Colin's Journal

Germany seems to be taking the wrong approach to reducing its budget deficit. On the bright side at least they are trying to stay within the current spending rules, but by cutting defence spending they will reduce what little influence they have on foreign affairs. Additionally the cuts will not address the real problem Germany has – which is unemployment.

Hopefully we’ll see Schroeder’s coalition government collapse and elections called – although I’ve no idea how likely that will be. It seems it’s only with a change in government that we’ll see some serious economic reforms taking place and the long awaited drop in unemployment happening. One aspect of Germany’s current woes however is encouraging to hear: more Germans are looking to work elsewhere in Europe. The more that Europeans live and work in other parts of the EU the faster the EU will grow, and more importantly the more understanding of others will spread. I’m hoping to work on the continent myself one day, so I’ve got added interest in seeing others working throughout the EU.

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When I was at Uni there were no tuition fees – in fact I was given a grant by the government to help pay for my living expenses. Today fees are part of the British University system – but they don’t bring in enough funds to pay for the higher wages and better facilities that the UK needs to compete internationally.

For once there is a piece in the Guardian that I actually agree with almost completely: on how this University funding gap can be closed. There is one thing that must be said however, the proposal to use student loans in this way to cover tuition fees does not strike me as particularly “3rd Way”. The loan description given here is almost exactly the same as that introduced by the Conservatives (I had one by the time I graduated), and it’s only the interest rates and forgiveness clauses that set it aside from the common situation in the US. Still it’s good that this long outstanding issue is finally being tackled.

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As most will already know we are currently part way through the convention on Europe – the talking shop/convention that is meant to propose reform on what the EU is and how it should work. When it first started it seemed to me that it would inevitably produce a report that would be haggled over and negotiated into such a messy compromise that the resulting changes to the EU would not resemble any agreements made during the convention. However, as time has gone by, it seems that the convention is being taken fairly seriously, and there is a good chance that the resulting EU structure will reflect the results of it.

Everyone is trying to make their own power grab of course, but the important thing for me is that the question of what the EU is for is actually being debated fully with all of the options and ideas coming out. The one big achievement that should be welcomed is that the idea that the EU should have a constitution has been accepted by most (all?) of the major governments. This is a huge step forward in that it will define what the EU is in such a way that the basis of it’s existence can be explained to people without having to consider the scope of the latest treaty.

The battle is now on for what will be in the constitution, with the large powers generally in favour of a permanent (e.g. a 5 year term instead of the current 6 month term) president of the EU. This seems like a good move to me – however one of the big concerns I have is that the talk is not of this president being elected by popular vote, but rather selected by the heads of the national governments. It’s hard to predict how that will work out over the years, but if you want to bring the EU closer to the people then having them vote for someone to define the direction of it seems like the best bet.

The European Commission of course would rather see it’s power extended – I think this is a non-starter. I generally think that the EC does a fairly good job overall, the bureaucracy is fairly small compared to many governments, and they do push hard for members to respect and enforce EU law. Generally the EC is portrayed as being a large over-regulating body, but a lot of their work is instead about forcing members to open up their markets to competition, something that is good for all EU citizens. So why do I think they are wrong to push for more power? The one thing that the EC does that I’m not keen on is the proposal of legislation – to me this is something that elected government should do.

Many people have put together proposed constitutions for the EU (the most memorable one for me being the one the economist did). I’m not sure myself what I would like to see, except to say that I want there to be a strong directly elected component that has the power to overturn existing legislation and to propose new legislation. This would provide a simple and direct way for citizens to change the direction of EU legislation. The problem with acting through national governments is that EU level issues get left behind during election campaigns – and so despite politicians claims otherwise they do not represent the views of the people when dealing with issues at the EU level.

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Browsing through weblogs I came across a short posting on Instapundit regarding gun control and crime levels in the UK. Arguments over the quality of the survey withstanding I think there’s two major points here.

Firstly I agree 100% that the police telling people to avoid becoming victims of crime by changing their behaviour is an un-helpful response. There are two problems doing this:

• It breeds fear. Just because there is a higher chance in London of having your mobile stolen doesn’t mean you shouldn’t use it. In fact most of the time you can carry on using it in the same way that you do elsewhere, not be worrying about being mugged, and live a happier life because of it.
• It stops the problem being tackled. The correct response to a large increase in thefts of mobile phones is to increase the penalties of doing so, not to try and avoid the crime happening by hiding mobile phones away. If you do hide your phone away to stop people stealing it then you are automatically making yourself a victim of fear, and because fear is not recorded in crime statistics, it looks like the problem is being ‘solved’. Deciding on a personal level that you want to hide your phone away is one thing, but pretending that it’s a valid approach to fighting crime is scary.

