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?

Simple solutions to complex problems: target the hardcore criminals

The USA’s “black budget” – the part of security spending outside scrutiny, including the NSA’s spy-on-everyone programmes – is now an incredible $59bn. All of it unaccountable with the figure rising each year. There’s a much better way to achieve national security – one that preserves civil liberties for the law-abiding while creating half a million jobs for no net increase in cost. The solution: focus on the actual criminal.

Let’s look at some UK figures first. In England & Wales, a hardcore of 5000 people commit around half of all crime. Raise the set to 100,000, and you’ve basically covered all crime except the odd parking ticket. Assuming the same dynamic applies to the USA, that’s 25,000 people on the Most Dangerous List and half a million on the Watch List.

(The USA locks up a lot of people for life who’d merely be cautioned in the UK, so the actual figures might be higher, but the principle holds.)

The simple solution to this complex problem: for $59bn you could pay over a million people a decent salary to watch one person each.

That’s it: all these new employees do is follow one specific lawbreaker around, day in day out, reporting on what they do and who they’re doing it with. Infringement of civil liberties? These people are known criminals; they’ve already demonstrated their lack of interest in civil society. And the upside – no need to listen in to everyone in the world’s emails and calls – is a far greater prize.

Imagine: the ancient legal principles dating back to the Magna Carta – the right to be free of unreasonable search or seizure, to not be detained without reasonable suspicion – actually coming back into force, regaining the rights we’ve all lost since 9/11.  Big win for the honest citizen.

The cost structure is appealing, too. Many of those 0.5m offenders will be low-risk and nonviolent. (There are plenty of people in jail across the USA because they got caught with a joint at 18 or slept with a girlfriend aged 17.) So watching them like a hawk wouldn’t even be a full-time posting: the odd phone call and app check-in would suffice.

This means the hardcore ones could then be assigned up to a dozen Watchers each: experienced professionals whose sole job it is to stick closer to the offender than their own shadow. There’s an excellent career path for a young Watcher. In your first years on the job, you get Mildred Who Once Took a Bong Hit Near a Window. With a bit of seniority, you get assigned to Fred Who Repeatedly Drives Uninsured. Five years in, you’re into Boris the Bag Snatcher and Mohammed The Hate Preacher. Stay in the job long enough, you might even get the worst of the worst, a tax-and-spend socialist or something. (OK, but you get my point.)

That’s my simple solution: target the people who actually do crime. Civil liberties get respected once again: the lawbreakers earn credits based on how long they’ve stayed on the straight and narrow, giving both watched and Watcher aligned incentives. The jail population shrinks by two-thirds overnight; over a million people return to society within strict limits. It also erases the artificial distinction between criminal and civil law – which in the USA and UK doesn’t really exist in practice anyway, with 1% of the population in jail and white-collar crimes being charged under Terrorism legislation.

We don’t need a secret security apparatus watching our every move, where everyone is a suspect and your thoughts are used against you. We just need to do the sane thing – watch the criminals.

 

 

£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.

Google AdWords: expect to pay

Root-and-branch marketing across all media. 07876 635340.Google’s AdWords is an amazing business: an intrinsic part of the pricing model is that prices automatically rise to the maximum level the market can support. As a marketer, that means Google isn’t leaving much on the table – what economists call “minimal consumer surplus”.

But there’s a flipside: the maximum the market can pay also means AdWords delivers the lowest utility the market can bear. Unless you stick to the shadows of ultra-rare keywords in undiscovered market space, the service is always priced just below the level where it’s not worth it.

So what does that mean for small marketers like us?

First, it’s that AdWords will be expensive. Eyeball for eyeball, for instance, it’s pricier than a superbowl ad, and much more expensive than local radio. (Radio is always one of the best deals in media, incidentally.) If your market’s restricted by geography, as most consulting-type businesses are, take a look at traditional media: a 5,000-envelope snail mailing may well deliver better results than AdWords. The rule in this space is that “something happens” – a client turns up, a big new booking arrives – about once every thousand customer touches; expect 4-6 projects from your 5,000. Such a mailing will cost north of £3k, so you need each project to be over a grand to make it worthwhile.

(Of course, most consulting work comes from repeat business; find guys you get along really well with and they’ll still be paying you a decade later. That’s where the value is; a £3k mailing that brings in £3k of billable hours isn’t a breakeven, it’s an investment. Because one of those guys will like you enough to use you again.)

But AdWords still has value for a small marketer. Namely that it’s easy to control. You can create, change, and test ad executions in two shakes; dial your budget up or down; experiment with different times of day or sets of keywords. But because you can get started on a budget of a few pennies a day, many marketers make the Big Mistake of thinking it’s a cheap option.

