Remain or fade

The big day is here. A referendum that should never have happened, forced by a minor extremist party, allowed to happen by intellectual lightweights in government. The EU Referendum decides whether Britain keeps its seat at the table or is pushed outside to listen through the keyhole. So despite my libertarian leanings I’m voting to stay.

This is why. (Note: I have Masters training in finance, statistics, and behavioural economics, so while not a pro, I’m at least an informed amateur). Here we go:

Pretty much everyone believes a Brexit means economic difficulty for a while. Opinions as to how bad it’d be vary, but nobody – Remain or Leave – is pretending it’d be hugs and puppies by Monday. With even Leavers generally agreeing there’ll be a year or two of pain.

Now while we can predict broad economic outcomes a few years out with some accuracy (it’s called the Short-Term Debt Cycle) nobody can predict much beyond that.

So: there is 100% agreement we’ll have a couple of painful years -a timescale we can predict. Versus a 50% belief we’ll grow faster afterwards – a timescale that can’t be predicted.

In other words, Remain’s economic case is grounded in reality, whereas Leave’s is based on wishful thinking.

Someone on the street offers you a choice of £10 today, or a 50% chance of £12 in five years. Which would you take?

If you like Gaussians, then assuming the first guess falls within two SDs and the second within the third, this means there’s over 95% chance the economy is best off with Remain, versus less than a 5% chance it’s best off with Leave.

Based on simple statistics, the economy is better off if we Remain. Because a Remain vote is grounded in solid reality, whereas a Leave vote is wishful thinking. If you’re voting on the economy as I am, Remain is your best choice.

Why should right-wingers support the Living Wage? Try £10bn on GDP

The political map has moved on since French nobles sat to the left or right of the King, but most would still class me as a classic Right-winger. So why do I support a wage floor for the UK – and not just the minimum wage, but a Living Wage and beyond?

Targetting low wage earners...After all, I laugh in the face of unions (economic wrecking balls) who you’d think would be working towards the same goal. And my contempt for the Labour front bench – a mob of jerk-offs and whack-jobs incapable of simple sums – is total. I believe Occupy is shorthand for “Stand and deliver” and that Russell Brand is an overhyped self-indulgent uber-flake, circle-jerking the right-on juice for an audience of Guardian journalists. (Well, no argument there I suppose.)

Yup, the British Left is a joke, and the Conservatives aren’t that much better. I’m a hardcore Libertarian, in the extreme top right corner of the Nolan Chart. High social freedoms and high economic freedoms for all, and the main job of a small government is to protect those rights, not take rights of its own. The rights of society must stem from the rights of the individual, otherwise it’s just masters and slaves.

(As every State that’s ever dabbled in Communism discovers.)

And that’s why my stance is unusual. Isn’t the free market about invisible hands, supply and demand, efficient allocation of capital and all that? Libertarians are supposed to support laissez-faire. A minimum wage is a market distortion, and, the dogma goes, market distortions are always bad.

I still believe that. I’m a Libertarian even among Libertarians. But I also want to live in a civil society. And one of the few arguments against a Libertarian society is that it might not be a civil one.

Just to get things straight: I’m not developing a social conscience here. (Perish the thought.) Don’t worry folks, I remain a self-centred, individualist, rat-racing me-first Social Darwinist who glorifies the I over the We in true Objectivist tradition. Enlightened self-interest is the only personal philosophy that makes any sense, and darling Ayn got everything right, including not liking Libertarians. I enjoy BioShock for all the wrong reasons and Cormac McCarthy’s Judge ranks among my favourite fictional characters. And now we’ve got that sorted…

… anyone working fulltime at the lowest pay grade should be able to afford a decent life.

Let's bang some rocks together. Chris does Content.Not a life of luxury. Not a life of eating out every night – or even once a week. But a roof over your head and cash for Asda, with enough left over for a change of clothes and a broadband connection, isn’t asking much. And that’s all anyone needs to get onto the ladder of self-actualisation. The dignity of work should be matched by the dignity of pay… because those dignities give you the opportunity to pull yourself up.

And a society of 60m people with those opportunities is a successful, economically dynamic one. That’s the kind of place I want to live in.

So let’s look at what really matters to a small-statist: what does it cost?

The answer: a lot less than you’d think. And the benefits are enormous.

Back of envelope: the cost to employers worst-cases 58bn. That’s if Britain’s 12m lowest earners get £9.15 an hour. But many of them work part-time, bringing it down to £26bn or so. And some earn Living Wage already. (Including, to their credit, many local councils – although it’s easy to be generous with other people’s money.)

That brings us down to £22bn on the cost column. And the good news continues.

Because increasing these wages won’t make the jobs go away. Most low-wage jobs are non-exportable. They’re the cleaners, the waiters, the guys who sweep your streets and mix your drinks. You can’t outsource these jobs to Vietnam. A living wage won’t reduce employment.

What’s more, many employers among our EU neighbours already face real costs above this premium: try employing someone in, say, France. Britain’s beyond the economic stage where human labour is a costed commodity; low earners don’t make aircraft engines or devise new drugs. A living wage will have no effect on Britain’s global competitiveness.

Looking for that 360 degree view? Call Chris.Third, most of these extra costs can be recharged directly to customers. Anyone paying £2.50 for a Latte can afford £2.62, and if you begrudge the guy with his hands in your toilet an extra two quid, you need to rethink your priorities. I estimate £15bn of that £22bn moves straight into the revenue column; a living wage carries little real cost to employers.

So we’re down to a £7bn real cost to employers. What else?

Well, surprise surprise: put an extra £400 a month in people’s pockets, and they spend it on stuff. That £15bn charge-out becomes a £15bn economic boost. Which means greater sales for the companies who employ them. Leading to economic growth, higher employment, higher VAT receipts at the Treasury, and an increased feel-good factor among the teeming hordes. Would that cover the £7bn and bring the real cost of this change down to zero? I think so. (And yes, I’m aware how Keynesian this makes me sound. Suck it up.)

