Friday, 27 February 2009

Borrowing from Fred Goodwin's Bank

Thought I might as well lay in on this one, everyone else is after all.

Imagine for a moment that I, Gordy Braun, am a businessman. Having drawn up a business plan I approach a bank, RBS in fact (clearly you can now see this post is a work of fiction). The bank, having seen my business plan which they really like (I have an MBA from Harvard so my business credentials are automatically of the highest order), agree to lend me the cash to set up my new business - CastlesBuiltOnSand Ltd. But in common with all such lending, the loan is secured. It's initially secured against company assets but backed by a personal guarantee from the Directors (ie myself) which is in turn secured against my house. Anyway, cash comes through and off we go...

Then what happens? Oh no! Calamity! The world market has turned against me, there's a global recession, I did not see that coming! My company can't pay the interest, so the bank calls in the loan. But it's too late the money has been spent, so what happens now? Well the bank invokes the guarantee and I lose my house, but the bank gets its money back so that's OK really.

This scenario is not unusual. Banks just do not lend money without security, and when it goes wrong they will take your house off you. Of course they are very happy to borrow huge amounts of money without offering security, but they won't lend any of that to you. And this is where the ordinary person (or at least the ordinary businessman) starts to get annoyed; there is truly one rule for me, a better rule for you (if you happen to be the director of a bank).

Now we turn to Sir Fred Goodwin. RBS has this week posted the largest loss in UK corporate history, consisting of a £8billion trading loss and £16billion write down on good will, mainly due to the disastrous acquisition of ABN Amro. Sir Fred was the CEO at the time of the ABN acquisition and was the principle architect of the deal, the prime mover. At the time of the deal many said that RBS had paid too much, and we now know this to be true. Subsequently Sir Fred was forced out along with the rest of the Board of Directors (and who can say they didn't deserve it). To top this we also learn that under the terms by which Sir Fred left, he receives a £690,000 pension for life, which amounts to a pension pot of some £16million or more!

The question is, why, if I am responsible for repaying the money RBS has loaned to me, are not the Directors of RBS responsible for the money that was loaned to RBS? In fact why when they have made such a bad job of it do they leave with anything at all, why are they still wearing shirts? There is no good answer to this. The obvious one, that no-one (on the whole) could provide a guarantee to cover the amount that RBS has lost doesn't really cut it.

We also hear that the Government has very nicely asked Sir Fred to hand this pension back. Sir Fred has refused (at time of writing, is refusing), on the overt grounds that this was the deal agreed at the time. The underlying reason is quite different - most people's spending aspirations top out at under £1million; by the time you've bought a big house, a fast car, a holiday in the sun etc, it's actually quite hard to spend even larger amounts of money. What Sir Fred is therefore getting is more money per year for as long as he lives than most people could imagine spending at all. I know I for one would be pretty happy to suffer even quite high levels of opprobrium for £690k per year for life, well who wouldn't? Who is going to give this back if they don't have to?

The better question is, if Sir Fred had known that he risked his pension, would he have quite so happily risked the bank on the ABN deal? Would the Board have done the deal if they knew they stood to lose their shirts? The answer to bank regulation is not to make it tighter, it's to make it self regulating. You do this by imposing on the directors of banks the same requirements as any other business. Do you think we'd be in this mess if we'd done that when we set up the FSA?

Sunday, 22 February 2009

Thought experiments

Thought experiments - simple to carry out (no equipment, so to speak, needed), but the results can be profound. Thought experiments lead to Einstein formulating special relativity, in other cases they are useful in demonstrating or refuting otherwise abstruse laws of physics. For example Maxwell's Demon and Feynmann's Brownian Ratchet both require or lead to analyses of the second law of thermodynamics; Bell's spaceship considers relativity and so on. Then there are many famous examples in quantum mechanics, notably Schroedinger's cat.

Of course one of the better advantages of the thought experiment arises from its position as a theoretical or analytical tool. As the experiment takes place in one's mind, we can happily ignore the limitations of the practical, the current state of engineering and anything else we like, provided we don't break the laws of physics.

Although thought experiments are most common in physics, the technique can be used in other fields to expose what is essentially ridiculous. Here we consider what may at first appear to be an unlikely topic: British Law, or at least that part of it that prevents us from returning anyone to their country of origin if they are thought likely to face torture or be executed. This is the case no matter what laws they may have broken before fleeing, nor how heinous their activities on British soil are, no matter what hatred or violence they incite or have incited in the past, no matter what laws they may break whilst over here.

