The CoLD coalition’s new proposal on legal aid in England is quite scary, given that so many people will be unable to go to the courts even when the law is completely on their side, simply because the cannot afford to.

However, legal aid was already unavailable to lots of people who couldn’t realistically pay the lawyer’s fee (without having to sell their home).

The way I see it, the price for going to the courts should depend on your ability to pay – it shouldn’t be limited to rich people and those on legal aid. Ideally, it should be free if the courts decide you’re in the right, and cost a certain percentage of your wealth/income if you’re in the wrong.

The same goes for compensations received. It’s ludicrous that you can get more money for the same injury if it was the fault of a big corporation than if it was caused by a poor person – to the injured, the consequences are the same.

The solution would be to pool everything: All legal fees and damages should be determined by people’s ability to pay and put into one massive pot, and compensations should come out of this according to need.

In that way, nobody would we priced out of using the legal system, and nobody would lose their home or become instant millionaires depending on the outcome of a court case.

Edmund Conway (who is always worth reading) has written a very insightful article about the shift in international monetary structures.

He points out that the current system (floating exchange rates) has become unstable because “many developing nations (typified by China) have chosen instead to fix their currencies (in an effort to protect their exports)”, which means that “the world’s monetary system is being run in two incompatible ways”. (He doesn’t mention the euro in that context, but I presume it must be another factor in the break-down of the floating exchange rate system.)

Although he lists two possible outcomes, he seems to think that the problems won’t completely go away until China overtakes the US as the main economic power of the World.

It’s definitely worth reading the whole thing!

More and more people are warning that there’s a risk that there’ll be hyperinflation in the US soon. I don’t know how likely this is, but it sounds plausible.

I wonder whether the US would be likely to follow in the footsteps of Weimar Germany, insomuch as a post-hyperinflationary society would make it easy for groups with a fascist-like ideology to emerge.

Don’t get me wrong – I don’t think history ever repeats itself completely, but glancing at the Wikipedia articles on Fascism and the Economics of fascism there are various things that I think could appeal to a population that felt they had lost everything due to globalisation and the errors of the banks:

During the Great Depression, Mussolini promoted active state intervention in the economy. He denounced the contemporary “supercapitalism” that he claimed began in 1914 as a failure due to its alleged decadence, support for unlimited consumerism and intention to create the “standardization of humankind”.

[...]

reduction of the retirement age from 65 to 55, a strong progressive tax on capital,

[...]

In most cases, fascists discouraged or banned foreign trade; fascists believed that too much international trade would make the national economy dependent on international capital, and therefore vulnerable to international economic sanctions. Economic self-sufficiency, known as autarky, was a major goal of most fascist governments.

[...]

Fascists declared their opposition to finance capitalism, interest charging, and profiteering. [...] Fascist governments introduced price controls, wage controls and other types of economic interventionist measures.

[...]

While in power, the Nazis created social welfare programs to deal with the large numbers of unemployed. However, those programs were neither egalitarian nor universal, but instead residual, excluding multiple minority groups and certain other people whom they felt were incapable of helping themselves

Hopefully the return of fascism can be averted – although bits of the ideology can look appealing at first, fascist countries always end up as dreadful dictatorships.

Back in the early 1990s in Denmark, students could easily get cheap loans to finance their studies. The result was that a generation of students ended up with massive debts that they couldn’t realistically pay back.

So a few years before I started university, they introduced much better grants and restricted the ability to get student loans in order to ensure that nobody would be saddled with debt they couldn’t pay off.

England now seems to be going in the opposite direction.

Given that their is a limit to how much graduates can be forced to pay back every year, and given that the plan at the moment is to write off any debt left after 30 years, for most people there will be no point in restricting their borrowings.

That is, they won’t go to a cheap university, but will instead apply to the most expensive ones and borrow as much money as they possibly can to fuel their consumption.

Poor buggers if future governments decide to scrap the repayment limit or the 30-year write-off point!

I was provoked by an article in The Guardian by LibDem MP John Hemming today, in which he argues that the new English system of tuition fees is basically a graduate tax:

[F]or 54.2% of students in the future it does not matter how much their tuition actually costs. They will pay the same 9% of income over £21,000 a year for 30 years. In other words this new system is a graduate tax in all but name.

Does he not regard it as a problem that graduates whose parents were rich enough to pay their fees upfront won’t have to pay his so-called “graduate tax”? (Let’s face it, even fees as high as £9000 a year are not too shocking to upper-middle-class parents who have just finished paying equivalent private school fees!)

Does he not regard it as a problem that top earners (tomorrow’s bankers, for instance) will have to pay off less than the usual 9% for 30 years?

This is a graduate tax with an opt-out for the rich!

That said, I don’t think a graduate tax would work, either, and the only real solution is to go back to state-funded universities, finding the money by cutting admission numbers.

There’s a new revelation about the war between Blair and Brown in the Jonathan Powell’s new Book, “The New Machiavelli“, as mentioned in the Guardian’s Wintour and Watt blog (hat-tip: Liberal Democrat Voice):

Given the Treasury’s refusal to share information with us, we had real trouble working out what the financial implications for Britain of the Luxembourg proposal would be. In desperation, we kidnapped the Treasury’s expert at the UK mission in Brussels and took him with us to Luxembourg so that he could explain to us what the offer really meant.

He was enormously relieved when we finally let him go. He didn’t mind that he was being dumped in Paris, the next stop on our trip, without a passport or any money. He just wanted our assurance that we wouldn’t tell the Treasury that he had been travelling with us: that would blight his career for ever.

