AN OUTSIDE VIEW

Driftwood Structure , originally uploaded by seadipper . A week after a ship was wrecked off Portland Bill, masses of timber were washed ashore on the Sussex coast. In Brighton, people were building structures like this on the beach. Strict warnings were given against taking the timber away, even though it was battered and soaked with seawater. A week later a clean-up team arrived in Brighton. They began by clearing away the structures that people had made. They have some huge machines to collect the timber, consuming huge quantities of diesel. This morning, because the swimmers can't use their arch because the lock has been glued up for the fifth time since the new year, we made up a fire below high water mark, using odd scraps, and the clearance people with their big machines promptly turned up even though there is a mile of beach they are working on, which looks as if they were trying to intimidate. But they didn't, and we had a nice swim and a warm-up afterwards ...

The Danish IC3 trains (above) are amongst the most comfortable in Europe, though for how much longer? There is plenty of room and there ample space for luggage between the seat backs, so you can keep an eye on it. You can see out of the train from wherever you sit. This is an ideal arrangement and nowadays it is unusual. But a member of DSB staff told me that the seating in the trains will be changed when they are refurbished with unidirectional (airline-style) seating instead of the traditional arrangement in facing bays. Airline seats are for aircraft, where the luggage is carried in a separate hold. Where they are fitted in trains, it is almost invariably unsatisfactory. Look at the result where this has been done in Britain. The obvious effect is that the luggage space between seat backs is lost. This means that luggage shelves have to be provided, which loses space. Worse still, people cannot keep their luggage near by and there have been many instances of theft, including one cas...

Politicians from EU countries are meeting today to discuss methods of banking regulation to prevent a recurrence of recent events. But neither regulation nor supervision will work. If the problem is to be tackled, this must be at source. What has happened is a classic cyclic bubble. At the start of the cycle at the bottom of a recession, credit is in quite short supply. Nevertheless, banks lend money for land purchase, usually concealed at property or house purchase, but in which land value is a significant proportion of the total value. The money is lent on the value of the property as collateral. As time progresses and the economy starts to recover and with more of an assurance of income, people are more willing to borrow and lenders are keener to lend. This availability of funds starts to drive up land values. The banks, seeing land values rising, become ever keener to gain business by lending. This sets in train a positive feedback mechanism, with banks lending on the strength of l...

The government is proposing yet another initiative to get the long-term unemployed and disabled back to work, with skills audits, training schemes and the like. It is all very worthy, but the problem is that, while the benefits do not exactly permit people to live a life of luxury, the shape of the tax and benefits system makes it costly to employ them whilst leaving them any better off. This is a consequence of targeting benefits. People move into the target area and stay there. Who can blame them? And this is why these schemes have had a marginal effect over the years. With recession on the way, and no policies which would help to get the economy on the way to recovery when it comes, where are the jobs for these people newly equipped with skills?

Forth Road Bridge , originally uploaded by bridgink . The Forth Road Bridge, built in 1964, is starting to show its age, and a replacement is needed. It is likely that weight restrictions will have to be introduced within the next five years and the new bridge will have to be opened by 2016. How should it be paid for? The Private Finance Initiative method is the most likely. But why? The bridge is essential to sustaining land values on the north side of the Firth of Forth and its influence extends far beyond that. The logical method of payment would be through a bond issue, supported by revenues from a land value tax, but that is not going to happen. But all of this has a bearing on a statement by the new head of the International Monetary Fund, Dominique Strauss-Kahn, approving of the US government's financial policy of injecting funds into the economy through tax cuts. What is wrong with that policy? First, there is no guarantee that tax cuts will maintain consumer demand....

As the economies of many countries in the world slide into serious economic difficulties, one might be excused for asking how this situation has been allowed to come about? It is not as if similar boom/bust events have never occurred in the past. Governments are advised by experts, the newspapers all employ teams of expert commentators, and throughout the world there are academics and other professionals who are supposed to have an understanding of how the economic system functions. Yet seemingly they have no better grasp of events than fortune-tellers, tarot card readers, and diviners of chicken's entrails. Are these experts mere charlatans? If not, what has gone wrong? The economic process is in principle simple. Human labour is applied to natural resources to create products that people desire - food, clothing, shelter and artefacts that give pleasure. Very early in human history, those products were transported and exchanged, from places where there was a surplus to places wher...