There are other benefits. A reduced need for Housing Benefit. A lower bill for income support. And a greater incentive to get into work; that extra £98 a week might, who knows, persuade some lard-assed wasters away from the Sky box. And with the minimum income of a full-time worker – over £18,000 – now significantly greater than most people can score from the Social, the number of people claiming benefits would fall anyway. It’s all good when work pays. An extra £3-4bn boost to GDP?

These positives, of course, also reduce the appalling complexity of Britain’s welfare state. All the edge cases – what percentage of this guy’s rent should we cover? How many hours of this woman’s childcare? – go away, and with them the armies of functionaries who adminster them. (Maybe they can all get jobs in Starbuck’s instead.) A living wage means a smaller State. What’s that, £1bn off the Public Sector payroll?

So there you have it: I estimate a living wage carries a £5-10bn benefit to the UK economy. Not far off a full percentage point on growth. Are you listening, Osborne?

£100k to £10m: a ten-year project

ad73b-37barsinbunkerGiven my modest life goals, I’ve been thinking about how achievable a rich but not ultra-rich level of wealth really is for the average middle-class taxpayer over the course of his working life. So I’m exploring a challenge-to-self: can one individual, operating alone with a job and a bit of capital, build a £10m wealth portfolio in ten years?

It doesn’t involve following some get-rich-quick scheme. (Nobody who gets rich quick ever does.) It’s about doing the right things: developing solid client relationships, doing the right kind of work, understanding your market. Most of all, it’s about the numbers: credit leverage, asset allocation, yields and margins and revenue streams. It sounds like complex financial stuff, but it’s not. Remember there are only two questions in finance, the cost of capital and the return on it. The assumptions below are reasonable: around 5% capital appreciation, 4% cost of capital, reinvested profits and average rental yields.

I’m not the type who employs people (people suck) so owning a big business is out of the question; startups come with such a high risk factor it’s not reasonable to build this strategy on a business anyway. So this is more about what’s possible for a lone wolf. Someone intelligent and self-actuated, but without infrastructure beyond the benefits of living in a stable nation like the UK. I can’t remember a time when I lived without risk (there’s a factor of seven between my worst and best-earning years); the novelty of this strategy is that it takes risk out, aiming for a positive outcome without requiring assumptions multiple SDs from the mean.

Here’s what to do. (As if I needed to say it, this isn’t financial advice; it’s a hypothetical plan I want to follow myself and you should ignore it totally. I don’t really want you competing with me for hot properties.)

Year One: the setup year.

You need a solid income, whatever it’s from: regular salary, sales commissions, client retainers, whatever. It doesn’t need to be a six-figure monster: my plan needs £60-80k. A high-but-not-skyscraping salary for the UK, not even in the top 1% of earners. If you can only hit £40k or so, it’s still possible but it requires a change in mindset. Cancel the Sky subscription, rent your spare room, sell the car and take the bus. Act like the low-income person you now are. People live healthy lives in the world’s priciest cities for under £20k.

Intertwined with this is your credit rating. All the big ratings agencies allow consumer access: Experian, Equifax, CallCredit. Check your score. If it’s low, take active steps to raise it; not much less than a top-decile credit score allows the balance of credit and yield in this plan. Your goal for this year is to have £100k in investable assets in two years, most of which you’ve got already in less investable forms.

Year Two: the savings year.

With discipline a careful worker can save £20-30k/yr. By Year 2 you’re looking to make first use of it. The only longterm asset capable of paying for itself is property; most great fortunes are built on it. My preference is for small freehold houses in secure locations;  land has been a well-regarded asset for 5,000 years, and things like management fees in flats can eat away huge amounts of cashflow. Furthermore, with no-one living above or below to worry about, risk is minimised.

Britain’s property websites allow awesome depth of research; leverage them. My plan involves two shabby but structurally sound 1/2-bedroom homes, on a good street in an up-and-coming area, in a sweet spot like London’s Zone 2 near a Tube. Too fiddly to attract commercial investors, most private buyers get turned off by stale decor, and the market is spotty enough there are bargains at the edges. Find them with a ruthlessly critical eye. It’s not your house to live in, it’s your asset to sweat.

Let’s say costs are around £200k each. Allow a £40k deposit for each plus £20k for stamp duty and solid kitchen and bathroom refurbs, then approach mortgage vendors with your credit rating, income statements, and deposit. Spend two months refurbishing both. Use all the tricks – constant flooring throughout, lots of brilliant white paint, and little touches like making sure all lightswitches and sockets are the same type and free of paint flecks. (I’ve just done this to my own house and it raised the rentable value by £200 a month.)

Two mortgages of £160k carry repayments around £2200/mth. Renting the houses to young professionals brings in around £2600/mth, and capital appreciation another £20k on paper over the first year. Two primary goals are answered: you want capital growth that outpaces inflation (as London’s market is likely to do longterm) and loan repayments covered about 120%. You control a £420k portfolio that pays for itself and your £100k of initial capital has earned a 25% return on paper: you’re on your way.

Year Three: we’re in business.

You’re still saving. And it’s getting easier since you’re pulling in an extra £5k or so from rentals. By December there’s £40k to buy a third Buy-to-Let. (Let’s say it costs £210k.) Your first two properties add £20k to your equity during the year; your portfolio’s past £600k. And we’re just getting started. The biggest risk is to lose sight of the ten-year goal, sell up and splurge: Rule One is that these are long-term assets that grow over time, even while you’re driving a hatchback and watching basic satellite. If you have a surplus, use it to pay down mortage sums to increase your equity.

Year Four: do it again.