The trick to making it function is to work backwards. Let’s take some figures.

Let’s say you’re in my business: a jobbing copywriter. I’ve got some built-in advantages – a decade in the world’s top agencies gives me some heft, while parallel skills with buzzwords like predictive analytics and information architecture position me a few rungs up from the average ex-agency type. But by contrast, being a lone wolf by nature means I’m hopeless at the schmoozing and networking that leads to new client contacts. While working at a higher pay grade, I’m fishing in a smaller social pond.

So key is to know what you’re looking for. A “good client”, for me, is a midsized company (up to 250 people or £50m in turnover) doing something interesting but complex. (Often you find these in the technology or financial sectors.) These tend to be companies where internal marketing resources are stretched, or who can’t afford the £80K+ cost of a senior marketing director… giving them an incentive to make good use of outside resources. (With the absolute minimum cost of employing a junior professional being £30k+, they can afford a much more senior person on a part-time basis, especially one who doesn’t need a desk.)

So what does it take to win a £30k client with Google Adwords? Answer: at least £5,000. That’s a budget that puts you in the top few percent of all AdWords spenders.

Of course, you might get lucky. But I’ve done it half a dozen times over the years, and on average, a big new client – the sort who pays a retainer for an agreed set of services month after month for a year plus, a client you can learn and grow with and give ever more value to as the journey progresses –  will cost you £5,000 to acquire and another £5,000 in resources to retain. (The second £5k: we’re talking pitch projects, meet-and-greets, learning curves and outright freebies. I shortcut part of that with my free £1000 offer.) That’s £10,000 you need to invest for every new client win.

That’s why most freelancers don’t make any money. They just can’t make the investment.

Let’s look at the figures. My ideal client profile describes perhaps 15,000 companies in the UK, perhaps 50,000 across Europe. That’s surprisingly few in a zone that contains tens of millions of businesses, even given that my capacity is about 4. With half the world’s population using Google, you’re going to waste a lot of clicks and pageviews before any of them stumble across your value proposition. Count on a campaign running for three months before you get a solid sniff.

In that time you’ll have a few thousand clicks and your ads will be shown several million times across Google’s Search and Display networks. It’s all worth it, but you have to make a lot of upfront investment before it pays off.

Because that’s Google’s value: once you get a real lead, it’ll really be a real lead. The gap between someone idly clicking your ad, and actually dialling your number for a chat, is a huge mental commitment. By the time someone’s heard your voice, the odds of them becoming your client are a lot better than 1-in-10. (Once I went a whole year with every single first contact leading to a paid project.)

But on average, count on every new longterm client costing a third of that client’s first-year gross to acquire.

AdWords. It isn’t cheap. But it has coverage. And if you make the investment, it pays off forever.

Queues at Heathrow, Q’s for the unions

Summer’s on the way, and just before a public holiday the news is full of two-hour queues at Heathrow. How convenient… for some.

And as usual, Britain’s journalists are completely missing what’s really happening here: Britain’s unions want the queues. Here’s why.

Let’s look past the talking heads to some basic drivers of human behaviour. You’re a union baron wanting to secure yet more pay and benefits for your members. (Most of whom don’t vote in favour of strikes, but that’s by the by for union bosses – nobody plays faster and looser with inclusive democracy than a committed Socialist.)

Now Labour’s out of power and the days when you could rock up to Number 10 and be invited in for beer and sandwiches are long gone, the main tool at your disposal is striking.

And if you’re looking to strike, lengthy queues at Heathrow beforehand would make it look justified, wouldn’t it?

So that’s the crux of it: who, here, really benefits from long queues at Heathrow? Not the government; they’ll shoulder the blame. Not, of course, the customers: we’re talking unions here, whose only attitude to customers is fuck the lot of ‘em. The only people to benefit from apparent undermanning are the people planning to go on strike.

That’s why the queues last forever: a deliberate act by the lefties to screw Britain’s economy … for the benefit of its own members.

Eyewitness accounts from passengers confirm that at busy times there have been just two desks open to process arrivals. They may have had manpower cut by 10%, but that still leaves a lot more than two immigration clerks. Which makes it obvious what’s really happening here: Britain’s over-unionised, ultra-bloated public sector is cynically engineering a crisis to make itself look like a victim.

I don’t see why anyone’s surprised, really. It’s all the public sector ever does.

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.

Simple solutions

It’s amazing how many of the Big Problems could be solved simply. But those in the position to make those decisions don’t do simplicity. Unless, perhaps, the solution (once found) is so simple and obvious everyone adopts it immediately.

I appreciate that when there are special interests, lobbyists, and campaign contributors to satisfy, simple problems are the hardest to come up with… and in the USA in particular, cross-party alliances for the greater good seem to have died with Roosevelt. But when it comes to simple solutions, competing interests aren’t the biggest blockage.