One of the effects of the smoking ban is cleaner air in pubs and restaurants. Another is piles of butt ends all over the streets outside pubs.

This used to be the Casino. It is on the main road from Brighton Station to the sea front. No doubt it will be vacant for many more years. The owners have little incentive to do anything with it in the depressed state of the property market.

The news is full of stories about politicians who have been accepting large amounts of cash for their campaigns to get elected to various political positions. It is easy to understand why people would give money away for this kind of thing, but why does anyone crave political office? Especially positions like US President and Prime Minister in the UK. It is my idea of spending a period in hell. Gordon Brown, for instance, wanted to be Prime Minister for years. Now he has got his wish, just when things have all gone wrong. Any sensible person in that position would be sorry they had ever got the job. This is a good argument for monarchy. At least the head of the country never wanted to be. Democracy, especially UK and US-style, seems to almost guarantee that the countries are run by ambitious and stupid people with debts to the vested interest groups that have helped them gain office. Which is not a new observation, as the same point was made in Plato's Republic.

The BGA is a popular method of attaching integrated circuit packages to printed circuit boards. The IC package has one face covered (or partly covered) with balls of solder in a grid pattern. The printed circuit board has copper pads in a pattern that matches the solder balls. The assembly is then heated, either in a heater, or special oven, melting the solder balls and forming conductive connections. Because of surface tension, the molten solder holds the package in alignment with the circuit board, at the right distance, while the solder cools and solidifies. Whilst there are advantages, there are also snags. The main ones are that the solder balls cannot bend, for example if the components expand due to warming, or flex due to movement, for example, in a laptop computer which is moved around. The joints are therefore liable to break, and the problem is compounded due to the recent adoption of lead-free solder, which is more brittle. The system is also makes for difficulties in inspe...

Protectionism is a benefit only to sectional interests, paid for by taxpayers and consumers. Where the protection applies to agricultural produce, the beneficiaries are not even farmers, but owners of farmland, as the higher prices for produce due to the reduced competition means that the farmers end up paying higher rents. Where the protection applies to manufactured goods, the resulting lack of competition means that over-priced and poor quality products are imposed on the unfortunate public in the "protecting" country. The EU's agricultural policies are a blatant example of how taxpayers and consumers have been exploited for decades; food is over-priced, to the benefit of owners of agricultural land. In other words, nearly everyone loses from protectionism. Retaliation is pointless, since its main effect is to harm those in the countries that retaliate. It is obviously difficult for producers if developed countries "dump" their surpluses in third world countr...

Maidstone West , originally uploaded by Boxley . Memo to George Bush You do not fight recessions by giving away tax and running a budget deficit in an attempt to try and sustain consumer spending. In that direction lies inflation and a growing balance of payments deficit. If you want to run a budget deficit, and it should only be a temporary thing, it should be spent on infrastructure so that there is something to show at the end of it which adds to the nation's stock of wealth. The railway here was electrified in the 1930s as part of a series of measures designed to alleviate mass unemployment. This was a permanent addition to Britain's wealth, and a tangible one as it resulted in enhanced land values. The same principle was applied by your predecessor F D Roosevelt, in the policy known as the New Deal.

2008-01-17 Trolley bike , originally uploaded by Michael Erhardsson . Could this be the latest idea to make bigger profits for Britain's train operating companies?

There is nothing that any government can do to avoid the coming recession. But taking the wrong measures in an attempt to avert it could make matters much worse, and that is seemingly what the US central bank is doing, with the Bank of England likely to follow suit. The underlying problem is a credit-fuelled land price boom that had been going on for about ten years. This has had many interrelated effects. The first is that banks had an incentive to tempt people to borrow more than they could repay. The availability of ready credit pushed up the price of land, although this went unrecognised and was seen as a "housing" price boom and a good thing to boot. Banks then saw these bloated and rising land values, created by their own lending policies, as good security for more loans. They continued to lend even more, on the assumption that the inflated land values were real and would go on rising, seemingly indefinitely. Northern Rock, for instance, was advancing loans of up to 12...