The prices are higher, but so are the rents you can extract. (One reason property works as an investment is that it builds in inflation: rents and capital appreciation tend to track.) At the end of the year the portfolio spans four properties and over £1m on paper; it’s producing a solid surplus of over £1000/mth in rent and in the next 12 months will rise £50k in value. The plan is starting to show concrete results. You need to look at tax planning here: your surplus of rental income over interest costs is now significant and the authorities look at this very, very closely. Be open, be honest, but explore all options for carried interest and remortgaging with your financial advisor.

Year Five: that sustainable vibe.

After another year, we’ve reached the halfway milestone: not portfolio size, but a self-sustaining buying strategy. The 40-50k to purchase each additional property is now mostly covered by rent yield: your portfolio is now pulling itself up by its own bootstraps. You’re using money to make money. Portfolio size: around £1.5m, with a third of it equity.

Year Six: the Long 15.

There’s a way to go, and on paper you’re less than 20% of the way there, but there’s a story behind the numbers. Your sixth purchase, taking price rises into account, puts your portfolio in the £2m range with free cashflow of over three grand a month. You’ve been working and earning a long time with few luxuries, but – hey – what are luxuries? The luxury to do what you want each day beholden to no-one: that’s luxury. And you’re better than halfway there.

Year Seven: getting lucky.

By the end of this year you’re at the point where the equity in your portfolio balances your remaining debt, at about a million each way. (If this sounds a lot, remember you’ve funded it to the tune of £350k or so out of your own pocket plus another £350k in reinvested rents: if you neglect capital appreciation for a moment, your return is less than 50% spread over seven years, not much better than a good savings bond.) Of course you DON’T neglect capital growth, which has been around £350k too, and 14% per annum taking it all into account is a far juicier average.

Year Eight: rolling in it.

With your mortgage repayments starting to bite into the capital sums you borrowed, the yield curve is looking good: you’re bringing in twice as much each month in rent payments as cost of capital, with your equity to debt ratio seeing two-to-one on the horizon and you’re comfortably a millionaire after liabilities.

Only one million? Yes – don’t forget tax. Britain has been good to you: it’s the UK’s strong institutions and stable government that gives investors and residents the confidence to come here, supporting your rental market and your capital appreciation. In most places in the world this can’t happen. Look at tax not as a cost, but as your contribution to civil society.

Year Nine: the end in sight.

Portfolio size: over £3.5m. Gross income over costs of over £10,000 every month, with over half your loans paid. With nine properties under your belt by year end, about as many as you’d want to handle working alone, it’s time to start planning the endgame: what you’re going to do in another year or so.

But it’s also time to start congratulating yourself: you may have deprived yourself of Lamborghinis and Breitlings, but let’s face it – they’re just stuff. You’ve probably discovered you don’t need them anyway. It’s time to give up work and concentrate on your portfolio.

Year Ten: the finish line.

No purchase this year, but your portfolio’s valued over £4m and the income allows you to pay down all remaining mortgage amounts. The tax implications here are  sizeable: make sure you make provision for all the tax… your contribution to the social stability that’s enabled your plan to work over the decade.

Outcome: you own £4m of net assets outright, plus a revenue stream of over a quarter of a million pounds a year: another £4m of Net Present Value right there. Over the next year, £250k of revenue plus a further £200k of capital appreciation give you a track record a larger scale investor will look at: an asset delivering stable returns close to £500,000/yr is the sort of thing pension funds get interested in.

All options are open now, from a straightfoward sale to exotic derivatives that securitise your assets and income streams. Remortgaging the lot gives you very high returns over costs (at least six percentage points) due to competitive loan rates now available to you. For the rest of your life, you can enjoy the returns associated with a £10m fortune while steadily accumulating an actual £10m in capital value. The work is done: your portfolio will climb to £10m over the next few years without further work. You’ve made it.

Of course, this plan assumes you find the right properties, capture the right lending deals, keep it rolling and disciplined over multi-year periods. But that’s the point. Not everyone can do it. And for people prepared to put in the work, research the market and sweat the small stuff… there are rewards.

The coming apocalypse: seven billion reasons

705px-Operation_Upshot-Knothole_-_Badger_001Some say I’m cynical. Actually I’m not: all I do is try harder than anyone else to see the world as it really is. Here’s the truth of it: I’m a happy person. I think the UK is the greatest place in the world to sleep soundly, build a business, or be a citizen in.

Which is why if I’m negative on tomorrow, it’s worth a shake.

And I am negative. Not for my personal situation, but for the world as a whole. Because I can’t stop thinking of where the megatrends are going. All the social and economic factors that collectively decide what’s going to happen seem to be pointing one way, and when the streams cross, there’s only one outcome.

We’re heading for another world war, on a 3-5yr timescale.

I’m not talking a regional conflict, or even the assymetries of Iraq and Afghanistan. I’m talking the Hundred Suns scenario, global thermonuclear war, toxic wastelands from Los Angeles to Leningrad and tribal affiliations co-opting civilisation. Consider the evidence… then consider how they interact when they all happen together.

nuclear-explosion1. Our unrepayable debt. The “rich” world owes approximately thirty-two trillion US dollars. And it’s expanding 1.7 percentage points faster than its economies are growing. Britain alone pays nearly a billion pounds a week in interest on its borrowings. You can’t pay back amounts like that in a New Normal of low growth. You can’t inflate it away, either. Not with households throttling back spending, companies hoarding cash, and central banks around the OECD keeping interest rates low. Our trillions of dollars, Euros, pounds and yen in debt are crushing us.

2. The attitudes preventing progress. Despite our debt, the West’s citizenry is clapping its hands over its ears – whole populations with a rising sense of entitlement on both sides of the Atlantic that everyone’s needs must be catered for, without limit, forever, paid from government coffers. (Who fills those coffers? Er, nobody much.) And they won’t vote for anyone who can solve it. Nobody wants to do the right thing, and a billion Westerners do nothing but stand around with their hands out and their mouths open.

