either you decide that torture is inexcusable under any circumstances, and accept the consequences of that choice.

Or you choose torture.  For everyone.

A person consists both of their being and of the works that their being produces. Whether those works are physical or as intangible as the time spent on a particular task.

A traditional Westminster approach to politics, with a typical Left / Right political duopoly, has become the gold standard of democratic representation. It is also conflicted and inherently incapable of resolving its core contradiction.

The way it is supposed to work is that Left-leaning parties are the parties of Collectivism while Right-leaning parties are the parties of Individualism.

Collectivism implies redistribution of wealth to look out for the marginalised or neglected members of society, and to ensure that everyone has equal opportunity.

Individualism implies innovation, uninhibited originality, wealth creation on an epic scale and each person rising to their own level of accomplishment.

The structure of the dynamic tension between the two political schools is designed to constrain the nightmare extreme scenarios of each approach. For Collectivism, that is the worst excesses of forced equality which impoverishes a nation and flattens innovation. For Individualism, it is the worst excesses of concentrated wealth that abandons a frustrated underclass to perpetual poverty in violent ghettos. A duality of parties that remains true to this ideal and recognises the threat from extremism of both their own and the other’s ideals is a very powerful social temper.

It provides its own feedback loop. As society twists one way, politics can twist the other, holding society in balance.

However, no more.

Each party is now hopelessly contradicted and the upshot is that neither side is capable of reconciling their objectives.

Parties of the Right have approached their mandate by supporting the rights of businesses, but not of individuals. As if you can accept the microwaves, toasters and high-definition televisions of the world, but not the people who made them.

Parties of the Left are no better, supporting the rights of people but bemoaning business. As if people have merit, but their works have none.

The Right provide bailouts and subsidies to businesses, while the Left provides entitlements and benefits to people. Somewhere in this has become cemented the belief that people – individuals – are separate from their works. That the works should be held accountable for their own existence and that people are the innocent victims of such works.

Labels, like “business” and “rich” and “poor”, are thrown around as if they’re not just distinct definitions, but unconnected, unrelated objects.

The truth will always be that they are not. It is impossible to promote individuals without also promoting their works.

A political party that promotes people may find that it cannot control their works, or the way that such works concentrate wealth. Spurts of inequality are an inevitable result of the innovation that results from individual freedom. A political party that promotes business may find that it cannot control the personal expressions, or social interactions, of the people who produce. An increasing space for alternative lifestyles is a natural consequence of business freedom to create consumer choice.

These inherent contradictions have become so entrenched that it is scarcely surprising that the most passionate devotees of either side sound so peculiarly detached and unhinged.

Until leaders reconcile these two contradictory approaches they will never return to the dynamic tension which enabled the innovation that built their societies in the first place.

The first war of the Industrial Age, the war that should have ended all wars, ended at the 11th Hour of the 11th Day of the 11th Month.  At precisely two minutes to 11h00, Private George Lawrence Price 256265 of the 28th North West Battalion, 6th Canadian Infantry Brigade, 2nd Canadian Division was shot, and killed, by a sniper.

What went through that sniper’s mind at 10h58?  The end of the war was planned.  The Kaiser went into exile on the 9th. The humiliation of Versailles was still to come in 1919. Europe lay exhausted and horrified. 40 million were dead. A further 20 – 40 million died in the influenza epidemic that followed returning soldiers home.

Nothing shows the ignominy, horror, futility and waste of war so much as that moment at two minutes to the eleventh hour of the eleventh day of the eleventh month.

They shall grow not old, as we that are left grow old:
Age shall not weary them, nor the years contemn.
At the going down of the sun and in the morning
We will remember them.

There are no nations at either end.

The current approach to ensuring some degree of fairness is to use the tax system. And, here presented, are various systems of taxation as well as the impacts of targeted changes to tax systems. It does involve some maths, but it is presented as simple tables. Like this one…

Figure 1: Equal Taxation

Much of modern economic theory has been about reducing the gap between rich and poor, and making a more equitable society. Troublingly for social scientists, GINI varies wildly irrespective of economic system. However, poor and autocratic societies tend to be more unequal than wealthy and free ones. And even where income disparities are wide (as in the US, where the poorest 20% of Americans earn as much as the richest 20% of Russians) it doesn’t always mean that the poorest are scrabbling in the dirt while the rich dine on caviar.

In Figure 1, we have a tax system that really would be unfair. But first, the rules behind these graphs:

1. Total GDP (or Gross Domestic Product – the wealth generated by the entire “nation”) is set at 100;
2. The income brackets of this society have been divided into five, with income presented pretty much as it breaks down in the US, with the top 20% earning some 9 time more than the bottom 20%. The sum of all the incomes adds up to 100, so the top 20% earn 45, and the bottom 20% earn 5;
3. Total tax levied against the nation is 17 – this is equivalent to what the US raises from its citizens currently – note that the current deficit of 4% implies that there is a tax under-collection of 19% which is where the current national debt comes in;
4. The blue bar is the gross income accrued by the particular income bracket;
5. The red bar is the total tax levied from that particular income bracket;
6. The green line is a % and reflects the proportion of income that is paid in tax (this definition will change in later figures, but I’ll let you know when);
7. You can click on the images to see a larger figure (and so read the text).

