The terrifying new metaphysics of data

I watched the film Lincoln recently, only a year after everybody else.  Apart from wondering why we can't make such intelligent films about political history in the UK, I was fascinated by the portrayal of Lincoln himself - his endless supply of homely tales which infuriated his colleagues but played such a role in defusing tension.

By coincidence, I've just been reading the absolutely compelling autobiography of Peter Drucker, Adventures of a Bystander.  Drucker really invented the art of management writing, and died recently (well, in 2005) just short of his 96th birthday - carrying on writing and consulting almost until the last moment.

Drucker describes Charlie Kellstadt, retired chairman of the retailers Sears Roebuck, enraging his fellow committee members in a Defense Department advisory group, doing exactly the same - long tales about selling bras which took apart the arguments of the young guns, absolutely but without rancour.

But Drucker drew some conclusions about this, writing in 1978, that have absolutely taken a grip on my mind today - because they are directly concerned with a major theme of this blog.  Namely, the gap between figures and reality.

Robert Macnamara, Kennedy's cerebral Defense Secretary - and a forerunner of government targets - went ahead with this particular plan anyway, ignoring Kellstadt, because the figures were right.  But the figures didn't express the wisdom that Kellstadt had gained selling bras.  The result was the disastrous decision on the Lockheed Jumbo air transport contract.

It is three and a half decades since Drucker was writing, and five decades since Kellstadt was irritating Macnamara's committee.  That gap between figures and reality is much more tenuous now.  Whole swathes of those who run the world no longer believe there is a gap - vast institutions are run without regard to any gap at all.

You might well say that this was why our organisations, public and private, are generally speaking so ineffective.  I couldn't possibly comment.

But Drucker put his finger on the issue, which is as much theological as it is economic.  He described the shift in the world since he was working at a London merchant bank in the 1930s called Freeberg & Co - then there just a few people, maybe in banking, who saw the word like that:

"Our whole society has moved to the perception and metaphysics Freedberg & Co represented.  It has shifted to seeing symbols as real: money, 'trades' and 'deals', interest rates and Gross National Product.  Our whole society assumes, in the words of the medieval logician, that Nomina sunt realia: that the symbols have substance while the objects they represent are mere shadows."

Drucker describes this metaphysical approach to life as 'ultra-nominalism', a version of the medieval philosophy, that "treats symbols and images as the ultimate reality, and people and things as shadows".

And of course, he is absolutely right.  That ultra-nominalism has grown in strength, increasingly blind to the shadow world that we used to know as human reality.  There is even a debate about whether this human reality is different at all from the figures that purport to describe it.

It explains the slow hollowing out of our institutions, and maybe also our bizarre failure to act on the world.  But for anyone who still believes there is a gap between data and reality, can I recommend my own book on the subject, The Tyranny of Numbers.  

It is more than a decade old but there is life in the old dog yet.  And over that period the new metaphysics has growth rapidly in strength.  It may now be changing reality by ruling it non-existent.

Those of us who know otherwise may have to fight to keep the old language alive, which is the only way we will be able to assert a separate existence for awkward reality beyond the data.

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Why the home ownership dream ended

Here is a picture of the flat where I was born.  Randolph Avenue in Maida Vale, a former red light district fallen on good times.

It was a slum in 1958 when I first emerged there, in a rented ground floor flat. Now the same flat is occupied by the head of Benetton Europe (not actually this front door, in case you are casing the joint).  I can’t even afford to sleep rough there. There’s the problem.

Now, there are some predictions I make where I don't really want, for my children's sake, to be proved right. But unfortunately what I said in my book Broke: How to Survive the Middle Class Crisis is all too true.

As it said in the Daily Telegraph this morning, home ownership in the UK is at a 25-year-low - not back to the levels before Margaret Thatcher came to power, determined to shape a property-owning democracy, but almost.

Home ownership is down to 65 per cent, its lowest level since the 1987 stock market crash, when Nigel Lawson was Chancellor.  No coincidence this, as I will explain.

Also a third of all homeowners are now over 65.  The young are being priced out, and flung into the not very tender embrace of the private landlords.

Does this matter?  Well, I think it does.  It means a loss of independence, a dependence on the whims of landlords, and continuing rental costs carrying on for the rest of your life.  

There is a peculiar resistance to home ownership on the left, is if renting was somehow ideologically purer.  I don't see it - and there certainly is no insulation from the rocketing costs that way.

The 30-year housing bubble has also led to huge additional costs for taxpayers, as the Telegraph report explains:

"The figures also disclose that there has been a significant increase in the number of people who rent their homes claiming housing benefit.  Over the past five years, the proportion of people claiming benefits who rent privately has risen from 19 per cent to 25 per cent, while in the social housing sector the figure has risen from 59 per cent to 66 per cent."

But I take issue with some of the coverage of the bubble.  It is always written as if this was some kind of betrayal of the objectives of the Thatcher government.

It isn't.  It is a direct result of the poor decisions they made then.  Three in particular:

1.  Debt.  The idea that rising home ownership could be built sustainably on unrestrained debt, an idea that is popularly supposed to have been embraced by Margaret Thatcher after persuasion by Nigel Lawson, was always wrong.  If there is no limit to the money available for mortgages, then it will always tend towards inflation - and the shrinking homes and the lengthening mortgages are an inevitable result.  We have seen 40-year terms and are well on schedule to end up with the enslaving Japanese-style grandparent mortgages, paid off by the generation after next.

2.  The Corset.  The Corset was an instrument in the 1970s and before which regulated the amount of money going into the mortgage market, keeping house prices as level as possible while still allowing housebuilders to make a profit.  It was abolished by Sir Geoffrey Howe in 1980, as a direct result of the end of exchange controls - but nothing was put in to replace it.  As far as I know, nothing was even considered.

3.  Big Bang.  Yes, the City needed reform, but the free-for-all ushered in by the flawed reforms presided over again partly by Lawson, with help from Cecil Parkinson, inevitably unbalanced the economy.  The avalanche of money going through the City inevitably got recycled into bankers bonuses - which in turn got recycled into rising house prices.