3. China is peaking, not rising. It might seem unstoppable; in fact, the big red blot is already on a downward trend. All the IP-stealing, all the Fake Banks, all the new money – nothing there is sustainable or backed by real assets. The Communist Party took a gamble a couple of decades ago, betting they could keep the illusion going for enough years to bootstrap the country to real prosperity: it almost worked, but the West is getting wise to it, and its companies are starting to be recognised for the straw men they are. The tensions this is creating within China – mass unemployment, wealth inequalities, political impotence – will only have one result: a strike outwards by an uncontrolled military. All it’ll take is one sea captain to make an ill-advised landing on an island inside the fantastical nine-dash-line, and NATO gets dragged in. China is the flashpoint, and a billion Chinese will want someone to blame.

4. The Islamic assymetry. The Muslim Brotherhood – a more cohesive and on-message global organisation than Karl Rove’s Republicans in the Bush years – has quietly stepped into the chaos of the Arab Spring, and is putting its people into positions of power across the Arab world. But a day is coming when the West no longer needs the oil that finances our “real” enemies like Saudi Arabia. (The ultimate source of most terrorist financing and investment in mosques and madrassas staffed by imported imams who pour hate into frustrated youth all day, every day.) Meaning this quiet consolidation across the Ummah is happening without schools, without jobs, without prosperity to take the edge off their frustration and rage.  And the Muslim world will start to see extremists as the way out. Terrorism won’t be a few million fanatics, tacitly supported by a few hundred million sympathisers and opposed by the rest. We’re heading for one billion extremists, today’s assymetric war on terror multiplied a thousandfold, pushing political resources beyond reason. A billion Muslims will turn on us, and on each other.

mid-Greenhouse_George_Early_Fireball.ogv5. This angry Earth. Whether or not global warming is inevitable, cyclical, or chaotic, you can’t be pumping a billion tons of noxious gases into our atmosphere each year and expect any good to come of it. 80% of the world’s population lives near coasts; the majority of their homes are beneath the waves with just a few extra metres of sea level. (The amusing thing here is that it’s happened before; we conventionally think civilisation is just a few thousand years old, but there are coherent societal structures – cities – on the ocean floor over eighty thousand years old that used to be on the shores. The only reason this isn’t widely known is that historians aren’t generally scuba trained.) Pressure on the West to do the right thing, while the developing world has a license to keep doing wrong, creates no incentive for anyone to do anything, and a billion Africans who never caused it are already feeling the heat.

6. The end of the rains. There is no Peak Oil, but there is Peak Water. We’re drinking the deserts dry and desalination is too energy-intensive to replace freshwater sources; few cities outside the northern temperate zone are genuinely viable, and those that are are at risk of drowning in brine. Water is a scarce commodity, and billions in the South are already thirsty.

7. The fall of democracy. The compact between citizen and State is broken; with professional politicians inhabiting our Houses and psephology now so advanced a pollster can predict an election with 100% accuracy in every US State, politics is turning ever more polarised – concentrating on the extreme edges, the swing votes, only the few thousand people who can affect the result. The US Capitol is partisan beyond belief; younger democracies in Asia and Africa are just family and tribal businesses working under a pretext. Government has been co-opted by the fringes, and we can’t do anything about it.

When you take all these trends together, there’s only one logical conclusion: it won’t be a crash, but a war.

War is how China’s leaders will deflect attention from their failings. War is how the West will forget its debt. War is how the angry young men of the deserts will fill their time.

There won’t be ground invasions: there’ll be a few days of skirmishing, then someone in China will miscalculate and take it nuclear.

Then there will be blood.

Hundreds of millions will die. Billions more will suffer. Nations will dissolve; tribe will build wall against tribe; family will fight family. Packs of feral children will run naked in the toxic streets, and we shall hunt them for food. Society will be deleted, and there will be no Undo button.

atomic-blast-imagesSome regions may escape. There’s no obvious reason South America will be dragged in, but that continent is at risk of becoming one big narcostate anyway. Australia’s leaders may take the hard decision not to support NATO, and escape the nuclear carnage: Mad Max will tread the fallout everywhere but his homeland. India may go on being India, in all its chaotic complexity, although I expect Pakistan to take its chance once the birds are in the air. But for Europe, North America, the Middle East, and Northeast Asia, decimation is the only outcome.

And maybe – just maybe – it’s for the best. (And not just because a nuclear airburst is the most beautiful thing imaginable.)

We can’t inflate away our debt, stop China stealing, make Muslims respect us. We just can’t. As with every great crisis, the best solution may be to start over.

I’ll survive; probably even prosper, given the opportunities every great upheaval presents. (Chris Worth, Marketer to the Thames Valley Wasteland.) But I worry about the rest. Billions will suffer pain, all because we couldn’t make the few big decisions that really need taking.

Watch this space.

Still an insult, no longer an offence

Finally! The word “insulting” has been removed from the UK Public Order Act’s offence of “threatening, abusive or insulting behaviour”. It’s about time: like all laws written with the best of intentions, it’s been abused time and again to bring people who merely disagreed with a litigious person into a cowed defensive posture.

It’s not far enough – British law still favours people with “beliefs”, constantly letting them off societal and legal obligations simply because they made a big noise about their imaginary friend in the sky. (Witness the way “faith schools” are allowed to discriminate based on what ancient text pupils’ parents prefer, or the way an organisation sending 26 people to the House of Lords is allowed to deny people a certain job rank simply because they’re female.) But it’s a step in the right direction.

Introduced in the 80s, the law’s been abused by countless thin-skinned people who think anyone criticising their beliefs should be jailed. (Interestingly, some of the biggest numbers of both plaintiffs AND defendants in such case have been Muslims. Proving once again that religion is principally a divisive force, something for playing up our differences, not bringing us closer together.)

So at last, UK citizens are once again free to voice nonviolent opinions and concerns as they please. Can I just mention that you are stupid and ugly and your mother dresses you funny?

