I haven’t posted anything for a while, so thought I should at least write something to try and keep in practice. I’m not sure why I haven’t written for a while. I’ve been working fairly hard and have been away for 10 days or so, so don’t really feel like sitting down for half an hour or so to write something. I also haven’t really been following the news or current affairs particularly closely, so haven’t encountered anything that has infuriated me enough to write about it. May be a good thing since I’m not feeling quite as worked up about things as I sometimes do. I’ll enjoy it while it lasts.
Until my mid-thirties I had the kind of job that didn’t really have any deadlines and I didn’t really have any meetings to attend, so I didn’t bother keeping any kind of diary. I have since, however, started doing more teaching and now am at a level that requires me to attend various meetings and events. I have now got a palm pilot that I sync with Microsoft Outlook and try to regularly update my schedule and keep a list of important tasks.
I often, however, forget to look at my palm pilot and because I also carry a mobile phone, hardly ever also carry it with me. I have, therefore, been considering trying to get some kind of mobile phone that has an email and calender function that can be synced with something online that I can access via my laptop. I had considered an iPhone but was also quite impressed with the new Android phone by Google. Unfortunately, my mobile contract doesn’t run out for another 6 months or so and since I would need to change providers, I can’t bring myself to pay up my existing contract just to get another phone now. My wife’s contract, on the other hand, has just finished. She is also with Vodafone who are offering a very impressive deal on the Google phone called HTC Magic. She has just received her new Magic phone and I must say it seems quite impressive.
What is quite something for someone who started university before the internet existed in the form we know today, is the ability to now carry a phone that is constantly online. Somewhat depressing maybe, but impressive nonetheless. I have also been downloading some of the free applications. I had to get the Star Wars light sabre which my wife scoffed at until she started playing with it. I also downloaded the mandatory news and weather feeds. A particularly impressive application is the Google Sky Map. Since the phone knows where you are and in what direction you are facing, it will display – on the screen – the star field you are looking at. It also has the ability to search for objects in the night sky, by indicating the direction to move your phone in until you are looking at the object you are trying to find.
I now have to decide if I should to wait 6 months before I can get one of my own, or if I should just pay up my contract and get it over with. I suspect that I will probably wait a little while and then give in. I also suspect that although my explicit reason for getting something like this is so that I can have a single device for all my needs, in truth it probably because I just want something fun that I can play with. I was going to say that I would never admit that to me wife, but she seems to enjoy playing with the phone as much as I do, so I may get away with it.
A number of things recently have made me wonder about what I think of as the British desire for accountability. Accountability is probably the wrong word. What I mean is the tendency to have lots of procedures and checks to make sure that everything is being done properly and that money is not being misspent.
As far as I can tell there are two reasons why we do this. One is that we no longer trust people and therefore feel we need to check that everyone is doing their job properly. The other is that an awful lot of money spent in the UK is public money and consequently there is a belief that the taxpayer deserves to know that this money is spent appropriately.
In principle this is all fine. I do, however, have a suspicion that at best this continual checking really does nothing, and at worst actually has a detrimental effect on whatever is being checked. Why do I think this? It is my sense that people work more effectively when there is an element of trust. They will also feel more comfortable making decisions as opposed to continually worrying about whether or not what they are doing will be judged at a later stage to have been the wrong thing to do. This isn’t to say that people shouldn’t follow procedures, but they should feel comfortable using their judgement when they encounter something that doesn’t seem to fit the known procedures. Another factor is the cost of the continual monitoring. I would very much like to know if anyone has worked out how much public money is spent making sure that the rest of the public money is spent properly.
This may seem like I am advocating a completely free and unchecked system, which is not the case. I do think, however, that if a new procedure isn’t going to have a positive effect on the system then in general we shouldn’t introduce it. Also, if we start spending so much money checking a system rather than actually doing something productive with the money, then we should consider changing the procedures. Do I think the end justifies the means? Not quite, but I do think we need to have some sense of what impact the various procedures will have on the end product and we should be willing to modify how we do things to optimise the end result.
It has recently been announced that a couple of banks (Barclays and HSBC) have managed to make a few billion pounds profit in the first 6 months of this year. Most of the profit has come from their investment bank divisions and like many – I suspect – I am disappointed that these banks are now considering paying out substantial bonuses at the end of this year. Firstly, I’m not really convinced that their employees are so brilliant that they really deserve the kind of bonuses that are being predicted (although this is a rather subjective view). Secondly, the argument that they’ve done really well and deserve these bonuses may be correct in some sense, but without taxpayer intervention these companies probably wouldn’t have survived. To assert that these profits are simply a consequence of their talented staff seems slightly simplistic. Some humility and an acknowledgement that without public money this profit would not have been realised would at least make me feel like they have realised how much damage their unregulated business practices have done to the UK and the World’s economy.