No, I don't include the failure to build homes as one of the main causes - though clearly it hasn't helped.  When more than 60 per cent of new homes in London have been snapped up by foreign investors, then you have to look elsewhere for the cause - which is, as I say, the unconstrained growth of the mortgage market.

It was based on a peculiar, fundamentalist view of market economics.  In the context of the 1970s, it looked creative.  But from the benefit of three decades later, you can see that - however much you believe in free and open markets (as I do) - the fundamentalist idea that markets produced real prices when they are left to themselves is as damaging as religious fundamentalism in its own way.

And just as destructive.  Unless we do something about it, it will destroy the dreams of the next generation, constrain them in jobs they hate because it is all that will satisfy the demands of Mega Landlord PLC.

More about how we got into this mess, a series of blow by blow accounts, in Broke.

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Where is 38 Degrees now there's work to be done?

I got so cross with the internet campaigners 38 Degrees over the Lobbying Bill, for their half-truths and infuriating ability to concentrate useful political energy on a chimera.

But they were right that the Lobbying Bill was much less than perfect, and particularly in its failure to tackle the funding of political parties.

In fact, it is hard to see how restricting money that goes into electoral campaigning will make any difference when there is the loophole, shouting at the top of its voice.  Any passing billionaire who wants to impose his views on UK elections only has to fund a political party - either his own or someone else's.

This is usually the cue for anyone involved in politics to shake their heads in despair.  Only the Lib Dems, chronically under-funded, have any obvious benefits from restricting donations to political parties.  The others just need the money and tend to keep their heads down.

So, it's hopeless, right?

Well, no, it isn't.  Just for a moment, we have a political opportunity to act.  Labour have thrown all the cards up in the air by changing their relationship with their trade union funders, and in a creative way that has huge possibilities for energising their support base.

It also just so happens that the Conservatives are horrified by the way huge donations are now bypassing them altogether and going to UKIP.

There is an openness in Westminster to tackling the basic problem, the Old Corruption as William Cobbett put it, on a cross-party basis.

Can it be done in the year before the next general election?  What we really need is an enlightened internet campaigning organisation to take up the cause, when they could make a major difference?  They have the support base, invigorated by the Lobbying Bill campaign, who just need pointing in a more creative direction.

Where is 38 Degrees when you actually need them?  Don't tell me they are still out chasing chimeras?

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Does the UK government want Scots to vote yes?

It really is rather peculiar.  So peculiar that historians may comment on it in years to come if the vote is unexpected, but the campaign by the UK government to keep Scotland in the union is really so badly judged, so unimaginative and ill-considered, that I begin to suspect some kind of conspiracy.

I don't really.  I don't believe in conspiracies.  Regular readers of this blog (if there are any) will also know that I am not as determinedly against Scottish independence as I should be.

I believe nations should be smaller, and that we would all be better and more peacefully governed if they were.  Despite the fear of the electoral consequences, and despite the horror of nationalism - even Scottish nationalism - I believe smaller nations is a Liberal idea, and one that would have been recognised by William Ewart Gladstone himself.

But I understand the case against independence too.  What I don't understand is why is it being put across is such a bizarrely corrosive way.

Exhibit #1.  The UK government spokespeople have been using their habitual tone of voice for squelching regional aspirations and plans - you know the kind of thing; patronising, negative, superior and miserably depressing about everything.  Sorry, your dreams are just uneconomic - that's all there is to it.  Go off and bother some other government department.  It might have been calculated to encourage the case for independence.

Exhibit #2.  They put up George Osborne, of all people, to explain to the Scots that they will not be allowed to share the pound if they vote 'incorrectly'.  Of all the people designed to cause irritation north of the border, could they possibly have found anybody better?

Exhibit #3.  This is the topical one.  Of all the issues to fight on, the management of Britain's North Sea Oil seems the least likely to imply a persuasive case for union.

The very fact that David Cameron has decided to raise this issue at all is some measure of the denial in the UK establishment about how badly North Sea Oil has been handled over the past generation.

While Norway saved the profits from the oil windfall, for investment in their own people, successive UK governments organised things with their usual dull short-termism, just adding the revenues to the bottom line until it was all used up.  Consequently we never used the proceeds to re-equip UK manufacturing.  We never used the proceeds to provide us with modern, renewable energy.

North Sea Oil pushed up the value of the pound, throttling what remained of the old UK manufacturing base - and we never used the proceeds to invest for the future.  It allowed us to cling too long to fossil fuels - and we never used the proceeds to gear up for the future.

When I tried to come up with a list of the ten most disastrous political decisions since 1945, for some reason which I can't now remember, I put the failure to invest the proceeds of North Sea Oil at the top of the list.

Fortune magazine wrote about the Norwegian oil fund - now the biggest sovereign wealth fund in the world - a few weeks back and revealed political divisions about exactly how it should be used.  But let's face it, that would be a good problem to have.

Thanks to the miserable short-term thinking of our governments, we will not be agonising about how to spend the equivalent of Norway's $830 billion.

So ask yourself: why does David Cameron bring it up?  Is it because he doesn't know any better?

We need to be nervous of Google's investment in robots

It's a funny thing, but just 48 hours after I posted the question about what makes Alan Turing the ubiquitous English hero for the 2010s, then the Observer reports the next twist in the tale about the famous Turing Test.

Let me quickly explain for the uninitiated.  The test was set by Alan Turing in 1950 as a way of deciding mathematically whether or not a computer could think.  Turing suggested that the test would be passed when you couldn't tell whether you were taking to a human being or a computer in written conversation.  He believed that moment would have arrived by 2000.

So when the world's leading apologist for Artificial Intelligence, Ray Kurtweil, the author of The Age of Spiritual Machines, talks about that moment happening by 2029 - then it is already nearly 30 years late.