Goodbye Neil Armstrong

Don’t forget as you read the Sunday obits, folks: all those pictures of the Apollo 11 crew on the Moon are of Buzz. That’s why I thought I’d put a shot of Neil here, reflected in Buzz’s gold visor as he took that famous photo. (“OK Neil, you can take the first step if I can be in the big photo.”- not.) Neil Armstrong reflected in Buzz Aldrin's visor

Despite his military background, Neil wasn’t ultimately a hero or adventurer: he was a scientist. That’s why there aren’t any decent pics of him on the lunar surface: taking holiday snaps just wasn’t part of the mission. A mission that involved over 50,000 people.

Apollo may have been driven by politics rather than rational scientific enquiry. It may have been appallingly uneconomic (taking something like 4% of US GDP.) It may not have done much “good science” – a tradition that, with the near-useless ISS vanity project, continues to this day.

But the outcome was the same: for a couple of glorious years in the 60s and 70s, we walked on the Moon again and again. Goodbye, Mr Armstrong, and – bloody good show.

When one disused missile silo just isn’t enough

I’ve always had a thing about subterranea, and my Fallout New Vegas Tour last year reawakened an interest in missile silos. There’s a tiny subculture Stateside of people who’ve bought these monuments to Cold War military budgets as unusual living accommodation… and one day I want to join them. (Hey, it’s one hell of a holiday let.)

An Atlas-F site: think of it as a pretty big house with a ABSOLUTELY ENORMOUS BASEMENT.Why do I like them? It’s something about the contrasts: the big-sky vastness of the American West, pockmarked by hidden concrete bunkers whose sole purpose was to rain down Strangelovian death on people thousands of miles away. (Or, to take the realpolitikal view, to prevent the need ever arising.)

It’s such a science-fiction cliche – the innocuous shack or wooden door leading down to a cathedral-sized space within the earth – but the pointy bit here is that such things actually exist. Hundreds of them, dotted around mostly-abandoned Air Force bases, from sea to shining sea. Designed to take a direct hit from an airburst in the megatons, they were the strongest structures ever built by Man… perhaps the strongest structures man will ever build. (Cold War budgets aren’t coming back anytime soon.)

Like walking through a graveyard, the few signs above ground create a sense of wonder. Who were these people? What drove them to attempt such feats? What are the stories of that which lies beneath? 

I first travelled across that landscape at 20, and I don’t think I’ll ever get bored of it. To own a parcel of it isn’t even an unattainable dream: there’s a lot of land out there, and in parts of the US 3,000 acres cost less than a one-bedroom London flat. But it wouldn’t quite have the melodrama without a missile silo on it. So my needs are simple and specific: an Atlas-F.

If your idea of a missile silo involves a big trapdoor in the desert with a rocket blasting vertically out of it, it’s the Atlas-F you’re thinking of. They cost an incredible sum to build – over $400m in today’s dollars –  yet their operational lifetime was just a few years; the fearful pace of development during the 50s and 60s made many obsolete even before the bomb went in. With no appeal except as novelties, they change hands today for under US$500,000. (In case this sounds like a bargain, consider: many of the silo tubes were imploded or flooded to discourage trespassers, and I know of no case where the tube itself has been remodelled.)

With an Atlas-F, you get a bit of land above ground, the “Command Centre” to convert into a dwelling, and – down a subterranean corridor – the missile silo itself, minus its erstwhile resident. Many are within commuting distance of major cities; the surburbs sprawl broader today. Most of the Atlas rockets eventually got used for peaceful purposes – launching satellites and whatnot – but their amazing garages remain. Gigantic Euclidean solids under the earth, temples of technology to a war that never came.

I saw one years ago, and the sense of being somewhere Man was never supposed to be is hard to describe properly. So that’s my goal: to own an Atlas-F site.

And now, what comes onto the mMash of the Titans. They didn't make many of these; even the Cold War had a budget limit.arket but a Titan-1?

There’s always a bigger fish.

The Titans were the biggest land-based nuclear missiles ever – able to deliver their megatons of radioactive death to any point on earth. A Titan site is basically an Atlas F site… in triplicate. THREE enormous vertical cylinders, a huge fuel dump and machine shop for each, plus a command centre complex, all connected at deep level by half a mile of tunnels. Now that’s what I call a project!

And one of the very few ever built is on sale. If only.

Unfortunately the price is over £2m. And let’s face it, remodelling the equivalent of three 17-storey skyscrapers through a hole in the sand is one hell of a development project. My dreams continue…

Riots? Blame New Labour

Walking around Deptford last night, I felt the troubles hit some some of tipping point around 2am; tonight I expect them to start fizzling. (Partly because there’s only a finite number of Currys and JD Sports left to loot.) It’s been an interesting week so far. But what caused it?

There’s been a lot of talk over what really caused the riots spreading across London. Blame poverty, blame race, blame lack of male role models, blame the Met’s appalling PR after the trigger event. (At least it seems the guy was, indeed, carrying a gun.) But for me, the attitudes of today that led to this week’s rioting have one core driver: the 13 years of New Labour government.

It was Blair, after all, who coasted in on a promise of “We’ll take care of you.” And Brown who hosed billions at the public sector as it added today’s millions-strong hordes dependent on the public purse. New Labour was all about giving a man a fish – never teaching him to fish for himself.

And that’s why it’s all New Labour’s fault. It created a class of people with no sense of ownership in society; people who think everyone else owes them a living. The looters are one example – but they share space with striking unions (like the one led by Bob Crow, whose Tube chaos has cost Britain about £500m so far) and the pension-guzzling parasites of the public sector, who can’t understand why we don’t all support their bid to keep their pensions three times as generous as anyone else’s.