Portland Street , originally uploaded by seadipper . The buildings on this site in the middle of Brighton were knocked down about 20 years ago. Consent for office development was quickly given but nothing happened. The owners have re-applied for consent a couple of times and got it, but still nothing has happened. With the developing recession, the owners will hang on and wait for the recovery. In the meantime, people have to look at an eyesore, This is just one of the reasons why land value taxation is required. If a properly designed system was in place, the site would have been developed long ago.

If you are a bus enthusiast you might enjoy riding in these middle-aged vehicles. If you are just trying to get somewhere by train on a Sunday you could be less keen to find yourself having to make part of the journey on a bus, taking much longer on the way. Railways which are used heavily and constantly, day-in and day-out, have to be closed from time to time for maintenance. But the construction of short lengths of connecting track would considerably shorten some journeys - for instance, it would enable trains to get from Brighton to London via Horsham without having to go into Littlehampton and out again, which adds a further 15 minutes to the detour. And reinstating the Lewes to Uckfield line and Shoreham to Horsham routes would also provide useful and better alternatives when the main line is closed, as well as giving access to small towns at present without rail access.

The row over what to do about Northern Rock rumbles on. It will be surprising if there are not other banks in a similar situation. If there are, can the government guarantee their depositors' savings too? The other issue is this. Huge amounts of money have gone abroad to pay for consumer spending, with the result that previously British-owned assets have fallen into foreign hands. READ ABOUT £65 BILLION BRITISH DEBT And what has funded this consumer spending? Borrowing on the security of land values which have themselves been stoked up by injudicious lending. This is in principle no different from what happened in the great crash of 1929. My own suspicion is that not only are we are moving towards the worst economic crisis since the end of World War 2, but that the problems that we are seeing at the moment are just the start. Things will get a lot worse over the next couple of years. I have no confidence even in the security of such seemingly solid pension schemes such as those pr...

Bush's announcement of an injection of money into the US economy through tax cuts - without spending cuts - in order to prevent recession, is classic inflation of the kind condemned by monetarists such as Milton Friedman, who was not wrong in his analysis of the causes of persistent and generalised increases in prices, which is what this policy will lead to. It demonstrates the economic illiteracy of Bush and his advisors. It is the worst possible thing the US government could do. It will lead to disaster. The US balance of payments deficit has resulted in very large dollar balances being held abroad, especially in China and the oil producing countries. The mere announcement of this fiscal policy will promote holders of dollars to unload them and into currencies that seem more substantial, such as the euro, which is why it has risen against other currencies. The pound will probably fall with the dollar, which will result in widespread price rises in the UK also, especially if inter...

There was a report today about some Big Brother software that Microsoft has come up with so that bosses can check whether their workers are slacking. Apparently it monitors various bodily functions. I never use M$ unless on someone else's computer. I find everything takes two or three times as long as doing it on Linux or Apple. A friend of mine who is wedded to M$ spends a fortune on software and support. She and her staff sit in front of their screens cussing and blinding like troopers all the time while they try to get it to do what they want. If they had swear boxes on their desks they would always be full. So if the aim is productivity, I would have thought the best thing would be to ditch M$ software. On the other hand, the concept is interesting. M$ certainly raises my stress levels when I am forced to use it, so perhaps they could use the technique to measure the frustration factor and change their software to reduce the stress it causes to the users. Or perhaps there could...

The £ has dropped 9% against the Euro since November. This is a comparable rate of decline to that which occurred in the run-up to Black Wednesday in 1992. That led to Britain's enforced exist from the exchange rate mechanism and demolished the Conservative government's reputation for economic competence. Fortunately for the present government, the newspapers now devote their headlines to trivia and to stirring up anti-immigrant emotion. But this respite will be short lived. The inflationary effects of the falling pound, of around 3%, will quickly find their way into the shops in the form of higher prices of foods, especially out-of-season produce imported from southern Europe, where higher costs will be augmented by recent fuel price rises. These are likely to lead to pay demands, which will further compound the inflationary pressure. The weaker pound will also cause problems in the Eurozone as producers find it more difficult to export to Britain, and this could hit growth in...