I'm not a big fan of the fringe enthusiasts of AI.  This is not to say that I believe somehow humans can never be outwitted by a computer.  We constantly are.  But the Turing Test has been bundled up with a whole range of extra peculiarities it was never intended to serve, and in particular about human nature.

Turing certainly believed, as Kurzweil does, that computers will be able to tell jokes and flirt - it was these issues which dominated the debate back in 1950, as you can find out in my new Kindle Single about Turing, Alan Turing: Unlocking the Enigma.

The first problem is that, actually, the bar is pretty high.  The American philosopher Daniel Dennett suggested this question to tell the difference between a human and a computer;

“An Irishman found a genie in a bottle who offered him two wishes. ‘First, I’ll have a pint of Guinness,’ said the Irishman, and when it appeared he took several long drinks from it and was delighted to see that the glass filled itself magically as he drank. ‘What about your second wish?’ asked the genie. ‘Oh well,’ said the Irishman, ‘that’s easy. I’ll have another one of these!’ Please explain this story to me, and tell me if there is anything funny or sad about it.”

Dennett said that, if a computer could genuinely answer this question to the satisfaction of a human interrogator - with all its complicated social peculiarities - then yes, then you could certainly say it could think. It is still unclear whether that will ever happen.

The second problem is that these are questions about the nature of humanity. The roots of the Turing Test in logical positivism and English philosophy is part of the problem. Turing was trying to find a way – not to decide about the human soul but whether machines could think. He saw no real distinction between whether the computer could fool an interrogator that it was human and whether it was actually thinking.

That raises other questions too.  Is the computer doing the same as a human being when it flirts and tells jokes?  Or does that beg the question?  Is its motivation the same?  Does it matter?

But what really unnerves me about all this, and Google's link up with Kurzweil, is that it plays into a corporate agenda which asks us to believe that a virtual doctor or teacher is indistinguishable from a real one - or, as Kurszeil says, that virtual sex will be better than the real thing.

This not only misunderstands human nature but risks fobbing all but the ultra-rich off with a machine in the classroom and surgery, unaware that it isn't the basic functions of teaching that are important, but the relationship with another flawed human being that makes it work.

I may say that this may also be the problem with virtual sex, that perfection misses the point - it is the less than perfect human being that makes it worthwhile, and makes the teaching and medicine effective.

Find out more, not just in my Alan Turing ebook, but in my take on the future of authenticity, The Age to Come.

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Why are we so fascinated by Alan Turing?

It is now 102 years since he was born, or nearly, but this really appears to be Alan Turing's moment.

Not only was the government moved to give him a pardon, rather belatedly, for his conviction for homosexual acts back in 1952, but the stills have been released to great excitement for Benedict Cumberbatch's portrayal of the man in the film The Imitation Game.

It is even being talked about as an Oscar contender for 2015.

Now even the hotels of Manchester, where he lived and died, are joining in.  Jurys Inn Manchester has just published their own guide to his life.

What is it about Turing that speaks so much to our own age?  On the face of it, this is quite simple.  He was brave enough to be himself about his sexuality - in fact, he managed to flout respectability, to the frustration of his mother, for most of his life.  He famously wore a gas mask on his bike to avoid the pollen, and held his trousers up with a piece of string.

As the father of the computer age, and the great prophet of computability, he is a good nominee for the creator of our world.  He was a problem-solver, the breaker of the unbreakable Enigma code, when our age is so full of uncrackable problems.

I've had the chance to think about this myself, because the short biography I wrote about Turing has just been published as a Kindle Single (Alan Turing: Unlocking the Enigma).

My own feeling is that nothing about Turing is quite straightforward.  Confident in his own abilities, amusing and witty with friends, yet shy and uncertain in company, except with the few people he trusted. Relying on relentless logic, yet also managing an almost mystical ability to intuit mathematical proofs.

He combined a rigid clarity and scepticism about human specialness, but he was also fascinated by fairy tales and was famously obsessed with the Disney film Snow White and the Seven Dwarfs.   One of his closest friends was Alan Garner, later the author of The Weirdstone of Brisingamen.

The overwhelming feeling about Turing, reading the details of his life – and his mother wrote a detailed tribute after his death – is just how English he was.

Many of his fellow countrymen failed to understand him at all, and he worked part of his career with American and German mathematicians at Princeton University, but he was deeply English in his sheer practicality, for the literalism with which he turned intellectual ideas into practical projects, and for his empiricism.

He was a true successor to the great British empiricists, John Locke and David Hume, and the exclusion of every consideration except sense data. It is a theme that keeps returning in his life and work.

But I think our fascination may be more subtle than that.  We are beginning to regard Turing is the very apotheosis of a man of genius crushed by the petty mores of his own day, and perhaps that is a little how we all regard ourselves.  No wonder we admire him: he was the real thing.

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Why Lean is so inefficient

It's no good. I simply can't resist it. The old monsters at management consultants McKinsey & Co are just too tempting a target, and not just because they are so responsible for the shape of the modern world and its organisations - but because they are so slow to grasp why those organisations are stuck.

I subscribe to their online newsletter and it is always well-written and informative, and sometimes so wonderfully old-fashioned that I find it irresistable.

The elite consultancy, named after its founder James Oscar McKinsey, the first management consultant, still lives and dies by the highly misleading maxim “everything can be measured and what can be measured can managed”.   And therein lies the problem.

What actually inspired me to write this post was their new hymn to the idea of Lean, which as anyone who works in big organisations knows was attributed to Taichi Ohno at Toyota, and is now being rolled out everywhere from the NHS to the way car insurance works.

This is what they predict:

"An unprecedented amount of product-performance data is now available through machine telematics. These small data sensors monitor installed equipment in the field and give companies insights into how and where products are used, how they perform, the conditions they experience, and how and why they break down. A number of aerospace and industrial-equipment companies are starting to tap into this information. They are learning—directly from customer experience with their products—about issues such as the reliability of giant marine engines and mining equipment or the fuel efficiency of highway trucks in different types of weather."