Under New Labour, these people were made to feel special. To feel that drawing your income from the State was somehow more admirable than being a wealth creator. (It is, at best, its equal – never its better.) And on the back of these views arose a complete contempt for the private sector. Blair and Brown’s disdain for those who create the wealth of nations – as opposed to those who merely spend it – was near-total. Private business, under any Labour administration, is simply an ATM dispensing limitless green notes to fund the socialist dream.

Well, where has it got you, socialist scum?

The Big Lie of the Left – an unwillingness to comprehend that wealth must be created before it can be spent –  has led to millions taking to the streets, in demos, strikes, and riots. All trying desperately to ignore that fundamental truth. The account New Labour wrote its cheques from went so far into the red that the UK now pays a billion pounds a week in interest on it.

And the rioters are wrapped up in the same mistaken belief Blair and Brown were. Partying against the darkness, trying to ignore what’s in plain view.

The next few years are going to be hard. And I doubt this week’s flare-ups will be the last. But we need to return British society to where it once stood – a land of fundamental rights balanced with fundamental responsibilities. Where there’s an understanding that the person most capable of changing your future for the better is the one in the mirror.

For years, people like me at least gave the Labour rabble a chance; lefties make better constituency MPs, after all, because that’s a job well suited to little thinkers. But we were wrong; we should have been clamping their thick skulls in vicegrips until they understood. Because they were – as always – just plain wrong. And now the gloves have to come off. People must be made to understand.

We will hurt you, Labour voters. And we are not sorry. There’s simply no other way.

Don’t go West, young man

That’s it then. In the last 48 hours, the balance of world power shifted from West to East.

With Xinhua reporting China’s “demand” that the US address the structural deficit that drove S&P to withdraw the USA’s triple-A credit rating yesterday, the leverage across the Pacific finally changed direction. (There was the little matter of a $2 trillion rounding error, but a credit downgrade is a credit downgrade.)We all knew it was going to happen, but not quite this soon.

With much of the USA’s debt held by the Chinese government, Beijing now calls the shots – just as the roof over your head is ultimately there because your bank extended you a mortgage. Thanks to its UK-style profligacy in its public sector entitlements, its expensive war efforts, and its absurdly complex tax code that raises very little money, the USA has lost any power over China. And it lost it … yesterday.

I spent a lot of years in the Chinese world and like Chinese culture a lot, but this has nothing to do with Chinese characteristics – or indeed socialism. It’s realpolitik. One country manoevring for advantage in the shadows until it was time to press the button.

The West woke up this morning to a fundamentally changed world. And only time will tell if it was for the better.



Telegraphing change: the generosity of public sector pensions

On the day 750,000 public sector workers are closing schools, the Telegraph reports on the real problem: after years of Labour largesse, the public sector doesn’t comprehend just how good a deal it gets. Thanks to the zero-risk defined payouts of unaffordable final-salary schemes, a mid-career teacher on £32k will retire with a pension equivalent to £500k. Vast.

That £500k isn’t a pot the teacher can take as a lump sum, of course: it’s the equivalent someone in the private sector would have to build up in order to draw a pension income at the same level. But this is the point. Public sector workers get a free ride from the taxpayer, making very little contribution themselves. Whereas the taxpayers who make it possible – private sector workers – get zilch.

We in the private sector don’t want your benefits, teachers; that’d be even more unaffordable. All we want is for you lot to understand that things can’t go on like this – that the public sector isn’t some sort of special case deserving preferential treatment. Accept that things have to change. And get back to work!

Public sector parasites: BRING IT

All right, you public sector fuckers. This is war.

We of the private sector have. had. ENOUGH.

You cannot be permitted to go further. You may not be permitted to cost our country more than you already have, during the years of Labour rule. And the time for negotiation is over.

So, Public Sector workers: Go ahead and strike.

Strike all you want. Strike again, and again, and again.


Because the British taxpayers who DON’T work for the public sector – and there are, despite years of New Labour mismanagement, still some of us left – have run out of patience. Of your endless demands on a public purse that failed to execute an end-run around economic reality. Of your endless bleating about “Fairness” and “Equality”. (Fairness and equality always seem to mean the public sector getting far, far better pay and benefits than anyone in the private sector.) Of your utter refusal to accept – ever – that you might, just might, have to make some sacrifices along with the rest of us.

What’s truly amazing is how poorly you understand that the mood of the country – this time round – isn’t with you. This ain’t 1981, folks. There are a lot of you, thanks to New Labour’s phenomenal expansion of unaffordable nonjobs 1997-2010, but you’re not as strong as you like to think, and we were better to start with. And you’re nowhere near as necessary as us.

We create the wealth of nations; you just spend it.(Definition of a Socialist: someone who’s really genorous with someone else’s money.) Work out who’s actually more vital to the economy here, you scum-sucking lowballers.

This is it. I’m calling your bluff. Go ahead and strike, you fuckers. Go ahead and strike. I’m ready for you. With a baseball bat. With nails in it.

Really BIG fucking nails.

Public sector workers are the all-singing, all-dancing, thieving scum of the world

My word, public sector workers really are the all-singing, all-dancing thieving scum of the earth, aren’t they.

750,000 of the bastards out on strike on June 30th – again. All because the public sector thinks it deserves the right to be insulated from economic conditions. That it has the right – unbelievably – to dip its hands into someone else’s pocket, every year, because it thinks its members are somehow “special”. For special, read: better. They honestly believe – work-dodging, early-retiring, disability-benefit-seeking all of them – that they shouldn’t be subject to basic rules of society. That they should somehow float above it all, protected from reality, and taking money out of the economy they never created in the first place. Just because they work for a jobsworth-employing local council instead of an enterprising private company.

I’ve tried to hold back on this, but there’s no fight left in me. Public sector unions, you are scum. Andy “Serwotka”, you are scum. The 32% or so of his union that actually bothered to vote (if they were in favour of striking): you are scum. Merrily taking money out of the taxpayer’s pocket, never comprehending that all that money has to come from somewhere. To me, you’re thieving scum; to a large number of private sector workers, you’re thieving scum; to an ever-larger percentage of the British taxpaying public (admittedly, a smaller class these days) you’re thieving scum. Fortunately, in the next difficult couple of decades, you’re going to realise just what that means.