On the other point raised in the post though I have to disagree. Regardless of your intellectual views on rights to gun ownership I find the following sentiment to be equivalent to hiding away your mobile phone: “Gun control is bad in itself, but it can only exist in a setting in which the right to defend oneself against aggression has already been devalued in a way that makes crime much more rewarding, and hence much more common.”

To me the concept that law and order have broken down to the degree that you must go about protecting yourself against crime using firearms is an admission of defeat. What is the difference between living in fear – changing your behaviour by hiding your mobile away – and having to learn to use and own a firearm?

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I’ve just returned from seeing Bowling For Columbine, the latest film by Michael Moore. I’ve not seen any of Michael’s other films, only the TV Nation series that he did a while ago. The film style is very much his own, although being longer than TV Nation he gets into it in a more serious way.

There’s a lot in this film, and it’s certainly not just about guns. The comparison between Canada and the US regarding prevalence of guns is an interesting point (especially while I’m living here!), but some of the numbers presented are misleading.

For example the film takes the number of fire arms in Canada (approximately 9 million – estimates and sources can be found here), and determines that with a population of around 10 million house holds (population of 30 million) that 9/10 house holds have guns. The maths of course is bogus, while there are around 9 million fire arms they are concentrated together, with gun owners likely to own more than one gun. According to this paper based on the International Crime (Victim) Survey from 1996, around 22% of house holds in Canada has one or more fire arms. The point still stands however that with US gun owning house holds coming in at 48% (see the same paper) it’s not just a straight matter of gun ownership that can explain the nearly 10 times difference in gun related deaths (figures from the movie).

The thesis put forward by the film is that Americans are perpetually afraid – they are constantly being told about dangers in their society, and as a result are more likely to see gun ownership as a part of defence. This added to the sheer number of guns is what causes the number of gun related deaths. It’s an interesting idea, certainly supported by the type of news coverage that I’ve seen in the US, but I’m not sure how well it would hold up to proper analysis. While the number of gun owners in Canada that deem their ownership of guns being for defence is low, this is not true of Austria.

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A quick round-up on some recent software releases: Mozilla has released version 1.2. Mozilla is my favourtite web browser when I’m stuck on something other than Linux (where I use galeon). There’s also a new version of the stable linux kernel 2.4.20, although I’ll wait a few days for some feedback to come in before I upgrade myself.

On the subject of software that hasn’t been released: I’ve now handle text encodings other than ASCII in my weblog system. This means that I can quote prices in pounds properly (£ – see?)! I hadn’t spent any time worry about text encoding until I found that it didn’t work, but now I think I’ve got it nailed down pretty well. Internally everything uses unicode, all weblog posts are stored in XML in UTF-8, and you can specify what character encoding the HTML templates and resulting files should use. The bit that seems like a bit of a hack to me is that I can’t find out dynamically what encoding the GUI is using (written in wxPython) – so it’s currently hard coded.

The feature that I’d like to work on next will be a simple web based entry editor so that I can make postings while on the move – it should be simple enough to implement so it shouldn’t take long. I definitely want to have it finished for Christmas, otherwise it’ll be very quiet around here!

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The big headline in the UK today was that the government has admitted that the current spending plans will result in a budget deficit of GBP20 billion. The BBC news didn’t mention anywhere what this was as a proportion of GDP, which is useful when comparing with the state of our continental neighbours. It seems to provide this information here but looking at the graph shown you would expect the deficit to be around 0.5%. If you read the description of the graph though you will see that this is excluding “borrowing for investment”. Now it’s always difficult to determine what can be classified as investment, versus on-going expenses, so this number should be viewed with suspicion from the start.

In addition it’s also not a useful number in the long run – you might have borrowed money for investment, but at the end of the day you still have to pay it back regardless of how it was accounted for on a year by year basis. I agree with the government approach of having a balanced budget only over the sum of an economic cycle (although that’s a very hard thing to achieve – it means you must make some sort of prediction as to the likely length of future growth periods or recessions!), but excluding borrowing for investment seems like a misleading thing to do.