Now, bear with me a minute.  Although Lean emerged from assembly lines, Ohno was not actually very impressed when he visited Ford immediately after the Second World War, as I describe in my book The Human Element.

There was too much extra work from bad workmanship, and there was far too much extra stock lying around taking up space. On the same visit, he and his team happened to shop in a supermarket called Piggly-Wiggly and then they got excited. The supermarket had a system that only ordered enough stock as it was bought by customers. 

It was the beginnings of the Just-In-Time delivery systems that so many companies use today, and the basis of Toyota’s success.

Toyota’s ‘lean’ systems are all the rage in the UK now, and it makes a lot of sense.  It tries to bring jobs back together again rather than splitting them all up into little bits. 

The problem with Lean outside a factory is that it keeps the Toyota version of the assembly line at its heart. It requires standardised systems and processes. It means measuring the speed that everyone does their jobs and holding them to the new system. 

 It is therefore a prime candidate for putting the processes into inflexible concrete, and Lean IT is the latest twist in what is on offer from IT consultants. 

The trouble is that Lean assumes everywhere is a factory, a little like Toyota. The central purpose may be to improve the flow by bundling jobs back together again, but it isn’t necessarily about getting people back face-to face – and it certainly doesn’t mean letting staff get on with their jobs in the way they know best. Quite the reverse.

It is the obsession with data that is the clue. Of course these tweaks are important, and they do improve services. I know government functions that have been transformed just by moving the photocopier a bit nearer the front desk.

But here is the problem.  Lean assumes that the basic system will always stay the same.  It wires in data sensors and processes, and software systems, that make sure it does.  It allows no leaps of imagination - no sudden realisations that, actually, what you need is a different kind of institution altogether.

This is McKinsey's basic weakness, and it is a big one - as one of their biggest critics, the systems thinker John Seddon has explained.  This kind of Lean approach tends to lock organisations into their own administrative and control systems, even when they are doing the wrong thing, desperately improving the efficiency of it - and wondering why no major leaps forward are possible.

This is the problem with targets too and with the New Labour approach to services, which still clings on to public services in so many ways.

It allows you to improve the throughput of the NHS, as if it was an assembly line.  It allows to to improve the efficiency of the existing system until it can improve no more.

What it can't do is tell you, given that you want to improve the broad health of the population, whether you might need a different kind of organisation altogether.

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Why Popper is the key to modern Liberalism

Imagine yourself in the coffee houses of eighteenth century Edinburgh, in the elegance of the New Town.  It was there that the philosopher David Hume first cast doubt on scientific method, peering at ideas about what causes what and finding there was nothing there.

All you can do, he said, is say that events tend to happen together. Yet, if we can see nothing causing things under the philosophical microscope, it means a big logical problem for the scientists. 

It doesn’t matter how many times they do an experiment, or watch the sun rising bang on time, it doesn’t mean these events are any more likely to happen tomorrow.

Two centuries after Hume was writing in Edinburgh, the Viennese philosopher Karl Popper, a refugee from the Nazis, came up with an interim answer. But, more importantly, he also applied it to politics and organisations. 

You may not be able to prove what you believe about the world, no matter how often an observation or experiment takes place, but you can disprove it. 

Popper used the example of swans. It doesn’t matter how many white swans you see, it still doesn’t prove that all swans are white. But if you see a black swan, then you know they are not.

Popper was writing during the Second World War, his home city was in the hands of totalitarians, and he quickly found himself applying this insight to politics too. In doing so, he produced one of the classic twentieth century statements of philosophical liberalism, The Open Society and its Enemies. 

He said societies, governments, bureaucracies and companies work best when the beliefs and maxims of those at the top can be challenged and disproved by those below. This has huge implications, not just for effective societies, but for effective organisations too.

Popper was flying at the time in the face of the accepted opinions of the chattering classes. They may not have liked the totalitarian regimes of Hitler or Stalin, but people widely believed the rhetoric that they were somehow more efficient than the corrupt and timid democracies. 

Popper explained why they were not, and why Hitler would lose. Anybody who has read Antony Beevor’s classic account of the Battle of Stalingrad, and the hideous slaughter and inefficiencies brought about by two centralised dictators who had to take every decision personally, can see immediately that Popper was right. 

Real progress required “setting free the critical powers of man”, he said.  More about this in my book The Human Element.

I believe Popper was the key Liberal philosopher of the past century or so.  I said so many times ten years ago, during the Lib Dem's commission on philosophy, but his name was still omitted - such is life on policy committees, I can tell you.

But he is even more important now.  The possibility of Popper's challenge from below – in what he called ‘open societies’ – is the one guarantee of good and effective government or management. Those human beings at the front line, those most affected by policy, will always know better about their own lives or their own work than those at the top. 

Open societies can change and develop; closed societies can’t. Hierarchical, centralised systems, by their very nature, prevent that critical challenge from below.

So if want to sum up why the Blair-Brown years devastated our public services, you need look no further than Popper.

So I was pleased that Jonathan Calder included a fascinating interview with Popper before his death.  These days, when authoritarian government is creeping back, it is worth remembering why it is less effective - and less efficient - than the kind of structures which are open to challenge from below.

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Why it's dangerous when the middle classes feel betrayed

Years ago, my friend Iain King cast my horoscope in return for an omelette.  "Yes, I see this in a lot of Lib Dem charts," he said.  "I think it means unreasonable optimism."

Which is a way of explaining that I've always been optimistic.  I don't feel comfortable as Cassandra.  I don't believe in disaster.  I certainly don't believe in extrapolating disastrous trends.

Yet really, sometimes, the middle classes could try Cassandra's patience.  There they are in the UK, staring oblivion in the face in less than a generation, happily shelling out for their indentured servitude by mortgage, and taking out their occasional frustrations by beheading the chair of the Environment Agency and other symbolic officials.

I wrote a book about it.  Rather a good one, though I say it myself (it's called Broke: How to Survive the Middle Class Crisis).  It isn't pessimistic, in fact - it suggests a way out.  It even predicts a way out.

