Tuesday, 24 August 2010

Why GCSEs are Meaningless

It has been reported today that record numbers of students have passed and achieved A* grades in their GCSEs, much to the delight of the students and their parents. However, there is a slight problem with this. The value of something - anything - is determined by supply and demand. If something is easy to obtain, i.e. the supply is high, then it is likely to be cheap.

So, if 98.7% of students leaving school have GCSEs, how much are they worth?

This question is worth one mark.

Here's the answer... Nada. Niente. Nil. Nothing.


The whole point of GCSEs, indeed any formal educational qualification, is to provide an indication of the student's aptitude towards a particular subject, and on the whole, their overall intelligence.

If you compare this to another test for measuring intelligence, say an IQ test, you will notice some frightening disparities. IQ generally follows a normal distribution pattern, as illustrated below.

Normal Distribution

Most people have around average IQ, some people have above average, some below average and a few select few have exceptionally high or exceptionally low IQs. So, you would expect any qualification system that purports to measure intelligence to be reflective of this distribution. In such a distribution, the mean value - calculated by adding up all the discrete values and then dividing by the number of values - equals the median value - calculated by finding the midway point between the highest and lowest value. And it also equals the modal value - the most commonly occurring value. If this was mapped onto the GCSE grading levels, the middle grade is a C, so most students should actually get Cs, with only a very small percentage getting an A*.

Is this reflected in the GCSE system? Quite simply, no. This year, 69.1% of the grades issued were C or above. 22.6% of grades were either A or A*, and only 1.3% actually failed to register a grade at all. On a normal distribution, the number of fails should be equivalent to the number of As and A*s. They're nowhere near.

So this leaves two possibilities:
  • The student intelligence pattern does not conform to a normal distribution - highly unlikely, given that most measurable criteria conform to a normal distribution given a wide enough sample range;
  • The GCSE system is fixed to produce better results, i.e. the examinations are made easy in order to boost pass rates, thus making our (effectively nationalised) education system look good.

Therefore, as truckloads of students leave school with GCSEs, and they do not accurately measure aptitude or intelligence, they are worthless.

Tuesday, 17 August 2010

Clegg's Confusion on Trident

The Telegraph has reported that Nick Clegg seems to think that incurring the expenditure of renewing the Trident nuclear deterrent makes it harder to justify cuts to the benefits system.

Why?

The job of a State, it's only reason for existence, is to provide security for our society, and to uphold the rule of law. That's it. That's all it has to do. Everything else is an optional extra. Politics is the discussion of what extras we build in.

In a multi-polar world, where the supremacy of the Western powers is waning,  newly-emergent or resurgent nations like Brazil, Russia, India and China look set to take a greater lead, and nuclear proliferation continues (examples include North Korea and Iran), the preservation of our nuclear deterrent is absolutely paramount to the security of our nation.

The benefits system is there to help the most vulnerable in our society, but it is not essential society's survival. Therefore, however laudable it's aims may be, it is an optional extra.


Preventing this is not optional.

Bang.

Friday, 13 August 2010

Labour's Hypocrisy on Electoral Reform

One of the key points of the coalition pact was the Conservative agreement to hold a referendum on adopting the AV voting system, for both parties to push forward equalisation of constituency sizes, and to reduce the overall number of constituencies from 650 to 600.

Labour have, accordingly, announced their opposition to these plans, arguing that a review of the boundaries is effectively gerrymandering, and an attempt to 'fix' the electoral system to prevent a Labour majority in the future.

A couple of points:

  • Labour were the only major political party to have a commitment to the AV voting system in their election manifesto. Why have they suddenly turned their backs on it?
  • Equalising constituency sizes is not gerrymandering - it is restoring balance to the electoral system. Even by Labour's own admission, 'the electoral system is... biased in favour of Labour'
  • Reducing the number of constituencies would again bring better balance to the electoral system, and reduce the cost of politics. Why is that gerrymandering?
And the Boundary Commission for England note in their 2009/2010 Annual Report their disappointment at the previous Government's refusal to review electoral law, despite the Committee on Standards in Public Life recommending it for review!

That thing that we all take for granted

It is not the coalition that are gerrymandering. Labour have been doing so for the past 13 years, allowing important legislation to become outdated, and population drift to take it's toll on constituency boundaries, simply because they benefited from the changes. And their hypocrisy now, accusing the coalition of fiddling while they themselves have been doing it for the past 13 years, is difficult to stomach.

Thursday, 12 August 2010

Minimum Pricing on Alcohol

The BBC reports today that dear old Dave is very sympathetic towards councils who want to introduce minimum pricing on alcohol at a local level.

The aim of minimum pricing is to discourage binge drinking, the theory being that if the people going out on a binge can't buy alcohol cheap enough, they'll stay sober.

There's just one problem with this plan - it's complete and utter bollocks.

 A good night out?