Thameslink has been taken over by First Group who have rebranded it as "First Capital Connect", a meaningless term if ever there was one. One lot of people who have done well from the railway privatisation are publicity companies who do branding and that kind of marketing nonsense, trying to present less and worse as more and better, as if people are fooled. The trains have been refurbished (they needed it), with a psyschedelic livery on the outside. The inside is another story. The seats seem even more tightly packed than they were before. The other evening I was sitting in the empty corner seat where the red bag is and the largish guy on the left came and sat opposite me. As my knee has been playing up and I cannot tuck it right under myself without it hurting, I was forced out of my seat and had to stand.

The 1973 translations of the Catholic liturgy done by the ICEL are having to be replaced by something more true to the Latin. This has aroused protest by the ageing liberals, who continue to defend the 1973 version. It is a terrible translation, and now it is dated too. The translators could not even get the response "Et cum spiritu tuo" correct, transforming it into the bizzare and awkward "And also with you". Some other languages at least have been accurately translated. But now congregations in many parishes come from so many different countries, and people are travelling abroad so frequently that there is little point in using a vernacular liturgy. If the clergy were doing their job properly, in accordance with the various documents that have been repeatedly issued on the subject, they would make sure that their parishioners were familiar with the Latin texts and simpler Gregorian chants, a task that would start in the Catholic schools.

Labour MPs are indignant about the success of religious schools, especially Catholic schools. They claim that middle class parents are playing the system to get their children into one. A new concern is the number of children being baptized. This is strange because I thought that religion was considered completely uncool these days. I am surprised as I was under the impression that most of the pupils at the local Catholic secondary school hardly ever darken the doors of a church. Perhaps there is something about the Catholics whom the non-Catholics meet at their school that makes them admired as role models. Why the "faith schools" are successful is an interesting question. The large number these days, especially on the liberal Left, who take a strongly anti-religious stance are generally unwilling to ask it as the answer might upset them. And so they tend to dismiss their success as "cherry picking". The curious thing is that fifty years ago, the Catholic schools w...

There were a couple of really disturbing news items today. The first was about a student with terminal cancer who was deported to Ghana, only to find that she could not receive the treatment she needed in Accra. It was said that the immigration officials had checked and found that the treatment was available. Obviously they did not check hard enough. They should be sacked. And as if any serious problem would have arisen, or bad precedent set, if she had been allowed to stay. The second was about a young man who had been stabbed to death when he tried to intervene in some yobbery near where he lived. His mother received a payment from the Criminal Injuries Compensation Board, but the amount was reduced on review, on the grounds that he had contributed to his own death. This was later reversed but what kind of people are they that sit on these committees?

Now the pound is down to the point that one Euro is worth 75 pence, and there is no sign of any respite. This is its lowest value against European currencies since 1996 and its lowest ever against the Euro. Aggravated by higher fuel prices and consequently higher transport costs, it will quickly feed through into higher prices of food and goods that come from Europe, including staples such as vegetables. What next? The Bank of England's Monetary Policy Committee (MPC) has decided not to reduce interest rates again this month, which may check the fall, but the pound remains vulnerable to political pressure and the MPC would have to hold firm or even raise interest rates for several months running if confidence in the UK currency is to be restored. In the meantime, the lower value against the Euro, together with higher fuel prices, will quickly lead to higher prices of food and other commodities in the shops. This will put pressure on wages, and could lead to industrial unrest. It ...