But I do occasionally wonder, especially yesterday - when the commentators hail the drop in inflation to 1.9 per cent and the rise in average house prices to a quarter of a million pounds - why there is so little debate about the big trends.

Not whether there is a house price bubble this winter, but whether there has been a disastrous house price revolution in the last 30 years - and whether, if it goes on the same way for another 30 years, the average house price in the UK will actually be £1.2m (it will).

So it is a relief that a commentator with her finger so much on the pulse, like Lucy Mangan, has raised the alarm (thank you, Lucy, for bringing me into the debate as well).  This is what she says:

"Already among my friends there is a sense of betrayal. It used to be (we know, from the parents who lived through it and with whom we are increasingly moving back in to save on housing or childcare costs), that if you played the game, if you did all the right things – were thrifty, diligent, cleaved to the principle of deferred gratification – the system would reward you with leisure time, spare cash and a certain freedom from worry in the short and in the long term. Now the feeling is that you have to outwit the system in order to survive it. Win the lottery, have a brilliant business idea, marry money (no longer a dream confined to women, by the way) or inherit it from several forgotten aunts or a neighbour whose beloved cat you once rescued – something semi-miraculous that will provide the protection modest living, hard work and hard saving once did."

That is exactly right.  Because, despite their denial, I believe Lucy Mangan is right that the middle classes feel that something fundamental has changed.  

These are dangerous moments.  When the middle classes understand that they have been betrayed, by the politicians who governed in their name - and by the financial services who looked after their money - it can get ugly.

The rise of the nationalist right across Europe is one symptom of this betrayal, and of the failure of mainstream political parties to provide any kind of solution - even to articulate the problem.

It is, after all, as much a moral problem as an economic one, because the whole system of deferred gratification on which English middle class life depends has crumbled away.  And every new round of bankers bonuses removes a few more pit props supporting it.

So I am nervous about the future for fear of the politics of betrayal, as much as I am afraid of the economic future for my children in the new sprawling proletariat.

But I am still optimistic.  Because, as Lucy Mangan says, the middle classes still have the power to shift the situation.  If they can grasp what is going on.

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The policy lever to tackle loneliness

For some years now, I've been pedalling the idea that 'evidence-based policy', as described by Whitehall, is often a means of avoiding doing anything.

Our official standards of evidence are somewhat naive.  Because it relies on hard objective evidence in numerical form, which - because the objective numbers are chained to descriptions (anything but objective) - is pretty much impossible to find.

Evidence-based policy can so often be the endless search for evidence which will never be forthcoming.  A recipe for permanent inaction.

This is not to say that we need policy without evidence, of course.  But that is another story.

But what I find strangest is the way that, even when evidence is forthcoming, it still seems to take a generation or so to work its way into policy - especially if it is in any way inconvenient.

The evidence that is pouring out of Holland, for example, on the health impacts of trees and green space in cities might be water off a duck's back to planning authorities.

And what are we to make of the evidence about the health impacts of loneliness, set out in stark terms in the Guardian today?

"Loneliness has dramatic consequences on health. Feeling isolated from others can disrupt sleep, raise blood pressure, lower immunity, increase depression, lower overall subjective well-being and increase the stress hormone cortisol (at sustained high levels, cortisol gradually wears your body down)."

These were taken from an important report revealed in Chicago over the weekend by Professor John Cacioppo.  The health impact of loneliness seems to be equal to heavy smoking.  Well, it is evidence of a kind.

But even among the researchers who have understood these things, there seems little understanding of policy options.  Governments seem to believe that loneliness is none of their business, despite the financial costs.  But even the scientists, since they usually seem to be doctors, fall back on medical interventions - with proposals for various kinds of psychotherapeutic interventions or shared talking therapies.  Friendship pills can't be far away...

It is nearly fifteen years ago since I was involved in launching the Rushey Green Time Bank, at a GP surgery in Catford - still going strong - and it seems to provide a glimpse of a solution.

It means setting up the kind of mutual support infrastructure that gets people together, not to talk (except incidentally, of course) but to do things: visiting, befriending, giving lifts, visiting people just out of hospital, fetching medicines, doing small repairs...

In short, doing all those things which we kind of imagine public service professionals might do but never will - broadening and deepening our services.

Loneliness is going to be solved, not by encouraging people to talk about their isolation, but by organising a mutual support infrastructure, on a huge scale, though public services.

Because, in the end, if people feel they are playing a useful role - which is denied so many recipients of our services - it can transform their lives.

But this is tough for the wonks to grasp.  They want to treat people or involve people or get them to talk.  Anything, it seems, rather than finding ways of encouraging them to act.  Strange.  The fear of action by ordinary people runs very deep.

But there is an alternative if we fail.  We can do what the Chinese have done: pass a law forcing children to visit elderly parents..

Beheading people who are responsible for the weather

Cast your mind back to 1668, if you can.  That was the year they decided to start executing bankers.

The banker Johan Palmstruch was sentenced to be beheaded in Stockholm outside his own bank.  His crime?  Causing inflation.

In fact,, the sentence was never carried out and he was imprisoned instead, the fate of innovators everywhere - and Palmstruch had just invented the first European paper money.

The irony is, of course, was that he may have been guilty: his paper bank notes would have definitely hastened inflation if they had been printed a little indiscriminately.

But those were the days when serious economic difficulties had to be punished.  A century before, there had been fearsome consequences in Spain for anyone taking gold out of the country.

It wasn’t that nobody was doing it.  The problem was the balance of payments, and it wasn’t a process that was really understood, any more than inflation was in Sweden.  The trouble is that, when policy-makers fear a process they don't understand, then heads tend to roll.

I was reminded of all this over the past week when the consequences of a changing climate was tackled by some national newspapers with the public execution of the chairman of the Environment Agency. 

It was all a little like Xerxes having the sea whipped for causing a storm.  And I fear there will be more of this kind of stuff.  I would call it medieval, it I wasn’t rather keen on medieval economics – which was in many ways more enlightened that ours is (another story).