This way lies disaster: the disappearing middle classes

The HBR on a subject I’m concerned about: the hollowing-out of the middle class. A problem large and growing – unlike the middle classes themselves.

In the American idiom “middle class” equates to “middle income” – perhaps a better definition than in the UK, where medicine and the law are middle-class. But the principle’s the same: the middle section of society – the part that has most stake in the rule of law and economic growth, the part that pays its own way through life and doesn’t expect or get much from the State – is disappearing, all over the Western world, just as it’s growing massively in the BRICS and beyond.

In the UK, the squeeze on the middle was largely driven by politics, not managers – the last government despised anyone able to stand on their own two feet; much easier to control ’em if their source of income comes straight from the Treasury. Tax credits, income support, means-testing, and the endless hordes of new public sector workers were the results of this mindset. (People think Gordon Brown was a complex character. He wasn’t; he was a simple, unreconstructued socialist, believing people should be kept on a leash for their own good.)

It led, of course, to today’s problematic public sector and appalling public finances – but at least the masses were controlled! For their own good! And that’s all that matters to a socialist; forget the money stuff; we can always print more.

To be fair, there are controllers on the right too. But Tory control freaks (I was sure George Osborne was one, but the guy’s grown on me over the last year) promote their authoritarianism through rules and regulations rather than the bread and circuses of discredited New Labour – and rules can always be gamed somehow, even if the winning move is not to play.

So 17 million Americans are doing jobs below their skills level, with another 8-10m unable to get jobs at all. 10% of the population. That’s a lot of people to annoy. Especially when those people are articulate, educated, responsible individuals, most of whom believe at heart in fairness of opportunity and personal responsibility.

I’m not counting the working poor or the low-skilled unemployed here; many of them are good people, but they’ll never be genuine contributors to society – through no fault of their own, they’ll never be able to pay enough taxes to cover the public services they draw.As a result, they’ll always hold the view that the State owes them a living; takers rather than givers. This is not a negative on low-skilled people – I hugely admire people working their asses off in restaurants and farmer’s fields – but it’s hard for them to join the middle class and take up a contributing role in civil society. We’ve got a general view in the UK that the NHS – a government-funded monopoly, for crying out loud! – should be the only provider of healthcare available to anyone. An uninformed viewpoint – but that’s what happens when the middle class disengages: public opinion is formed by the uninformed. Less civil society, more mob rule.

The middle classes are the backbone of any civilised society. They pay the taxes (because there are many of them); their views shape policy (because they read the newspapers and vote) and they instil values into their children, connecting across the generations. These things together form something called “society”.

And without a middle class – or worse, a middle class that feels hard done by, as in Britain today – we are truly lost.

And Dunkirk spirit died a little more

People warned off from clearing the snow outside their homes. A murdered man is criticised for chasing thieves who then stabbed him. And a musician gets a warning for scaring off intruders.

It’s obvious what’s happening here: Britain’s nannying Police State gets really, really worried when it hears about people fending for themselves. All these puffed-up functionaries in our bloated public sector – all desperate to demonstrate their little bit of power is really, really important and you should really take notice of them – are driving Wussy Britain ever-deeper into the morass of mediocrity and blame culture that’s characterised New Labour’s time in power.

It’s the basic subtext of any Labour government: We Are The Only Ones Who Can Help. We, the State, will protect you; we will define your rights; we will look after you. You have no responsibilities except to us. In return, we only ask that you give up every last detail of your private life, that you abrogate any right to decide your own destiny to us. For you, people of Britain, understand that your neighbour is not your friend, every hedge contains a pervert and every action carries legal consequences. There is Us. Only. Us.

Where’s the punishment? Where’s the deterrent? Where’s the acknowledgement that the bagsnatchers and burglars might, just, have second thoughts about doing it again? That’s what these stories are about. Dunkirk spirit, and how the UK State discourages it.

And to the health & safety idiots, misguided cops, and owlish government ‘advisors’: grow a pair.

There ain’t no justice

The frothing-mouthed Daily Mail does raise sensible issues occasionally, and this is one of them.

From a legal viewpoint, what the homeowner did was indeed against the law: chasing down a housebreaker after gaining the upper hand, then giving him a good kicking. Good on yer, Mr Hussain. But the judges weighed the application of the law, versus the prosecution of justice… and decided on statute rather than circumstances. Which is wrong.

Since we know the law is not a perfect model of justice, and judges are by definition supposed to dispense justice (and have great leeway on sentencing), can judges not be given the leeway to ignore the law in such circumstances?

Just how far should we follow the rules, when dealing with people who have no sense of feeling bound by them?

It’s a dilemma mirrored in every terrorist case, every ASBO, indeed every middle-class person’s interactions with the Police State the UK is fast becoming. If you can’t win by playing by the rules, what’s the point of having rules?

Well, the attackers went into someone’s house armed with blades and ropes. By any moral standard, such individuals have signed away any right to be treated fairly. Mr Hussain did what most men would do in such a threatening situation: HE WHACKED THE LIVING DAYLIGHTS OUT OF THE BASTARD. Sorry, but that’s what real justice is.

(I’m not sure how, exactly, the attackers got off so lightly. Any crime involving a blade is supposed to be a 2year minimum sentence these days. But that’s another matter.)

I hope Mr Hussain gets out of jail quickly. And his attackers do something else soon that puts them inside. But beyond that, I hope this makes judges take a second look at what they’re really there for. Justice ain’t law.

Simple answers 2: the US representational system

I’ve just realised why Obama can’t get anything done no matter how hard he tries: it’s the Senate. So it’s time for another simple solution to a complex problem.