The growing gap between rich and poor has been the subject of recent comment by the Pope. He has called for a fairer distribution of wealth. Some people have accused him of being a socialist and criticised him for not being an economist. They believe that market forces will suffice. But market forces are unable to produce a just outcome without prior equity. This means that everyone must have equal access to land and other natural resources which are God-given. Whilst Marxist systems of economics produce tyranny and poverty, and Socialist ones have the same effect but do it in a softer way, the mode of economic organisation usually referred to as "Capitalist" invariably leads to a division between a small number of very rich and a mass of poor. In the absence of free access to land and a genuinely free market, the notion of "Free Market" is a cover-up for a fundamentally unjust state of affairs. Free markets would, for example, rule out things such as restrictions o...

Kibera, Nairobi, the world's largest slum , originally uploaded by Church Mission Society (CMS) . When the troubles broke out in Kenya after the elections, a TV commentator described the country as one of Africa's successes. If this is success, what does failure look like? So is Africa a basket case? It does not have to be but the continent needs land reform. The right sort of land reform. Which is not just land distribution. This photograph comes from the Church Missionary Society, which like other Christian bodies, has projects all over Africa. It is good work, but never more than tinkering. Sadly, Catholic Church organisations do not have any better grip on the problem and the underlying issues of economic justice.

The pound is now worth only 1.33 euros. Three months ago it was worth 1.40 euros. That is a drop of 5% of its value. What the hell is going on?

Cobalt is the metal which is added to glass to make it blue, as in the Chagall stained glass window here. It is scarce and the main source is in the Congo. Its price is three times what it was a couple of years ago. The main reason is rising demand, as it is used in a range of electrical and electronic goods such as batteries and magnets. The Prius hybrid car has about 2kg in its batteries. And this illustrates another problem with permanent economic growth. It is not just energy that is in short supply, but other commodities too. We need to use less of everything, and that means the whole notion of "growth" is not viable. Unfortunately, what are described as "capitalist" economies take growth as a underlying given, which means that the system is doomed. One must hope that there is enough perception around to make the changes before they are forced on us.

These trains, called Electrostars, and the diesel version called Turbostar, were originally designed by Adtranz, the train manufacturer which is now part of Bombardier. They got off to a shaky start in 2000, but after a lot of work by the engineering teams they are well established and reliable. But when the initial orders were complete, the production line at Derby was shut down. Now, there are new orders, for example, from London Overground, and the production line has been reopened, demonstrating the industry's confidence in the design. It is likely that it will comprise a high proportion of new build for in the forseeable future, for example, as replacements for classes 313/507/317 and 455 as these become due for replacement. The trouble is that the design, never entirely satisfactory, needs a thorough overhaul to get rid of the things that are wrong with it and take advantage of technical developments; for example, because of changes in the way the infrastructure is managed, i...

HMRCs site allows you to submit your tax return on line. You log in, fill in the information and submit. It is very clear and easy to use and you can save your work and log in again to continue, as many times you want until you have finished. Full marks. Pity though that the notion that tax should be related to "ability to pay" is so entrenched. But what is wrong with "ability to pay"? First, in practice, it means that those with the deepest pockets have the ability to pay for the best professional advice and so exploit the inevitable loopholes in a system that equates "ability to pay" with "income". The second thing wrong is the cost of the system, around £25 billion a year, which amounts to about 6% of the total collected. The third thing is that it penalises work, thrift and honesty. There is a story about a Soviet commissar who was trying to gather crops from the newly established collective farms. His method was to ask how much they needed ...

Accountants Grant Thornton predict that house prices in 2008 could end 10% below the peak they reached in August last year. According to a report in the Daily Mail, "A fall of this level would wipe about £400 billion off the nation's wealth held in bricks and mortar." That is precisely wrong. Bricks and mortar go down in value all the time due to the effects of time, weather, and wear and tear. The peak referred to was a peak in land values, not the value of bricks and mortar. And it is a paper value. If it falls, nothing tangible has gone anywhere. Land can be exchanged for wealth, but is not itself wealth, and a failure to understand this is the reason why the problem of periodic booms and slumps is seemingly intractable. This fall in values will indeed cause big problems for all sorts of people and institutions, in fact it will cause trouble for everyone, but false descriptions of the situation make it impossible to deal with and prevent recurrences.