The bigger problem with simple solutions is that you’ve got to make one change… and then not interfere with what happens next. And for today’s politicians, not interfering is the hardest thing of all.

However, executional factors aside, I believe that despite the multiplicity of complex drivers, every Big Problem has a simple solution. There’s ONE enabling factor that would release pent-up potential and open the gates for all related problems to be solved…. key word: ‘enabling‘.

In some cases, the simple solution is obvious. For example, take Israel vs Palestine: it’s All About Jerusalem. Sharing a couple of mouldering rocks in the Old Town; that’s what this thousand-year-old problem is ultimately all about. For others, the simple solution is buried in behaviour or legislation sometimes centuries old.

Here’s my list. The principle: make the change, then let go.

Iran. A solution to “the Iran problem” is exceptionally simple: show some respect. Persian culture is ancient and fascinating; this huge and deep nation just wants us to take it seriously, with Ahmedinejad the (somewhat deranged) voice of this ‘tude. I thought Obama was the man that’d do this, but he’s got off to a bad start. You don’t have to like someone to respect him.

The financial crisis. The solution here is deep – but simple. The Bank of England (and its counterparts elsewhere) has few instruments to influence the economy: interest rates, quant easing. Let’s add one more: a rolling ability to set banks’ required capital ratio. When the economy starts overheating, turn up the ratio. When it starts sloping downward, ease up. This simple solution (nominally free of political interference, like Gordon Brown’s one good idea of letting the BoE set interest rates) would smooth peaks and troughs in the economic cycle and put bankers in their place.

American healthcare. The solution here is brilliantly simple: kill the tax perk attached to health insurance. This distorting tax break, originally designed to encourage employers to provide insurance, takes $250bn a year out of the US Treasury – not far off the entire cost of Medicare per year at present. The resulting effects, as fewer employers provide insurance, would be to increase incentives for insurers to offer affordable personal plans, currently out of reach for anyone earning below $50K. In turn, more insured people would reduce the distortions of uninsured people arriving in emergency rooms, encouraging preventive treatment and earlier, cheaper interventions. The total cost savings would enable the only national health solution palatable to US voters: a cheap government-backed insurance for the unemployed. Costs down, revenues up, a raft of new business opportunities, and 100% population coverage. Simple.

Closer to home, Scottish independence. The solution for Scotland is simple. Just let them do it! Seriously: give ’em their share of the debt (Hellooo, RBS!) and cut the apron strings that shower endless English taxpayers’ money onto Edinburgh. This nation of five million people contains perhaps 150,000 actual taxpayers; it has serious self-inflicted health issues and is almost entirely reliant on Westminster’s largesse. Take that largesse away, give Scotland independence, and what’s the betting they’ll be on their knees wanting to rejoin the Union within a decade. Problem solved.

British education suffers two Big Problems: crap schools and underfunded universities. As usual, both caused by Labour governments. (Socialists never understand the Law of Unintended Consequences, not being capable of seeing further than their own noses.) Both can be solved with one simple solution: the International Baccaleareate.

The English school curriculum is cluttered and prescriptive: telling teachers what to do, yet preventing them actually doing it. It focusses far too much on top-of-Maslow’s-Pyramid stuff like self-actualisation and diversity, before the basics of reading and writing are embedded. Employers constantly complain of remedial maths and English for supposedly bright candidates. Meanwhile, tens of thousands of British kids are missing a university place this year, since providing such an education costs more than the £3K/yr the universities are allowed to charge. While all universities remain open to ‘international’ students able to pay a market rate.

The IB is a general qualification covering a range of subjects taken at 18 – a ‘real’ education, instead of the politically-correct GSCE (where being unable to reach the correct answers does not deny you a pass) and the over-simplified ‘A’ Level (now offered in subjects including Photography and Hairdressing.) The teenage holder of an IB is a Decent Citizen, capable of writing a plain declarative sentence and solving a simultaneous equation with a working knowledge of history and the great stories across cultures. A sense of ‘place’, lacking in so many young Britons today (and responsible for their poor social skills.)

Equipped with an IB, British students would compete as ‘internationals’ (nothing’s more racist than denying a place based on passport not ability) and would get offered places based entirely on their abilities, as it should be. They get charged the same rates as international students; paying for it is their problem. (This solution is about improving education, NOT improving ‘access’ – another New Labour straw man put up to cover their hatred of the middle class.) The simple solution here is to make the IB the basis of schooling in the UK.

And, of course, there’s an obvious one for Africa.

Big Problems, simple solutions. There are plenty of them; I think I’ll add to this post over the coming weeks.