What I must admit that I do not completely understand is why investment banks are actually allowed to operate in the way that they do. Maybe I should be more honest and say “in the way that I think they do”. Why do we need investments? From an economic point of view, some people have good ideas, but have no money. Others have money, but don’t have any good ideas. Those with the money then invest that money with those with the ideas and if everything goes well, they both make money. There is generally some risk involved so the investors could lose their money, but the potential returns generally make the risk worth it. By and large, the investor can choose their level of risk. Low risk would generally imply smaller returns and high risk would imply – assuming it all works well – high returns.
Investment banks then presumably came about – initially – to provide a way for investors to invest their money. Of course part of the goal is to make money for the investor, which seems perfectly reasonable. However, the profit is meant to result from this money actually doing something such as providing capital for someone with an idea. Today, however, it seems like the goal is simply to make money in any possible way. Not only does this include what appears to be effectively a form of gambling, but also potentially artificially influencing the share price (by for example dumping lots of shares on the market) in order to make money at a later stage.
It’s seems that in general there is an acceptance that this is all fine. If these investors – and the investment banks themselves – make money this will stimulate more growth. It’s not completely clear to me that this is quite correct. Firstly, the stock market seems to update share prices on a very short timescale. Money can therefore be made on the basis of short timescale fluctuations in share prices. This seems slightly odd in that these changes cannot truly reflect changes in the value of the company. Of course, if someone makes money, others will lose money so one could argue that this money just comes from other investors, but where is the benefit in this? How does the economy benefit by allowing people with money to make money on the basis of somewhat random variations in the value of shares? This money presumably hasn’t spent long enough in the system to have any real positive effect on the economy and presumably this type of trading doesn’t actually generate any real income (i.e., it just transfers money between investors).
One could argue that even though this money moves between investors, it does stay in the system and therefore does contribute to economic growth. Even this isn’t entirely clear since what presumably is required to really make money is a long term investment that can provide some kind of stability to a company. What’s more, a significant chunk of this money goes directly to the investment bank who, as we have seen can make billions of pounds of profit in only a few months. Where’s the benefit in this? Investment banking is just a service industry. Why are we so pleased that a company that doesn’t really directly generate any economic growth is able to make such huge profits. Surely our economy would benefit more if this money was located with companies who actually do something that can generate real growth.
Ultimately I would quite like to see much more regulation producing a system that requires that investors do more to make their money and that when they make money it reflects a wise investment that has lead to real economic growth, rather than simply clever trading that takes advantage of short timescale, random fluctuations in share prices. I’m sure there are plenty of arguments against what I’ve said, but I would be very keen to hear them. Of course, these kind of changes would need to be global rather than national. It’s also possible that one reason why the UK doesn’t want to consider any significant changes is that the money made by these investment banks may actually be coming from outside the UK, hence making money for the UK economy. Despite this, I still think that our economy as a whole would benefit from a more regulated system in which investments are actually aimed at generating economic growth, rather than simply making money for the investor as quickly as possible.
Quite an interesting article in the Guardian this morning suggesting that university degrees have been dumbed down in the last decade or so. This is based on a parliamentary enquiry that shows that the number of students getting first-class degrees has doubled in the last 10 years.
The report seems to suggest that different universities require different levels of effort to get similar degrees. It also suggests that the value of a good degree from a Russell Group university could be very different to the value of a good degree from a non-Russell group university (or at least one that is low on the league tables). Although there may be some merit to this, I can’t really make an informed comment since I don’t have any real experience of the standards at different universities. I would, however, be surprised if there wasn’t some truth in this.
What about the University where I work. Although I haven’t actually been there for 10 years, it doesn’t seem like the level of the material that is taught has really changed (we aren’t making the material easier). We are however replacing some content in the later years with courses that teach skills (research methods, literature surveys). I found this slightly worrying, but suspect that it is probably necessary and since it is at the 10% level, probably doesn’t really substantially change the degree.
What does seem to be happening, though, is an implicit pressure to maintain high pass rates, especially in the earlier years (this pressure does apparently become more explicit if reasonable pass rates are not achieved). Although we haven’t really changed the level of the material that is taught, we do seem to set our exams with some thought to what kind of pass rates we may want to achieve. This isn’t necessarily the overriding consideration, but does seem to play at least some kind of role. In later years this is not as crucial on an exam by exam basis because students can fail some courses and still progress or graduate. Even this, however, worries me slightly. I don’t have a problem with students not being required to pass all courses in the final year of an Honours degree (or 2 years in the case of students doing taught Masters degrees), but I think we introduce this a year too soon, when the students probably do need to have a reasonable understanding of all the material.
Do I think we are giving many more first-class degrees and as a result have dumbed down our degrees. I’m not entirely sure: it still seems pretty hard to get a first-class degree, especially a good one. The high pass rates in early years, however, probably does put students through to later years who maybe won’t cope as well as they should. We also seem reluctant to fail students in these later years since they’ve already committed so much of their time to the degree. My impression is that it may well be easier to pass an advanced science degree than it was 10 years ago, but is probably not significantly easier to get a first-class degree. This is essentially why, in an earlier post, I was arguing for more granulating in the degree structure. This way students could graduate at appropriate times and there wouldn’t be as many students in later years who were struggling to cope, but who may pass anyway because of the reluctance to fail students at this stage of their degree.