I did manage to work out what the deficit is as a percentage of GDP – by looking at the latest figures from the latest figures from National Statistics. Here you can find that the GDP for 2001 was 988 billion (plus change), which leaves the deficit at around 2%.

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It appears that the whole of idea of ransomware is starting to be formalised. The concept is that developers build software, do binary only releases and, once it has brought in a certain amount of money, they will release the source code as open source.

It has most famously been used for blender, a 3D rendering program, for which EUR100,000 was raised to free the source code. There is at least one other I know of in the form of pepper, a promising text editor that is no longer being developed.

I like the idea because it allows software developers to build quality software that is released into the community, and get paid. It also means that there is a direct way for consumers of software to purchase open source software in a way that directly benefits the authors, and helps the community as well. I’m not sure how well the idea scales however. If this model continues then we will should expect to see a few consequences fall out from it:

1. There will be some developers that work hard at a project, but at the end the ransom is not met. It’s not clear how to deal with this – the ransom website mentioned above talks about a “time bomb” to address this, but I doubt this will work (why not just wait for it to be released anyway rather than paying for it?)
2. There will inevitably be some fraud and mis-understandings. It’s going to take a while for the model to shake out and have solid contracts behined it.
3. PayPal is going to be making even more money than they do now!

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I’ve added descriptions to my RSS Feeds. They are created by taking the first 200 characters of the first paragraph of any post, and then stripping out any HTML present. It’s not a completely elegant solution, but the RR0.91 spec is fairly limited in what can be included in an RSS feed, so until I move to a more recent format it’ll have to do.

Unfortuantly as a side effect of this it may appear (if your aggregator is simplisitc like that used by livejournal) as if I’ve updated all my posts at once…

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There’s been a running theme through Brad DeLong’s Semi-Daily Journal regarding the tech boom, and the question of the economic growth due to advancements in technology. An aspect of this question is put nicely in this short post regarding the investment in computers and peripherals.

The question being asked is how can there have been an excess in capital spending growth on computers and surrounding technologies, if even today, we are seeing steep growths in “real” expenditure. The problem with this questions is of course in the definition of “real” expenditure. The real expenditure is calculated based on the amount that would have had to have been spent in the baseline year (in this case 1996) to purchase the same thing. The problem with this measure is that the extra computing power purchased today versus 1996 is not really used for anything. The fact that it’s present might add slight benefits to the user experience, but it’s economic impact is actually very low. Whether you are using your 2002 computer or your 1996 computer it will take the same length of time to write that memo or send that email.

The point raised is, however, correct: there isn’t a huge overhang in capital spending on computers. There is some overhang of course, mostly in telecoms, but also present elsewhere, it’s just not that large. One reason for the size of the gap being small is simply that the life cycle of a computer hasn’t really changed much. After 3-4 years you need a new one. It’s not simply a matter of the latest software requiring it, nor the peripherals not being compatible with it, but that it simply wears out. Hard drives start failing, keyboards need replacing, even mice can only do so many miles. Laptops are a particular problem of course – they travel around the world and have more moving parts. The result is that after a while it costs more to keep an old computer going than it does to replace it. When the replacement is made it’s with a machine of a comparable initial cost to the first one but it will, on an economists scale, be considerably better. In practise their was no option to choose a machine of the same spec as the original for a lower price, and so the newer machine will be a better specification regardless of whether or not this was a purchasing criteria.

The other major reason why so much of what was invested in the tech boom has not created a large overhang is nothing to do with hardware, but is instead about software. For any given system or project the hardware costs are always lower than the software costs, and yet in an asset sale the hardware retains it’s value far better than software does. Most software is developed or tailored for a particular situation, and so it has no value outside of that situation. During the tech boom lots of software was developed that is now simply irrelevant, has no value, and so can not contribute to an investment overhang. Unlike the hardware it’s not possible for someone else to come along and pick it up and use it for a new venture – in fact it would cost more to do so than to start from scratch.

In summary: most of the capital expenditure made through the tech boom has to be written off. The hardware that can be sold off does create a modest overhang (except in telecoms where the hardware has a very long shelf life), particularly for servers and other data centre infrastructure, but nothing in comparison to the total expenditures made during the boom.

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