Some further thoughts on economics and housing

  I was watching an interview with Angela Rayner in which we asked about building houses. Everyone seems to believe we lots more houses.  She realises that unless we get councils building more we are not going to tackle the crisis in housing and the huge size of the waiting list. The interviewer then asked about the sale of council houses and the governments plans to cut access to these.

  It is at this point I begin to lose faith in the abilities of our politicians and our press. The problem is the shortage of housing, selling council houses does not increase the stock of houses and currently reduces the stock of affordable housing. So in what way does selling council houses to existing tenants do anything to solve the crisis of affordable housing, In fact it probably does the complete opposite. 

  If there is to be a valid argument that because someone has paid rent for 5 years they are entitled to buy the property and that was a good thing why not extend it to all rented housing or farms etc.  There would be an outcry that this was unfair, it always amazed me that the high court agreed that the government was able to do this to property owned by the ratepayers. Norwich city council tried to stop the sale but some judge decided it was OK. It does make one wonder about the integrity of the judiciary.

  However there are other implications of the thinking about the shortage of housing. It would seem likely that "free market" economists would assume that the market would somehow adjust and deal with the shortage. One way would be to reduce the demand by increasing prices or even by increasing production.The first of these proposals would create a huge increase in homelessness which as a society we have decided is a "bad thing", though perhaps those who are devoted to the "free market" would not be concerned. As a consequence we have the current dilemma. The only solution that I can see is to create council housing and ban the sale until the waiting lists have become essentially trivial. Let me emphasise that I mean council housing and not housing association which appear to be a throw back to the Victorian era where support for the poor was in the hands of the "Great and Good". 

  In this situation it is clear the market does not provide for a stable and happy society, controlling demand by pricing things out of people grasp does not work. Now consider the ways of central banks and inflation. Their only solution to inflation is to increase interest rates, that is drive up the cost of money in the hope this will cut demand and so reduce inflation This very crude and hits those with low incomes and little savings much more severely that anyone else. But the present cause of inflation is not high demand but a lack of production, perhaps a little like housing, most of which has nothing to do with any actions taken by the UK or its citizens. The question is how will increasing interest rates help to cut inflation in these circumstances? I have no idea but the consequences will be to make life much harder for the poorest. 

Thoughts on Economics Part 1

 For some time I have been concerned that the way that economics is understood and used has some fundamental mistakes.  It is clear that in order to try to understand the economy a standard of measurement is needed. Often to try to see how something works something is measured. In finance and economics this has been money. When we measure GDP, government borrowing, the benefit of a policy they all get referred to pounds or dollars or some other  currency. However this makes the basic assumption  that all pounds are the same which I believe is false and such analyses always benefit those who are better off, and the better off someone is, the more they benefit from such analyses.

 Let me give two anecdotal stories which illustrate how this works. The first is personal and relates to my father. he was an hourly paid worker. How did he cost things? Was something worth paying for?  He did not look at the cost in pounds, shilling and pence. No, his simple analysis was based on how many hours he needed to work to pay for the item/event. Another example was at a time when a Labour government introduced a maximal pay rise that could be granted, this was in 1975 and I think it was £6. A friend who worked for USDAW (Union of Shop, Distributive and Allied workers) most of whom were in low paid jobs, explained that for their workers this was a much heralded pay rise. For higher paid workers it was seen as insulting.

 Recently Andy Burnham announced a reduction of VAT on electricity bills. It was claimed that this was trivial as it would only save £40 a year. To most people that might seem trivial but for families with children on school meals that might mean they can afford to feed their children during school holidays, It was not that long ago that Marcus Rashford campaigned to help families in that situation. To a person who has a low income and is struggling to reach the end of the week with only a pound in their pocket, it could make a significant difference. So forty pounds is a lot of money to some people.

  It is important to see how this consideration needs to be brought into our thinking about tax and benefits and I will return to that in a later post. 

AI and Maths

 As an old mathematician I have been trying to follow the use of AI in maths and trying to understand what is going on. There are two aspects which are confusing me. The first is how a system like an LLM can write proofs given that it is a stochastic system that tries to work out what the next 'token' will be.  The second issue relates to how it would know that it gas a proof? There a re formal languages which have been developed, like LEAN, which can formally check that a proof is valid, at least as I understand it.  There has been a claim from Anthropic;  https://www.anthropic.com/research/formalizing-fermats-last-theorem. This turned the proof into LEAN and then used that to check. Kevin Buzzard at Imperial College has been working on this for sometime; https://profiles.imperial.ac.uk/k.buzzard. Somehow this I can understand so that AI can take a proof and turn it into code in LEAN which can then be read makes sense. 

I have tried to read the statement that Open AI published; https://openai.com/index/navier-stokes-solution/. To those who might read this who do not know me I should make clear that I am an algebraist who has worked mainly in Group Theory and have no expertise in partial differential equations of which Navier-Stokes is an example. As a consequence what I was trying to understand how AI tries to put together a proof. Progress does seem to have been quite dramatic, a recent article by Marcus du Sautoy; https://www.ft.com/content/05a7292e-4931-4631-8f77-164fb727c203, expresses this quite well.

"Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found on the Help FAQ on gift articles.
https://www.ft.com/content/05a7292e-4931-4631-8f77-164fb727c203

Three months ago I tried using OpenAI’s ChatGPT to assist me in my mathematical research to discover non-polynomial behaviour in the zeta functions of free nilpotent groups. It was useless. All it did was regurgitate statements in papers that I’d already published. Two weeks ago I decided to try again. The result was phenomenal. I suddenly had an insightful collaborator that knew how to code and do experiments in the structures I was investigating. It made mistakes but corrected them often on reflection. It responded to my new ideas and suggested its own. It reached a level of understanding of the issues involved that frankly would have taken a new student embarking on their PhD months to grasp. Using ChatGPT, I have now discovered very plausible evidence of the behaviour I conjectured. Because of this experiment, I was not altogether surprised by OpenAI’s recent announcement of its AI model’s successful progress on the Navier-Stokes equation — one of the seven unsolved maths problems known as the Millennium Prize Problems. "

It is not clear which version of ChatGPT he was using, possibly one that is paid for but is still not clear how the models are creating proofs by a process of working out what might come next.  

As a human mathematician my memory is quite limited but when I tackle a problem it si important to know what is already known, obviously a machine can input all the relevant data rapidly and then store it. This can be done much more efficiently and almost certainly more completely than humans.  Having gone through and hopefully understood this material you then try to see how to use it to solve the problem at hand.  Many attempts will fail but as  a human you know that and you know when you have used an argument incorrectly. This is where I get left behind, what does the AI do when it has collected all the data? I think it would be helpful to have some idea how this works, my limited knowledge come up with a few ideas but they are probably rubbish

One other concern is that as humans we come up with questions and they often feed to development of a subject.  If AI is capable of AGI then can we get it to come up with new ideas and questions. Here is a possible test: Create and AI with now knowledge after 1900, it would have to be isolated from the internet. It would have to have input data in a specified way. As the question I want to pose is about physics so perhaps it would only need to have a database of all published physics up to 1900. Would it be able to come up with relativity?

 

North Sea Oil & Gas

 There is a discussion taking place about exploitation in the North Sea and whether the UK government should give permission. The reasons agains are clear, any further development will add to global warming. The argument against says that the developments will create jobs, reduce the UK's reliance on foreign sources and bring down resources.

The last two arguments are rather questionable. As I understand the situation any one producing the gas and oil can sell at world market prices and is there any restriction on who they can sell the oil or gas to. So if someone makes a offer above global prices what happens.

If the country was really serious about the cost then the licences should only be granted on two condition. The first being that the UK has total control over where the oil and gas go. even more important must be the price. If they are only sold at world prices than the UK consumer has no benefit of chaeper prices because it is UK oil and gas.  So the second and most important condition would be a variation on a fixed price contract. That is the oil and gas would be sold at a price negotiated with he government, perhaps fixed at the level preceding the invasion of Ukraine or at world prices whichever is lower. 

This would obviously restrict the profit and presumably to taxes that the government would get but if properly implemented could lead to significantly  lower prices for the UK consumer and thus lower the cost of living.

Let be clear I am not an expert in the way prices paid at the petrol pump and by the energy industry are calculated and regulated so this is a broad outline of a plan . It would need to be carefully pl;anned as private industry is very adept at looking and using loopholes. It might even be that the companies would not with to do the extraction with these conditions but when they first started oil prices were much lower so there would still be a sizeable profit, just not gargantuan!

Nigel Farage and 5 million pounds

 For some time I have wanted to write about the different value money has to different people. My work with Norwich Credit Union made it very clear that people have no concept of how much others earn and why £5 can be a lot of money to some whist £5 million or almost trivial to some. Most people in Britain are somewhere in the middle. 

The fact that Nigel Farage was given five million pounds should seem like a huge amount of money to many people. If you earned £50 thousand  a ear it would take 100 years to earn 5 million. How many of Nigel Farage's constituents earn even £30 thousand a year. Why does Christopher Harborne want to give so much money to  Nigel Farage. Recall this was not a gift to Reform, the political party, but a personal gift to one man, a gift he does not have to pay tax on. So Farage has just been given the equivalent to a hundred years salary at a not unreasonable wage.

This leads to the question of why Mr Harborne would give away this apparently large some of money. According to Wikipedia he is worth over £18 billion. This means that Harborne has given away less that 0.00001% of his wealth. So presumably he wouldn't even notice.For some earning £50,000 that is less that £15, a couple of pints in a London pub. So what does Harborne get for his money?

Notice that he didn't give the money to the Reform party so it is not just about politics. So why would Harborne, who lives in Thailand but maintains a house in the UK so he can donate money to political parties, want for his money. Why make it a personal gift, is he keeping Farage as his own personal poodle. A well trained dog who rolls over and has his tummy tickled as a reward for performing some trick at his maters request. Or perhaps the treat is just another million somehow gifted to Farage. 

One conclusion from that story is that Farage cannot be trusted, he will jump whichever way his master commands.  The other is that most economics does not seem to understand that £5 million is an enormous sum to some and trivial to others. This should really have an enormous impact on the way politicians and economists see the way taxation and benefits affect different people.