I thought about this over the weekend, as many of us did.  At one stage, I was trapped in the village of Nether Wallop, with all the roads out again blocked by fallen trees.

There is a good chance that this marks the beginning of what the New Statesman calls ‘The Age of Storms’.  It means a different kind of planning, and a different kind of economics – as I wrote last week.

But before we get there, there may be many more public beheadings of those who are supposed to have jurisdiction, in the strange dream world of British government, over the weather.  And more attempts to solve these issues the way governments tend to do: by making too much rain illegal.

We have to overcome this kind of superstition before we have any hope of coming to terms, at least as far as policy is concerned, with rapidly changing weather.  I reckon another winter like this one should do it.  

When all three parties, and Treasury mandarins, agree...

My great-aunt, who was a foreign correspondent in 1938 and therefore an expert on rising nationalism, used to say that Liberalism and Nationalism were opposite ends of the political scale - in some ways, far more fundamentally opposed than simple left and right.

But there are two exceptions to that law.  One is that, in the UK, British Liberals have traditionally turned a blind eye to the limitations of Irish nationalism.  They may not have turned a blind eye to its dark side, but they were allies of the Irish Nationalists in Parliament for most of the second half of the nineteenth century.

Because they also believed in self-determination.  They were just sceptical about nation states, and quite rightly.

The other exception I've just noticed.  I am a loyal member of the Liberal Democrats, and have been since 1979.  I believe their work in the coalition is difficult but vital, and courageous.  But when their leaders, and the Labour spokesman and George Osborne, all line up at the same press conference - and when senior civil servants support them - well, even I begin to get a bit suspicious.

I am not and never will be a nationalist, Scottish, English or any other kind - but the sheer negativity poured on the idea of Scottish independence has made me a good deal more supportive of it.

And, by the way, whose bright idea was it to use George Osborne as a paragon of avuncular trustworthiness?

Of course the Scots will be able to use the pound, or a currency tied to the pound, just as - in effect - most of Latin America until recently used the US dollar.  They will have no say in its management without the agreement which Osborne ruled out, but they have little say as it is.

My solution would be for Scotland to create the climate for a multiple currency state, which is the direction we are all heading anyway.  They would use the pound for most major transactions, the euro for cross-border ones outside Great Britain, and a Scottish or other city currencies for local spending.

This gets more interesting when you think what kind of design the other currencies might have.  Personally, I would propose a Scottish pound as a store of value currency, but with local city currencies - probably with a negative interest rate to encourage non-inflationary spending, rather as proposed by Senator Bankhead in the USA in 1933.

This design would allow Scotland to leapfrog the glacial pace of the development of currencies in most of the world.

Because, behind this debate there is something else.  It isn't really about national sovereignty because Scotland would be in the EU and there would have to be co-ordinating bodies for these islands.  It isn't so much national sovereingty as re-arranged sovereignty that Scotland would get if it voted for independence.

Independence itself is not possible, nor actually desirable, for any nation these days.

No, what is at stake here is the question of whether a small nation can thrive economically.  Evidence from Scandinavia suggests that it could.  The success of city states like Hong Kong or Singapore suggest that there is nothing absolute about scale when it comes to success.

But what is absolutely necessary is some measure of currency independence.  And some imagination.

What Scotland has gained from the independence debate, it seems to me - despite all the hot air - is the ability to bring together imaginative people and re-think the future, in a range of ways.

Every time I read another forward-looking, positive report from the Yes camp, on public services or social care - imaginative, hopeful, progressive and practical - I wish that England would have the same opportunity.

Sitting on the Lib Dem public services commission, as I do, is very interesting - but it isn't quite enough.

Why did Alan Turing die?

The Lib Dem peer Lord Sharkey introduced a private members bill last summer to give the great mathematician, code-breaker and pioneer computer scientist Alan Turing a royal pardon.  He had been convicted under the Labouchere Amendment which criminalised homosexual acts between consenting males.

He was put on probation, on condition he underwent chemical treatment, and found himself isolated by the establishment.  He killed himself two years later, in 1954.

I have been writing about Turing for years, and have now written a short biography of him, published yesterday as a Kindle Single.  He is in some ways the creator of the modern world, in more ways than one.  

You can find out more in Alan Turing: Unlocking the Enigma.  It is a fascinating story, reaching a crescendo in the intensity of cracking the Enigma code during the Second World War.

But what I found particularly difficult to understand was precisely why Turing died at the early age of 41.  This has been complicated by the debate about whether this was indeed suicide, or whether it was accidental death.

There have inevitably been dark internet rumours that he was in some way ‘disposed of’ by the authorities. There is no evidence for this. Quite the reverse: the manner of his death, if it was not an accident, was so personal and idiosyncratic, that it is extremely hard to imagine anyone else devising it. 

I think the answer lies in the strange paranoia of the time.  The defection of Burgess and Maclean led to a serious panic inside the UK security services, driven in part by the furious Americans who – under the influence of Senator Joe McCarthy and his anti-communist crusade– had serious doubts about whether their secrets were safe with the British. 

 In 1952, the UK government decided on a deep in-depth investigation into the lives and backgrounds of people before appointing them to sensitive positions. Positive vetting was introduced as part of a deal between Britain, France and the USA. 

 It was widely acknowledge that vetting had to go beyond communist sympathies, and go into what the report official report into the Burgess and Maclean affair called “character defects” – failings such as “drunkenness, addiction to drugs, homosexuality, or any loose living”.

Turing's biographer Andrew Hodges hints at the crisis, explaining that Turing’s holidays in Norway and Greece in 1953, dangerously near the Iron Curtain, could “not have been calculated to calm the nerves of security officers”. That must be an understatement.

There is no way of knowing exactly what prompted Turing’s suicide, but we can be reasonably sure that the security services were extremely worried about him. It was already clear how vital computing was to cryptography and for speeding up the exhausting calculations for nuclear weaponry. Turing was probably the leading theoretician in this field in the world. 