The solution: give each Senator a vote equal to the percentage of the US population he or she represents.

(Note these are simple solutions, not simple implementations.)

The issue is that while the US Congress is basically representative – California has over 50 votes in the electoral college given its population of over 37m – the Senate is not. Two Senators from every State, each with an equal voice in the upper house. This is the complete antithesis of the most basic principle of democracy (one man, one vote.

In practical terms, this means barely 10% of the US population have a veto over all US legislation. That 10% is almost entirely in the Red States: the god, guns ‘n gays crowd. (Apparently they have certain views on abortion, too.)

Worldly-wise, internationally aware (sort of) California and New York, with over 56 million people, have no louder voice in the Senate than … North Dakota and Kansas.

Now there’s nothing wrong with North Dakota or Kansas (or indeed with voting Republican if you’re into that sort of thing) but should the interests of a few hardscrabble villages really outweigh the greater good of cities with economies larger than most countries?

I mean, it’s hardly unique to the USA (the UK’s electoral boundaries favour the Labour Party, whose parliamentary seats require fewer votes on average to win) but nothing in Europe gets anywhere near the situation in Washington.

Odd that the world’s strongest democracy is ultimately overseen by a couple of farmers in the vast flat states inland. But the solution, at least, is simple.

Police State Britain: cops tool up

Hmmm. Armed police patrols in London’s residential areas are to become routine, for the first time. And the unit concerned apparently didn’t feel this was the sort of thing it should have told its chief (or the mayor) about.

It’s driven by a “rise in gun crime”. But this isn’t about gun crime; it’s about drug crime, drug dealers killing each other, not threatening the mainstream population. These guys aren’t getting into gun battles with the cops, or waving guns around on the High St.

And if you are in a gun battle with innocent bystanders around, what the hell use is a bloody spray’n’pray submachine gun?

So tooling up for routine patrols is just yet another example of the Met – one of Britain’s poorest-performing police forces – thinking uncritically. The force, using New Labour’s culture of dependency and authoritarianism as its excuse, is truly out of control.

It takes nine of us: the (lack of) value of a public servant

My three Big Problems with New Labour’s Britain – its nannynagging Police State, its increase in red tape, and public sector bloat – became even sharper when I ran a few numbers about just how under-delivering our public sector is.

For centuries, we who create wealth (business and taxpayers) had a deal with civil servants: work diligently for a living wage, and we’ll forget about your immense job security and gold-plated pension arrangements. New Labour broke that agreement: Britain’s public servants are now among the world’s best-paid – now earning more than an equivalent private sector role.

(Some senior civil servants are on record as thinking they should be paid as much as a FTSE-100 CEO, simply because the same number of people work for them.)

At income parity, that means it takes three private sector workers to support one public sector worker. (There are about 20m private sector workers in the UK and over six million public sector workers, an 800K increase under Blair and Brown.)

So far, just about sustainable – over three privates for one public. But let’s think about this for a second.

All of the civil servants get paid directly from the public purse – i.e. from the taxes of others. Meaning they contribute nothing to the Exchequer at all. So the ’employers contribution’ of NI taxes, for public servants, means nothing – it’s just making these people 11% more expensive. So a public servant has to be 11% more productive just to justify his job.

But there’s more. Public servants enjoy final-salary pensions – something very rare in the private sector. (And even where they exist, they’re subject to risks, like the providing company going bankrupt, that don’t exist in the public sector.) So a public sector pension, even compared to a final salary private one, is massively more advantageous – a discount factor of zero.

Now, a man retiring today spends on average a decade in retirement, and often much more. With a final salary pension, say a third of his total lifetime costs are taken up by his pension. But public sector pensions can often be passed on to spouses – and women marry younger and live longer, about 7-9 years’ difference on average. So overall his lifetime costs will be about twice as high as a private sector worker, who have to contribute to (and live within) their own pensions.

But wait. Public sector workers retire younger – often very much younger. (Why? Because they can.) 55 is common; 50 is not rare. And for certain sectors – like policemen – it’s normal to then take second jobs, again in the public sector, without forgoing the pension from the first. That effect is small but significant – let’s say 10%. A public servant now has to be 2.1 times as effective as a private sector worker to be worth the money. (Unrealistic to say the least.)

However, we’ve not yet dialed in the difference in salary it’d take to bring private sector pensions up to high public sector standards. A reasonably senior civil servant – say, someone equivalent to me but in the public sector, perhaps leading a small team and handling a local departmental budget by his late 30s or early 40s – gets a rock-solid, gilt-edged final salary pension equivalent to a pot of over £1m on the day he retires.

To get the same, I have to contribute approximately £3000 a month to much riskier private schemes from age 30 or so to have a reasonable chance of the same outcome – not far off having to earn another salary on top of my own.

To normalise this data, we’ve got to increase the civil servant’s costs again, to about 2.9 or so. A public sector worker has to be almost three times as productive as a private sector worker to add equivalent value.

On top of this we’ve got to apply a discount factor, because of the increased risk a market-based pension carries. (Bad times are not balanced out by good times in the world of corporate pensions – companies prefer to take ‘contribution holidays’ when the funds are growing strongly, without the necessity of catching up when growth slows.) Let’s say 15% or so discounted to the present day. Not far off a quarter million pounds, so we have to add that quarter mil to the public servant’s costs to be consistent. Another 10% or so on total lifetime costs. 3x.

So in Britain today, a public servant costs three times as much as a private sector one.

With taxes at a third of income, that means it takes nine private sector workers to employ just one in public sector.

And in Britain today there are a lot of public servants.

(All this, of course, is without mentioning the source of those funds. In the private sector, workers are paid from profits made; public servants are paid directly from state coffers and make no contribution in tax themselves. They’re wealth consumers, not wealth creators.)


Look in the dictionary under “unsustainable” and there’s a photo of Gordon Brown.