A sad day for British politics

 Hi,

I am very sad to see Keir Starmer resign, he did itb with some dignity but it depresses me. Starmer is a good man who has tried his best and not has not been rewarded for it. He never really had 100% support from all his MP's, perhaps less than he deserved for bringing back the Labour Party from the disaster of the Corbyn era.  He made mistakes but rather than the PM's congratulating him for his ability to recognise and correct errors they enjoyed attacking him and not helping.

There was no realisation that the situation the government found itself in was very difficult, much worse than they expected. This should have caused the MP's to gather round and support the cabinet 100% but did they. No of course not, they complained if their own particular concern was not addressed. The problem is that to correct all the failures of the previous fourteen years was not going to be easy. Especially those that go back as far as Thatcher's  regime. 

Things that need correcting that go back that far has been to sale of council housing which lead to a dramatic shortfall in affordable rented housing and a consequential transfer of public funds to private landlords. This government wants to build more council owned properties but has lost all the expertise that it used t have as well as the skilled builders needed to actually build the houses. Another issue which many feel needs sorting is the water industry which was nationalised by Thatcher which many want to take under state control. sadly millions have been wasted by transferring money out of the public purse to fund private equity and, to be fair, private pension funds. It is an interesting that the first thing that happened after privatisation was the directors doubly their income! But what is the best way to get the privatised companies back under public control. Their are various solutions proposed and it will need an act of courage to find the right way forward as well as convincing the public that it is the right way.

Another issue which I find concerning is what will now happen. Assuming Andy Burnham becomes the leader, I voted for him in earlier leadership elections though I don't know that I would this time, can he deliver, Many of those supporting him expect he will change the course of the government but how will he manage that. Being a mayor does not involve handling 400 so-called supporters with their own agendas let alone the issue of a vast agenda to control, many of which are not under your control. For example wars in Ukraine and a complete nut leading USA and the difficulties in the Middle East. The trouble is that if he does not deliver then the trust in politicians will drop even further. This tens to lead to a rise in totalitarian leaderships, a desire for the "strong man". In my life, which is probably passed its used by date, I have never seen a strong man whose rule has been good in the long run.  

To end this diatribe I would like to recommend Neil deGrasse Tyson a very interesting american astrophysicist who does some interesting popularising stuff. Tow comments which are relevant to the current situation. I am not sure the accuracy of the quotes but this is my memry of them which is probably what I want to convey.

Politicians lie because if they told the truth they would not get elected.

Simple slogans are easy to understand but take a lot of thinking about to counter.

Regards

Alan 

 

Houses of Parliament renew?

 We all know that this building is being neglected and will probably fall down soon without action. Some of you will know this is not a building I admire and if it were to fall down I would not feel particularly upset. However many people think it should be preserved and much discussion has taken place but no action has followed. The longer the the parliamentarians take to wake up the more expensive the process renovation will be and probably the longer it will take.

 

One of the causes of dispute is whether or not the Houses of Parliament shouls consider sitting whilst the renovation is being carried. It is obvious to any sensible person that closing the whole building down and renovating it whilst empty be the would be the best option. The question now is what would happen and how will parliament function if the Houses of Parliament are closed. It would be a great opportunity for a serious rethink of how they work.

 The first major step would be for the hoiuses to sit most of the time virtually. Anyone who watches parliament live will rea;lise that for most of the time most MP's and probably Lords do attend the chamber to listen to discussions. A bell rings and they all troop along to vote, I sometimes wonder if they even know what they are voting about, they certainly have not listened to the debate but have been told how to vote. Nost of this could be done online, some of this was done during the Covid emetgency. my poroposal would be that parliament should only meet in person one week per month, that shoud be sufficient to talk in perspn to other MP's. 

More controversially they should meet for differnt weeks in different places. There would be twelve weeks for paliament to meet, I suggest two each  in Belfast, Cardiff, Edinburgh and London, in alphabetical order and one each in Birmigham, Leeds, Manchester and Newcastle. I believe that in the past the sovereign would process around the country. Given a timescale of about 10 years this would give plenty of time for everone to get used to the idea. It would also move the focus away from London and England, note that parlimant would only meet in Enland half the time. 

This should be combined with some other reforms. One that is needed are the rules about doing work outside of parliamentary duties. It would be a mistake to ban this completely because some MP's do useful work and it keeps them in touch with their previous lives. However anything they earn would be put into the fund for the renovation of the Houses of Parliament.  It would then be clear how many are just doing it for the money rather than for helping them keep in touch. I am sure that being on TV programmes is good for their profile but that will happen whether the pocket the money or not.  

Another beef I have had  for a long time is the provision for office and secretarial staff for MP's in their constituencies. These should be provided by the civil service and not used as slush funds. If the office is provided centrally it will stay in the same place and at least one or two wokers should be there permanently. It has never seemed to be good practice for work an MP has done for a constituent of business should be tied to that individual. I realise that sometimes a new MP may not feel that they wish to support somehtinga previous MP has been involved with but they should have the integrity to say so.