If the British were relaxed about the possibility of his defection, knowing that he had almost no interest in politics, then the Americans would not be. The pressure on the British was huge. Not only could they not risk losing Turing, they could not be seen to be risking losing him. 

Something had to be done to rein him in. Yet, what hold could they have over someone like Turing to prevent him wandering abroad and getting into compromising situations? Cancelling his security clearance would not help. Nor would appealing to his better nature. Nor would close surveillance help, and we know that he was under close surveillance for this period.

They could remove his passport, but that might have had the effect of precipitating exactly the crisis they feared most.

Was it possible that the security services were so worried about his next summer holiday (it was June) that they threatened to tell his mother about his sexual encounters? Did they threaten to remove him from his academic posts? Did they threaten to prosecute him if he went abroad again? 

We have no idea, but something may have pushed Turing over the edge. Turing has been portrayed as a victim of sexual intolerance. He certainly was, but – as Hodges hints so eloquently in his biography, without quite spelling it out – he was also a victim of the Cold War.

More about this in the book.

The government has bypassed Lord Sharkey's bill and given Turing the pardon anyway.  But somehow the controversy about one of the greatest minds of the twentieth century isn't over yet.

Banking bonuses: the twilight of the dinosaurs

To my great shame, I still have one bank account with Barclays.

I was going to move it to the Co-op before discovering what everyone else seems to have always known, that the Co-op sends hefty donations to the Labour Party.  The trouble is that I want my bank account to support real change...

So it seemed like a choice between two old dinosaurs, so I didn't move.

But we customers of the Barclays dinosaur have been given the privilege - given that there are 48 million of us worldwide - of stumping up on average £50 a head to pay their £2.4bn annual bonus bill.

I resent this not just because of the money, but because the damage those bonus payments make to my life goes some way beyond the £50 I have paid.

The bonuses are a reward mainly to their investment bankers for further unbalancing the global economy.  The proportion of it that stays in London is recycled mainly into raising house prices, to the extent that my own children will not be able to afford to rent or buy in London without joining financial services themselves.

All of that might be forgivable if Barclays was supporting enterprise in the UK, but it quite patently is not doing so.

More on the peculiar way that this, and other policy decisions of the past 30 years, is undermining middle class life and values in my book Broke: How to Survive the Middle Class Crisis.

But I read with interest the comments of the Institute of Directors - "for whom is this institution being run?" - and it strikes me that, when the Institute of Directors and the green economists, the small business lobby groups and the left-wing intellectuals, are all on the same side, then political action will almost certainly follow.

I agree with Labour's Cathy Jamieson that we need a bonus tax, though I am equally aware that a bonus tax will tend to be avoided.

But the real issue goes beyond taxation.

When the rewards of dealing in money are out of all proportion to the rewards of genuine enterprise, then there is something more fundamental wrong.  I don't know what the solution is, but I can say two things about it - any solution is going to have to move towards global action, and it will need to restructure banking so fundamentally that its potential rewards no longer unbalance the world.

That is, of course, easier said than done.  So I've been wondering whether there might be any benefits at all to the nations which move first.

They will lose the banking profits to tax, of course - which appear to be used as a justification for almost any abuse and tyranny at the moment.  But they would gain something else: an effective, useful banking system would mean a hugely more entrepreneurial culture, much more widely spread through the national economy.

Which would you chose?

Liberalism and administrative tidiness

I was bawled at by a guard at Clapham Junction yesterday morning. I had held the doors open to let an old gentleman on. Shocking disregard of safety regulations and public money.

But then, I’m a Liberal.

And before you dismiss this example as too silly for contemplation, can I give you a couple more?

Imagine a single mother confides in you that she’s being beaten by her partner and begs you to say nothing; what do you do? Tell social services? Or do you at least consider the case for not doing so – local authority targets for taking children into care, and their appalling record for looking after them afterwards?

Imagine you suffer from serious eczema and you consistently find you know more about the condition in practice than your consultant dermatologist? Do you do what you’re told or go your own way?

Imagine your child is being bullied at school and the school is not doing enough about it? Do you knuckle down, think of the public money, or do you take them out?

These are not small questions. Nor are they rare ones, but I have begun to wonder if they are the touchstone of the different attitudes between Liberals and social democrats around public services.

Liberals retain enough scepticism about public institutions to be awkward.  They are sceptical enough to allow other people the space to be awkward too.

And social democrats? Maybe they do the same, but there is more consideration about the broader public interest, the distortion of public money – more Kantian nervousness about what would happen if everyone was awkward. More commitment to administrative tidiness perhaps.

What about the distortion of public money when people reserve the right to organise awkward local solutions?  All I can say is that it was self-build that first pointed me in the direction of Liberalism.

Cast your minds back, if you can, to the sclerotic public housing systems of the late 1970s. I remember when a group on the waiting list organised the first self-built housing estate on marginal land in Lewisham in 1979.

The Labour council was horrified. By definition, the ability to opt out and go their own way made these pioneers ‘middle class’ in the eyes of Old Labour. What about the impact on the rest of the waiting list? Why should a few people jump the queue by using their own sweat?

If it wasn’t for an imaginative housing chair, Nicholas Taylor, Walter Way – and Walter Segal’s timber-framed homes – would never have seen the light of day.

Why am I banging on about this?  The truth is I've been wondering why I find myself on the opposite side to most people in my own party on the issue of free schools, and it bothers me.

Of course there is a difference between the free schools ideal (self-organised groups of people who want something different in education and are prepared to wrestle for it) and free schools in practice now (occasionally gerrymandered boundaries favouring the well-off).

Clearly, free schools now are not quite in the same category as self-build.  They need to be brought under the same umbrella as all local schools.  They also need to provide a better fit to the central problem: the serious shortage of school places - and the staggering growth of the schools in the poorest areas.  Not a good sign.

Yes, there needs to be a new model for free schools.  I accept that.  But I believe in self-organised services, in their energy and innovation - not because they are infallible, but because they are human.