Binge drinking is a form of alcoholism. It is a deliberate form of substance misuse with the sole intention of getting 'high', or in this case, drunk. Therefore, the nature of it is addictive. Many people who engage in it will not have the inclination or the willpower to change their behaviour. And thus, with the motivational factor behind the purchase being the desire to get drunk, they will buy the alcohol regardless of how much it costs.

Minimum pricing on alcohol will do virtually nothing to prevent binge drinking, but it will punish the vast majority of drinkers who exercise control and responsibility. The solution is not to punish the responsible majority, but to break down the culture of binge drinking.

A few possible suggestions:
  • Change licensing laws to require licensees to refuse to serve people who are visibly intoxicated, and encourage others working in other services, e.g. taxis, takeaways etc. to do the same. Once people realise that getting hammered actually stops them from having a good time, they'll pack it in;
  • If someone turns up at a hospital requiring medical treatment arising from their own alcohol abuse, e.g. a stomach pump, bill them. They're wasting valuable resources that could be used elsewhere, and will act as a disincentive because they'll be having to hand over money without any tangible benefit;
  • Allow police reporting on which venues are more likely to produce binge drinking behaviour. These should be closely regulated to discourage marketing strategies which encourage binge drinking, such as 2-for-1 offers on alcopops, happy hours and selling shots at seats just before closing time.

Tuesday, 10 August 2010

Targeting Benefit Fraud

Dave announced today that the Government is teaming up with credit reference agencies to trawl through bills and credit card statements to help identify benefit thieves.

Good old Guido Fawkes has pointed out the inherent civil liberties violation here. Dave has tried to defend these accusations by saying that 'private companies use all sorts of different means to make sure they are not defrauded, why should the State be any different?'

Well, here's a good reason, Mr Prime Minister, sir: because the State is not in the business of turning a good profit, but rather protecting our society at minimum cost to its citizens.

Targeting benefit fraud is an admirable goal. But starting out from the assumption that the millions of people using the benefits system are screwing the system and should therefore be investigated until their innocence is proven is disgustingly authoritarian - exactly the sort of thing I expected from the last government.

 He's still watching

If Dave truly wants to cut the cost of the benefits bill, I have a few humble suggestions:
  • Limit benefits entitlement to British citizens. This will have the double effect of limiting immigration, as people will no longer migrate across Europe in order to abuse our system;
  • Capping all benefits claims at 80% of the net minimum wage. No one, under any circumstances, should be receiving more money for being out of work than those who are in work;
  • Abolish tax credits entirely, because they're a waste of fucking time. Use the proceeds to increase the income tax allowance, ensuring that everyone who should benefit, does benefit;
  • Replace the remaining benefits system with a simpler one based on holistic needs, not on the desire to reward certain demographics in exchange for votes. See my previous post on this.

Will any of my above suggestions help to cut fraud? Possibly not. But given that fraud accounts for £1.5billion of the total £197billion annual benefits bill, I think we've got bigger fish to fry.

How to Rob a Pension

One of the measures announced in the recent Budget is the subtle change from uprating pensions and benefits by the Retail Prices Index (RPI) to the Consumer Prices Index (CPI). Both are measures of inflation, but the CPI is the one used by the Bank of England when setting interest rates, in line with EU practice to allow like-for-like comparisons across EU states. The Government have therefore argued that it is more appropriate to use this measure rather than the older RPI.

But crucially, the CPI is often lower than the RPI, making it cheaper to use.

The Government's proposals involve:

  • Linking increases in working age benefits to the CPI in the future, which will effectively mean that benefits will increase at a slower rate over the longer term, limiting the rate at which the benefits bill increases;
  • Replacing RPI as the measure for inflation for State pensions, although with the introduction of the 'triple-lock', meaning that State pensions will increase by the higher CPI, National Average Earnings Index (NAEI) or 2.5% (subject to a maximum of 5%) means that the effect on State pensions will be minimal;
  • Most importantly, final salary pension schemes - including schemes in the private sector - uprate benefits in line with RPI each year subject to a 5% cap as a statutory minimum. This would be changed to CPI, affecting not just members of pension schemes, but pensioners in receipt of income as well.

This is the key one. The last point won't just affect pensions in the public sector, but those in the private sector as well. It effectively means that final salary pension schemes will only need to uprate deferred benefits - belonging to non-contributing members of the scheme -  by the lower of CPI or 5% each year, and that existing pensioners - people already receiving their pension - would have that income increased at a lower rate in the future.

Previously, changes to the method of pension uprating have preserved the uprating for previously accrued benefits. The Government is proposing a retrospective change, so that all deferred benefits will accrue at the same rate, i.e. the lower of CPI or 5%.

This will have several effects:
  • It will make the Government's bill for supporting the various public sector pension schemes, such as the Teachers Pension Scheme, the Local Government Pension Scheme, the Civil Service Pension Scheme and dozens of others, considerably cheaper going forward;
  • It will make far more private sector schemes more sustainable, as their long term commitments will be more manageable - their future liabilities will be lower, and therefore the scheme's assets will be under less pressure to produce higher investment performance;
  • Ultimately, the people who will suffer will be the pension scheme members - their entitlement will be accruing at a lower rate, and therefore their income in retirement will be lower. But uniquely, it would also be existing pensioners who would suffer - their actual income would increase at a lower rate.
 