Consider this hypothetical case: a citizen of some unnamed country that has the death penalty is a terrorist. Whilst at large he perpetrates a number of outrages both against his own country and others; large numbers of entirely innocent people die. During the course of one attack the authorities in his country manage to gather absolutely convincing evidence of his guilt, but don't manage to capture him. What is the best course of action for this terrorist?

Well if he stays he will be captured, tried, convicted and put to death, so best not to hang around. Question is where to go..? Well clearly he'd prefer some absolutist regime that more or less supports his aims and will therefore harbour him. However such places do tend to be unstable, so he thinks he should look around for somewhere better. At this point a lawyer points out the British Law mentioned above, so he comes over here.

At first he lives a blameless life, he breaks no UK laws and lives undiscovered. Then his identity is exposed and he is arrested, however he has committed no crime within UK jurisdiction so the only option is to extradite him. But, of course, we can't because his home country will clearly execute him, so what happens..? We have to shelter him!

Another example: two identical crimes are committed in a foreign jurisdiction, by identical criminals in identical circumstances (OK, unlikely I know, but you see the advantage of the thought experiment...). They are both tried in identical ways and sentenced to identical punishments, death in this case. Only now do the cases diverge, one criminal escapes the other does not. The one that escapes gets to the UK, he is extradited but the terms of the extradition are that he must not be executed once he is returned; the other criminal is executed. Clearly we have created an unjust situation. Either one criminal has been unfairly executed, or the other has been unfairly reprieved or possibly a society has been unfairly deprived of its right to act according to its own laws.

Another example, this time with a real character. Imagine after his trial but before his execution Saddam Hussein escapes (this is a thought experiment, so we don't need to consider how, in theory it's possible). Where does he go?

Why he comes here of course and our laws prevent us from returning him to Iraq. So after all that time, effort and money spent removing him from power, we end up having to harbour him because otherwise he'd be extradited and subsequently executed.

You may be thinking to yourself that this is absurd, but the only unlikely aspect of this scenario is the escape, the rest is clearly true but also clearly ridiculous. This is the classic result of the thought experiment - reductio ad absurdum, the reduction of ones initial assumptions to an absurd conclusion.

Ordinarily this is used to prove that ones initial assumptions must be incorrect, and hopefully that the opposite assumption is correct. In physics or mathematics this technique is used to advance knowledge or dispense with theories that are wrong and we can move on, the better for things. Here we don't get to move on, instead we get to watch whilst the lawyers argue it out, the politicians who created the mess just watch and the rest of us stand with open mouths!

Wednesday, 18 February 2009

Is Prince Harry ginger?

Clearly this post isn't about the colour of Prince Harry's hair, it's about his (sadly) well publicised "home video" commentary. It seems the scene was waiting for a flight along with his fellow cadets and he took the opportunity to make a quick video of everyone, complete with descriptions. One of the cadets in his platoon was from Pakistan and Prince Harry referred to him as "our Paki friend". The video clip some years after the event has now been leaked to the press.

As soon as the word "paki" was heard, everyone jumped straight to the racism conclusion without really thinking about it. This isn't surprising, as much modern commentary is of the speak first, think later variety, but this particular happening also demonstrates the superficial thinking that surrounds the issue of racism.

Racism nowadays is so strongly verboten that even the slightest tinge is enough to have people running for cover. The result of this is lack of proper, sensible debate and the consequence of no debate is that we now have no idea of where the boundaries lie between out and out racism (ie bigotry) and fair comment and freedom of speech. So instead of leaping to the worst possible conclusion about Prince Harry, lets just apply a little thought.

The first thing to think about is context. In fact context is so important, its worth saying again:

What is the context?

In this case it was several things: a privately made video set in an extremely close knit group. Setting aside the issue of privacy (who reading this would be happy for their every private comment to appear in the national press?), the key issue is the relationship between Prince Harry and his fellow Officer Cadets.

The course at Sandhurst is a year long, it's arduous and demanding both physically and mentally. This should be no surprise as the end result is the Queen's Commission, and we do hope these are not given away lightly, or given away at all. The point being, that such long and arduous courses lead to a level of camaraderie that is uncommon outside military life - other examples might be the better sports teams, arctic explorers perhaps and so forth. In that context, words and phrases that might otherwise have negative connotations can lose all their baggage and either revert to their basic meaning or perhaps take on new meaning all together. So in the case of Prince Harry, its quite possible that referring to a fellow cadet as a Paki was not even harmless but actually affectionate. After all "Paki" is just the diminutive of Pakistani, and we do know that the cadet so referred to was from Pakistan.