Back to Figure 1

Here, total tax is 17 and has been divided equally (and fairly) across the population. So, everyone gets to pay 3.4. Only problem is, income is not distributed equally, so the poor pay relatively more than do the rich. This is a recipe for riots. There aren’t really any countries in the world that practice this one on purpose.

Lets try some redistribution

There are many different tax systems in the world. Some breathtakingly complex (the US one is quite frightening), and some quite straightforward. One of the easiest (at least, to understand) is the concept of a flat tax. The government intends to raise 17% of GDP to spend on things it deems important, therefore everyone must pay 17% of their revenue to the state.

This looks like this:

Figure 2: Flat Taxation

This is much better, don’t you think? The rich are clearly paying much more in absolute terms than are the poor, and everyone pays the same proportion of their incomes. There is little incentive to try and manipulate things by changing tax brackets, because there is only one bracket.

What’s this bracket thing? Well, the alternative to a flat tax is what is known as a progressive tax. This basically means that income is divided into a set of brackets and, depending on what you earn, you pay a different amount of tax. This is the most popular form of income tax around and results in monstrously complex tax law. The reason is that the last thing any government wants is to create moral hazard here. For instance, if you knew that a salary raise was going to place you in a higher tax bracket and your net take-home pay would actually be LESS than what you were earning before, you wouldn’t want a raise.

Worse, is that investors wouldn’t invest either since any increase in their profits would leave them worse-off than if they hadn’t invested at all. So there are usually all sorts of grants, and back-payments and things like that to make sure that it remains “fair”. Now you get that usual distribution curve where the people at the bottom don’t pay taxes, and the people at the top cover the bill:

Figure 3: Progressive Taxation

This is the situation for most taxpayers in most democracies. Unfortunately, this system creates a lot of problems. Actually … let me demonstrate.

Progressing the tax further

Say a government decides to give tax relief to the middle class (i.e. bracket 3 and, to a lesser extent, 2; brackets 4 and 5 don’t pay tax anyway so you’ll never hear anyone offering to give them tax relief). Let’s take a look at how everyone imagines this will work out (and here, the green line reflects – not the % of income paid as tax – but the % change in gross income, where negative numbers imply a decrease):

Figure 4: Redistributive Taxation

This is what we imagine will happen. The rich will trouser the 2.4% loss to their gross income, while the middle classes earn an extra 1.7% to 4.1%, while the poor don’t experience much of an impact and the net tax effect is neutral since the total collection remains 17.

However, money is liquid and mobile and the rich are – by virtue of the fact that they’re in the top 20% – quite good with money. They have options. For starters, they can simply increase their fees (either in their time, or for the products they sell):

Figure 5: Scenario 1 – Increased Prices

The rich were expected to absorb a 0.9% decrease in their overall take-home pay. Instead, they increased their charges. Their total revenue went from 45 to 45.9. You can see the impact which is felt equally across society. Brackets 2 and 3 are still up from their original salaries – the redistributive tax has still left them better-off – but the poor have taken it in the neck. The poorest 20% have actually seen their salaries negatively impacted by 4.4%.

In other words, a redistributive tax has the impact of making the rich richer and the poor poorer. Exactly the opposite effect of what was intended. But this isn’t the worst scenario.

You see, the rich really do have other options. They could decide to invest their money offshore.

Investing Offshore

The rich may decide that the tax option of declaring an income one bracket down is very attractive. So they move a proportion of their investment offshore. Either they close down a factory and move it to China, or they place their investment equity holdings in an emerging market. Consider, emerging markets are expected to grow by 6 to 8% over the next 12 months, while US and EU economies are either to hold still, or even contract. A lot of cash could start moving in unusual directions – especially since US and EU banks now belong to their governments.

Figure 6: Scenario 2 – Investing elsewhere

The richest 20% decided to become the 2nd richest 20%, and sent the rest of their money overseas. Now the total tax take has changed dramatically. Instead of collecting 17, the state now collects 5.1.

Instead of the deficit being 4, the deficit now expands to 15.9. In other words, for every $1 that the state raises through taxes, it is spending another $4.1. That is a recipe for economic collapse.

Conclusions

The most likely result of a tax redistribution is a mix of scenarios 1 and 2. The US deficit will go up as a result of taxing the rich more heavily, but inflation (as the rich raise their fees) will also erode the gains experienced by the rest of the population while increasing the absolute levels of inequality.

Now, we can argue about this. Maybe the rich shouldn’t be so “selfish”. Maybe you can come up with a way to stop them taking the money they already have away. What you can’t do is force investment that did not happen to happen.

You can’t force the young inventor who would have built his new factory in the US from seeking a more favourable tax environment elsewhere. You can’t enslave the young engineering graduate to prevent her from taking her skills to a more favourable country.

The only way is to offer ostensible advantages.

That’s if you want them at all.