Why didn’t Blair just sack Brown?

I know he was afraid of Brown creating a backbench rebellion, but surely nothing could have been worse than this?

Note how the poorest 40% of the American population own so little that they aren’t even visible, but most people believe they own almost 10% of the nation’s wealth.

It’s also interesting that everybody – even rich people and Republicans – believe wealth ought to be spread out much more.

I’d love to see an equivalent graph for the UK and other European countries.

Just look at the pie chart on the right – England constituted 84% of the UK’s population in 2001.

I therefore decided to investigate some ways of fixing the English problem by changing England’s borders. I’ve mainly used the English Regions for the following maps and figures.

My first idea was to extend Scotland (adding Cumbria and the North-East) and Wales (adding Cornwall and the rest of the South-West), bringing both up to about eight million inhabitants.

It’s nowhere near enough, though – England is still more than big enough to run the show undisturbed.

To make this approach work, I guess Scotland would have to be extended all the way down to the Humber, and Wales would have to encompass the West Midlands, but that would completely undermine the Scottishness of Scotland and the Welshness of Wales.

My second idea was to split England into East and West along a line extending down from the Pennines, but that isn’t enough, either: East England would be able to run the show on their own (but only just – moving a few counties such as Hampshire from East to West would take the East down under 50%).

One might also argue that Cumbria is much more similar to Northumberland than to Somerset, so it might not be a very natural split.

I also wonder whether London would dominate the East so strongly that the genuine needs of the peripheral areas would be completely overlooked.

Another option would be to create a Greater London by merging London with the East and South East of England. This would actually work fairly well – although Greater London would be a lot less populous than the Rest of England, it would probably be able to hold its own given the way London dominates the whole of the UK.

This might also be a very good way for the remainder of England to build up a identity separate from London, perhaps centred around Manchester or Birmingham.

Finally, I tried to recreate the Danelaw. This would actually balance the two halves of England very neatly and would from a mathematical point of view be the best solution. However, it would place London on the border (just south of it, to be precise), and I’m not sure whether that’d be a good or a bad thing.

From the point of view of Danelaw, its economy would be hugely influenced by London (and many people would be commuting from Danelaw into London), but it wouldn’t have any influence on over it.

From the point of view of non-Danelaw England (Wessex?), it would completely dominated by London, although it would be in periphery.

In an article in The Telegraph about the problems facing first-time buyers after the credit crunch, my attention was drawn to the claim that “for the first time, graduates might be better off not repaying student debt when they leave university, because the only chance they stand of home ownership is saving for a deposit from the age of 21″.

I wasn’t aware that graduates had an option of not repaying their student debt (unless their salaries are rather low), but I think it’s an overlooked consequence of tuition fees.

The problem is that if you have to pay off your student debt for years, and if your salary isn’t high enough that you can afford to pay off debt and save for a deposit at the same time, you’ll end up a home-owner potentially much later. (It’s not as simple as just saying that you’ll become a home-owner five years later. If you’re very young, you might be willing to live with your parents and save a lot, but the older you get, the more likely it is that you’ll have a partner and perhaps kids which will make saving for a deposit much harder.)

Of course house prices aren’t rising at the moment, but once the recession is over and they start going up again, timing matters – the flat you could have bought with a £5000 deposit in 2000 would have been completely out of your range in 2005.

I suspect there will be a lot of graduates that will actually never become home owners, because they won’t manage to pay of their student debt before they become parents, but at the same time, they probably won’t have great pensions, so we’ll be looking at some very impoverished pensioners fifty years from now, unless tuition fees and graduates taxes are abolished soon.

On the Andrew Marr Show this morning, they were again briefly discussing tuition fees vs. a graduate tax, and it was mentioned that annual fees at the best universities might rise to £10k a year.

This is crazy if we’re talking about state universities. In the US, fees are “£3,572 a year (although students at private universities pay a lot more on average, £13,877)” – and don’t forget that American parents tend to save up for their children’s university education from the day they’re born.

I’m starting to think that the move towards higher and higher university fees in England are due to Oxbridge comparing themselves to the Ivy League in the US, which are extremely well-funded universities.

Proponents of tuition fees tend to argue that it’s OK so long as there are grants for the poorest students, but what about the 80% of the population in the middle that aren’t poor enough to qualify for the grants, but not rich enough to pay for all their kids’ tuition fees and accommodation, either?

Also, tuition fee fans often say that the graduate premium (i.e., the amount of money you earn extra because of your degree) is so high that it’s a no-brainer to get a university education, no matter how much it costs. If that’s the case, why should anybody get a grant, so long as there are loans available to postpone payment till they’ve embarked on their hopefully lucrative careers?

The way I see it, if people make so much more money over a life time if they go to uni, they will presumably pay more tax, too, so it should be a no-brainer for the state to send young people to uni, paying for their education and giving them grants to give them the best possible basis for making a fortunate and paying a lot of taxes.

On the other hand, I have a feeling that Oxford and Cambridge will never be satisfied with any level of state funding. So why don’t we simply cut them free and make them private universities without any state funding whatsoever, except for charitable status if they give free places to poor students, just like private schools? They’re probably famous enough that they can attract more than enough students worldwide who are willing to pay £15k a year.

We should then move the remaining universities back to exclusive state funding, and reintroduce student grants allowing students to concentrate on their studies, but at the same time make universities tougher again to ensure graduates are ready for a globalised world.