Of course, private sector funds may still choose to make provision beyond the statutory minimum, but it is unlikely. I work in the financial services industry, and have only come across one pension scheme which makes provision above and beyond the statutory minimum.

Hand it over, Grandma

This is a tiny change, but one that will have massive repercussions if borne out in full. It will not just affect people's future pension entitlement, but their existing entitlement as well, including those who have already retired. The principal of changing the uprating method for future accruals is a relatively sound one, but the application of retrospective legislation to existing provision is, quite frankly, despicable.

It has echoes of Gordon Brown's decision to remove the tax credit for share dividends on pension funds, effectively allowing pension funds to fall into the Corporation Tax net. A small change that very few people really understood, but which had huge consequences for millions of ordinary people.

From the coalition, I expected better.

Monday, 9 August 2010

Money - the Ultimate Narcotic

It occurred to me the other day that people wouldn't suffer from as many financial troubles if they actually regarded money as a narcotic.

Consider the parallels:

  • It is a substance of which there is a finite supply, which is tightly regulated by an all-powerful cartel of the Treasury and the Bank of England to maintain it's value;
  • We are all dependent on it - we need it to feed, house, clothe and warm us. None of us can realistically be without it. It's withdrawal would result in unpleasant, sometimes life-threatening side-effects;
  • The abuse of it can have devastating consequences - consider the effects of gambling, as well as debt abuse, e.g. overspending on credit cards.

Now, I'm not advocating abandoning currency and reverting to bartering for beans and goats. The advantages of using currency far outweigh the disadvantages. For me, the advantages of drinking whisky far outweigh the disadvantages, so I'm not going to give it up. But that doesn't mean that I won't treat it with the respect it deserves. I won't drink more than 3 whiskies in one sitting, otherwise I end up slumped in a corner snoring, or worse, standing on a table singing 'Delilah' at the top of my lungs. And either way, waking up in the morning feeling like a whole family of chavs is squatting in my skull.

Likewise, I treat money with the same sense of caution. I only buy something if I can pay for it immediately. The only exception to this is where I'm buying something which is likely to go up in value, where it is acceptable to borrow money, provided that the repayments are affordable. I save money wherever I can - to pay for the things I really enjoy, like holidays in the Lake District, and days out with my kids.

Nowhere else does this analogy seem more clear than in the benefits system. Whole swathes of people, effectively hooked on the narcotic of money, and their dealer is the State itself. They are unable or unwilling to break this addiction, as most addicts are. And the side-effects of their addiction are plain to see - anti-social behaviour and misuse of the substance they are peddled. Of course, not all people receiving benefits have these problems, but you see my point.


The Newest Way of Administering Benefits


The problem with the benefits system is that it pays money to people, not to help them out of poverty, but to keep them in it. I see two possible reasons for this:
  • Sentimentality - the last government, out of a genuine desire to help 'the poor', but in a Marie Antoinette way, misunderstanding the causes of poverty, simply threw money at the problem and hoped it would go away. They made an emotional, rather than a rational decision;
  • Vote Creation - the last government set about to create swathes of Labour voters, to make it as difficult as possible for the Tories to get back into office. What better way than creating massive sections of the population dependent on the State, who would be unlikely to vote Tory?

This could form an interesting debate in itself, but is largely irrelevant.

Of course, in the face of the proposed consolidation, simplification and reduction in State benefits, many of the recipients are complaining about how they will survive without them, and many on the Left are protesting against the cold-heartedness of the coalition in even contemplating such moves.

I suspect their attitudes would be different if the State was handing out heroin.

Just a thought.

Milk

I thought I'd comment on the school milk stuff, after a few facts occurred to me.

Damned Expensive Stuff

Putting aside all the 'Maggie Thatcher, Milk Snatcher' tedium, I thought I'd just look at the facts. School milk for 3-5-year-olds costs roughly £50million a year, and gives 1.8million children 189ml of milk a day.

In order to put this into context, 10 kids will go through your standard 2-litre bottle of milk in a day. Standard 2-litre bottle costs around £1.00. So that's 180,000 bottles a day, costing around £180,000 a day, nationwide.

So over the course of a school week, that's £900,000. There's around 39 school weeks in a year, so that's £35million.

So it should cost around about £35million, whereas it actually costs £50million. So why is the scheme overpriced by £15million a year?

The other point is, if 10 kids will go through a bottle in a day, then 1 kid will go through 1 bottle in about 2 weeks. If the scheme was cancelled, it would cost parents about 50p a week. That's about £20 a year. Hardly breaking the bank, is it?

I am a father of two - my eldest benefited from the school milk scheme, and my youngest still does. If the scheme were to be abolished, I'd be more than happy to pay £20 a year for the replacement milk. And my income is not high.