And that's just to consider the immediate context. The wider context is more illuminating yet; Sandhurst is there to train and prepare men to operate as leaders and commanders in the harshest of environments, to do this the cadets need to be tested in equally harsh environments. One way to generate a harsh environment is to use a degree of verbal abuse. To anyone thinking that this would be inappropriate I'd say, what do you propose instead? If a cadet messes up in training he gets an unpleasant talking to amongst other things; if he messes up on operations he may end up dead, or, possibly worse, someone else ends up dead! If you can't handle a little bit of the verbal, what are you going to be like when the shooting starts? As it happens we know a couple of things about the Pakistani cadet: he wasn't offended and he can handle worse than a bit of verbal.

And what do you think Prince Harry was called during his training when he messed up? Do you imagine that someone might, just might, have referred to the colour of his hair, maybe? Is it out of all likelihood that he was ever referred to as a "ginger tosser" perhaps, maybe with a smile and a laugh, or possibly with greater venom if the occasion demanded it.

Taken out of context, such things can sound offensive or worse, but that isn't the point. You have to judge words in their context, what's more if you're not yourself familiar with the context perhaps you should make no judgement at all.

Saturday, 14 February 2009

Is Gordon Brown Scottish?

Is Gordon Brown Scottish? Well yes, we know that...

Is Gordon Brown "one-eyed"? Yes we know that as well, not least because he's told us; it was the sad result of an accidental kick received whilst playing rugby in his youth.

Is he an idiot? Well arguably no, he's actually quite well qualified, with a PhD and all, I believe. So he's probably not an idiot in any objective sense. Of course wherever there is freedom of speech, this allows him to be called an idiot, and not even GB himself would object to that (well the freedom of speech bit anyway).

So is he a one-eyed, Scottish, idiot? Is the question offensive? Can linking two objectively known facts to a supposition create an insult?

Lets assume for the moment that it's the last of the three assertions that's the known fact, the other two being unknown, and also concentrating just on the Scottish assertion. So we know he's an idiot but we don't know if he's Scottish. Is asking if he is a Scottish idiot offensive to Scots? I don't see how, the "Scottish" is just a qualifier: given that he is an idiot, this serves to separate him from those English idiots (for example). Seeing that the word "Scottish" is a qualifier, does this make any link between being Scottish and being an idiot? Again no, other than that the qualification implies that there are Scottish idiots. If we knew that there were in fact no Scottish idiots then you could argue that the question is unfair, in that it presupposes something that is somewhat offensive and isn't true. But we are pretty sure that there do exist Scottish idiots, so identifying GB as one of them is merely an observation and therefore not an insult. This applies regardless of which of the two assertions we previously knew to be true, we assumed for the sake of the argument that it was the idiot description, but the argument remains valid if we start with the knowledge that he is Scottish.

How about the one-eyed aspect? This is where Clarkson is arguably out of order as anything that hints of a disparaging attitude towards the disabled is going to get you into trouble. So we shouldn't be surprised to hear that Lesley-Anne Alexander, chief executive of the RNIB, has weighed in with the following comment:
"Mr Clarkson's description of Prime Minister Brown is offensive. Any suggestion that equates disability with incompetence is totally unacceptable. We would be happy to help Mr Clarkson understand the positive contribution people with sight loss make to society."
Here we see where the problem is supposed to lie, by calling GB a "one-eyed idiot" we haven't offended GB we've offended the one-eyed because we've equated the one-eyed with the incompetent. Well the idiotic actually (Lesley), idiocy and incompetence are not the same. But never mind that, is the RNIB assertion true? By qualifying idiot with one-eyed have we made a link between the two? Have we in fact equated a sight impairment with idiocy?

If we have then such an equation would persist however we changed the words. Lets see: "Paris Hilton is a blonde woman". By the RNIB's understanding of English syntax and semantics this ought to equate "blonde" with "woman", but clearly it doesn't. How about "Paris Hilton is a blonde idiot"? Well here some might argue that I am making a link between being blonde and being an idiot; "Paris Hilton is a blonde genius" ... Somehow I don't hear any complaints about this one.