The arguments levied by people in my own party go way beyond that, as if it is the right to band together locally and make things happen that offends them - "prejudicial to the efficient use of resources in an age of austerity," according to the conference motion.  Or because it "wastes precious resources".

Well, forcing public services to be more flexible, allowing space for awkward people - which means human beings - does take precious resources.  The National Legal Services Program in the USA, allowing people to sue public services to assert their rights, took resources.  Otherwise people have to adapt themselves better to the shape of the service so they can be more easily processed.

That's tidiness, but I don't think it is Liberalism..

Giving people the space to come up with their own solutions, with other local people, is hardly the "efficient use of resources".  It isn't exactly tidy - but it recognises what everyone outside the political class knows: our institutions are inflexible and imperfect.  

I never concluded I was a Liberal because I believed that people should remain passive or because the system came first.  I never gt interested in policy to defend the system as it stands - or any of our other flawed institutions.  And I certainly never became a Liberal because I believed, above all else, in administrative tidiness.

How to pay if it doesn't stop raining

John Maynard Keynes was not well at the outbreak of war in 1939 but desperate to help with the war effort.

He gathered around him a group of friends who had been involved in Whitehall during the First World War – including Sir William Beveridge, who had been in the Ministries of Munitions and Food – and they met once a week at his home in Gordon Square to discuss financial aspects of the war. Keynes called them the ‘Old Dogs’.

He set out his ideas on paying for the war to the Marshall Society in Cambridge, and he turned his lecture notes into two articles called ‘Paying for the War’.  A peculiar leak meant that they actually appeared for the first time in a German newspaper, the Frankfurter Allgemeine Zeitung of 7 November – an extraordinary mistake given how important it would be for the war effort. 

The Times didn’t get round to publishing them until 14 and 15 November. The result was a blueprint for keeping inflation down during wartime.

The key problem which Keynes was addressing was not just how the war could be paid for, in the conventional sense – but how all that money cascading through the economy could be persuaded not to raise prices.

Every other war in history had caused rampant inflation. The fact that the UK did not inflate during the Second World War was down to Keynes.  More on this in my book The Tyranny of Numbers.

I mention this now, not because we can copy him exactly, but because we are confronted with a similar economic problem. And every time I look at the sad, sunken villages of the Somerset Levels, I wonder about it.

It is this.  How do we pay for civilised life in an era of climate change?

Assuming the climate scientists are right, then the kind of incessant storms and torrential rain we have had now since before Christmas may be semi-permanent, at least at this time of year.

If that is the case, it has to turn our economic assumptions on their heads. The most cost-effective infrastructure we have now, built to withstand the minimum of storm damage or high winds, means that energy and transport infrastructure will not withstand it.

Those cracked sea walls and dangling main lines will be familiar – not to mention the swamped villages and towns. London is in the firing line in a couple of days time, when an unprecedented tide meets an unprecedented river flow. The city may survive unscathed, the tube still dry, this time – but every time?

The UK establishment is quite oblivious of this kind of shift.  They are well able to carry on fiddling away with minor tweaks when Rome is well alight – that has always been the official English way.  Goering is opening the village fete, but at least the PSBR is on track, or - as Keynes put it in 1933 - "we are capable of shutting off the sun and the stars because they pay no dividend".

So what kind of shifts will be needed to deal with the new weather if it carries on? I can think of three things:

1. A much more efficient way of creating money. This was Keynes' problem: how can you spend money right up to the point when it would cause inflation, but not beyond? We need to re-visit this thinking. It may be changes in the way it is spent, or the places it is spent, but we will need to create a great deal more money to insulate our infrastructure and homes against the wild climate. Do we do it in a different parallel currency? Do we create the money free of interest, via the Bank of England, and then pay it back and delete it? I don’t know. What I do know is that the current system – creating our money in the form of mortgages whenever it is profitable to do so – is medieval in comparison with what we need.

2. A much more energetic, interlinked system of mutual support. Again the Second World War is a potential model – and those local institutions survived to play a major role rescuing people from the disastrous floods of 1953, as an article I wrote about Ken Worpole showed last year.

3. Much more resilient energy distribution systems, which do not rely on leakages from the national grid. I don’r mean that we need to abandon the grid – but we do need to know that we every community, every building, can produce its own power and manage its own water if the worst happens.

Three shifts, but they borrow from wartime in the energy required to achieve them.  Yet every time I look at pictures of the ruins of the sea wall and main line in Dawlish, I realise that we need to work out how to make them now.

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Help us ask the big What If? questions

"You see things; and you say 'Why?' But I dream things that never were; and I say 'Why not?' "

So said George Bernard Shaw, at least in the mouths of one of his characters in Back to Methusalah.  It was universalised later by Bobby Kennedy.

The issue goes to the narrowness of economics at the beginning of the 21st century. Once a subject area stops studying history, it can appear to them that no other system is possible – it is the way it is, because it is the way it is.

To unravel this, we have to inject a little of St Augustine into the economics conversation again – the bit when he abjures us to be as wise as serpents and as harmless as doves.

It is a harmless hobby to imagine the world differently (though it offends the conventional), but you have to take your wits with you. When you ask a question about like 'What if?' you have to be able to be completely honest - not just about the benefits of the shift you are imagining – but the peculiar and often counter-productive side-effects that are likely to come along as well.

It isn't always comfortable for campaigners any more than it is for conventional economists.

This is the skill that mainstream economists have lost. Worse, they tend to be as harmless as serpents and as wise as doves, neither of which is terribly effective.

I recently edited a book of 'What if?' speculations by economists called What If Money Grows on Trees?, with an excellent introduction by the economist Neva Goodwin from Tufts University.

I’m going to be talking about it with one of the contributors, my friend and collaborator Andrew Simms, at the Brighton Science Festival on Sunday evening. But we need to be able to debate and argue with people, so do please come along and tell us what you think....

We will be as harmless and wise as you want us to be.

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