Why the difference? It seems that the link of equivalence is only suggested if a less than complimentary assertion is made, at which point those on the side of the blondes immediately cry foul. Well I say, if the hat fits wear it. If you don't mind the compliment, you can't complain about the insult. If Clarkson had called GB a one-eyed genius would we be hearing the RNIB announce a link between sight impairment and high intelligence? I don't think so, the reason being that there is no such thing. In other words English sentence structure does not equate a qualifying adjective with the noun it is qualifying. Blondes are not idiots because they are blonde, Scottish idiots are not idiots because they are Scottish and Gordon Brown is not an idiot because he is one-eyed or because he is Scottish.

(This post relates to a comment made by Jeremy Clarkson in a press conference in Australia in which he referred to Gordon Brown as a one-eyed, Scottish, idiot.)

Friday, 13 February 2009

The Golliwog

Subtitle - is Carol Thatcher a racist or does she have anything to apologise for?

Answer - in my view, no.

There are maybe 2 issues at the heart of this scenario, not including whether or not "green room" conversations are in any sense privileged. The 2 issues are:

  • Is the golliwog intrinsically offensive?
  • Is comparing someone to a golliwog offensive?
Addressing the first point, well clearly a wide selection of commentators think so, for example:

Telegraph Comment

Note that in this case there is no argument presented, it's just stated that golliwog is an offensive term, and herein lies part (if not all) of the problem - there is no debate, it is just assumed or stated as fact that such a thing must be offensive. So lets be grown-ups and have some debate.

What is a golliwog? Well it's a doll, particularly popularised by the jam maker Robertson's. It isn't the only doll you may or may not be surprised to know, there are others out there, and they often have exaggerated features or proportions. For example the Barbie doll has particularly long limbs; the Bratz dolls have big eyes etc etc. However it is just a doll and as such it is widely considered an item of affection. My own sister, as I recall, had a golliwog and there are many women of her generation, and before and after, who will have fond recollections of their dolls, the golliwogs included. So is a golliwog intrinsically offensive? Well no, how could it be..?

If we generalise here, the question is, "is a doll intrinsically offensive?" Well clearly a doll could be offensive but this isn't necessarily the case. Is a doll of a black person offensive? Well, no, not because the doll is black (it might be offensive for other reasons, but the colour can't be the issue). Put another way, is a doll of a white person offensive? Is a Barbie doll offensive? Is a Bratz doll offensive? Is Action Man offensive? Would a black Action Man be offensive? Is a doll intrinsically offensive because its a doll of a minority? The answer to all these is no.

But what about the exaggerated features (the hair particularly)? Well, as observed above, lots of dolls (and seemingly the more popular ones) have exaggerated features, but I don't see people pulling Bratz dolls from their product lines because they have big eyes!

So is a golliwog intrinsically offensive? No, it's a doll and the object of wide affection, it's no more offensive than a Barbie doll or a Bratz doll.

The second point, is comparing someone to a golliwog offensive? Considering the linked item above, at one point the author says:
At what point did comparing a black person to a doll, initially described by its creator as 'a horrid sight, the blackest gnome', become okay?"
Well this is typical of the lack of debate we have. If we dissect this comment a little we get:

"At what point did comparing a black person to a doll ... , become okay?"
Well at what point did it become not OK? Given that a doll is generally an item of affection, why would comparing anyone to such an item be offensive? You'll note that I've omitted what at first sight is the key phrase, but here the author is guilty of selective quotation (and here I'll admit to using Wikipedia as my reference, but the wording is so similar that you'd have to think that the author did the same). The full quotation is:
"a horrid sight, the blackest gnome, but who quickly turned out to be a friendly character ..."
So the above should read:
"At what point did comparing a black person to a doll, initially described by its creator as a horrid sight, the blackest gnome, but who quickly turns out to be a friendly character, become okay?"
Now I think the argument behind the whole article is exposed as being superficial, shall we say (I'm being kind). Is comparing someone to a friendly character offensive? Wouldn't that be a strange world. Is comparing someone to an object of affection offensive? Again, no.

Could comparing someone to a doll be offensive? Well yes, but you'd need to consider the context and the particular circumstances. In particular you need to consider the validity of the comparison; if the comparison is valid then how is it offensive? The truth does not offend, not in this context anyway. Anne Hathaway (the American actress) to my mind has particularly big eyes, I think she looks like a Bratz doll. Have I insulted her, I don't think so, the comparison is valid, what's the problem..?

So lets grow up and debate these issues. Racism is a problem, but bad journalism makes it worse not better.

(Anne, if you are offended, I'm more than willing to apologise over dinner next time you're over here.)

(This post refers to an incident where Carol Thatcher made an off-camera remark comparing a tennis player to a golliwog and got banned by the BBC when she refused to apologise, broadly speaking.)