Scotland wants to Keep the Pound in a (somewhat) Independent Scotland

Posted by PITHOCRATES - March 8th, 2014

Week in Review

The Greek crisis happened because there was a currency union without a political union.  The Eurozone set some pretty strict limits on deficits and debt to join.  Why?  Because people in the Eurozone would all be using the same Euro.  So they didn’t want one country running up deficits or their debt.  Because if they did they wouldn’t just be messing with their economy.  They would be messing with the entire Eurozone economy.

Well, that’s what Greece did.  They were spending so much money that they had large deficits that added to a large debt.  A euro-denominated debt.  Which meant a default would raise borrowing costs for other euro-denominated debt.  Raising the borrowing costs for the Eurozone.  So to avoid that required other Eurozone nations to help Greece with their debt.  Requiring higher taxes in the more responsible countries of the Eurozone to pay for the irresponsible spending of Greece.  Neither option (default or rescue package) being a popular option.  Especially for the Greek people.  For the rescue package came with strings.  And the big one was austerity.  They had to stop spending so much.  Which meant a lot of people lost some of their government benefits.  Making them very unhappy.  Leading to some rioting in the streets.

Had there been a political union this would not have happened.  For there would have been only one entity borrowing and spending Euros.  One entity taxing the Eurozone nations.  And one entity printing money.  Much like the federal government in the United States.  And London in the United Kingdom (see Scotland’s referendum: Salmond says independence will benefit whole UK posted 3/4/2014 on BBC News Scotland Politics).

An independent Scotland with a strong economy would benefit the whole of the UK, First Minister Alex Salmond has told a gathering in London…

“I believe George Osborne’s speech on sterling three weeks ago – his ‘sermon on the pound’ – will come to be seen as a monumental error.

“It encapsulates the diktats from on high which are not the strength of the Westminster elite, but rather their fundamental weakness.

“In contrast, we will seek to engage with the people of England on the case for progressive reform.”

But Tory MP Mr Mundell said that Mr Salmond was saying that a choice to leave the UK and become independent “means staying exactly the same as we are now”.

He added: “By definition, that simply cannot happen.

“No one should be under any illusion that voting for independence means getting independence, which means becoming a new country outside the UK.

If the Eurozone sovereign debt crisis has taught us anything it’s that a currency union without a political union is not a good thing.  An independent Scotland would eliminate the political union there is now.  And the reason why England does not want a currency union with an independent Scotland is because of what happened in the Eurozone.  It doesn’t work.  At least, it doesn’t work well.  Which begs the question why do they want independence but not complete independence (keeping the pound)?

One can only surmise so they can have more autonomy over their taxing, borrowing and, of course, spending.  Perhaps to spend more.  Creating larger deficits.  And a greater pound-denominated debt.  Which would be of great concern to other holders of pound-denominated debt.  The rest of the United Kingdom.

It is unlikely that independence would lead to a stronger Scottish economy.  Or a stronger UK economy.  If it did then the whole point of the Eurozone would be a lie.  To create a larger economic zone to compete with the large economic zone that is the United States.  Because bigger is better.  At least in terms of GDP.  The British Empire was bigger than the United Kingdom is now.  And the United Kingdom is bigger than a United Kingdom without Scotland.  And an independent Scotland would be smaller than all of the above.  So if you want to maximize GDP you would want to maximize the size of your economy.  Not shrink it.  Which leads one to believe that the reason for independence is something other than economic.  Because the UK is too English?  Perhaps.  Whatever the reason let’s just hope everything works out for the best.  For the United Kingdom did make the world a better place.  With great people like Adam Smith from Scotland.  And John Locke from England.  To name only two of the greats to come from the United Kingdom.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , ,

Britain and Scotland disagree over Scottish Currency in an Independent Scotland

Posted by PITHOCRATES - February 16th, 2014

Week in Review

The Eurozone was a grand idea to make an economic zone that could compete against the United States.  A United States of Europe, if you will.  But the Eurozone has suffered a sovereign debt crisis that was unavoidable.  As many analysts have identified the problem causing the Eurozone all its sovereign debt woes.  The lack of a political union.

The solution they say is for member states to give up some of their sovereignty and allow a Eurozone government have more control.  Like the United States of America has.  Which means putting even stricter controls on member states when it comes to their spending.  Which, in turn, would limit their deficits.  And their borrowing needs.  Which brought on the sovereign debt crisis in the first place.  Excessive spending beyond their ability to pay for with taxes.  Normally not a problem for other countries when another country spends itself into oblivion.  Unless, of course, there is a currency union with that country.  Which makes their problems your problems.  Problems that are impossible to solve without a political union.

The Eurozone sovereign debt crisis illustrates that a currency union without a political union will not work.  Which makes the movement for Scottish independence very interesting (see Britain warns Scotland: Forget the pound if you walk away by Belinda Goldsmith, Reuters, posted 2/13/2014 on Yahoo! News).

Britain warned Scotland on Thursday it would have to give up the pound if Scots voted to end the 307-year-old union with England, declaring the currency could not be divided up “as if it were a CD collection” after a messy divorce…

The message was aimed at undermining the economic case for independence and one of the Scottish National Party’s (SNP) key proposals – that an independent Scotland would keep the pound…

The debate has intensified in recent weeks with Bank of England chief Mark Carney cautioning that a currency union would entail a surrender of some sovereignty…

The SNP [Scottish National Party] has indicated that if London prevented a currency union, an independent Scotland could refuse to take on a share of the UK’s 1.2 trillion pounds ($1.99 trillion) of government debt which Britain has promised to honor…

Osborne said the nationalist threat to walk away from its share of UK debt would mean punitively high interest rates for an independent Scotland and was an “empty threat”.

“In that scenario, international lenders would look at Scotland and see a fledgling country whose only credit history was one gigantic default,” Osborne said.

Currently there is a political union between Scotland and England.  The United Kingdom (UK).  And Scottish independence would go contrary to what some analysts say is needed to save the Eurozone.  Political unity.  The problem in the Eurozone is that no one nation wants to give up any of their sovereignty and have some distant power tell them what they can and cannot do.  The way some in Scotland feel about London.  That distant power that governs the United Kingdom.

The British pound is one of the world’s strongest currencies.  A product of the powers in London.  Because they have political control across the UK.  If they lose their political control over Scotland will it damage the British pound?  If the Eurozone is any measure of a currency union without a political union, yes.  So it will be interesting to see what happens between these two great nations.  Whose people made the world a better place.  People like the great Scotsman Adam Smith.  And the great Englishman John Locke.  To name just two.  So whatever happens let’s hope it’s in the best interest of both countries.  For countries everywhere enjoying economic freedom and human rights can thank these two countries for their contributions to the British Empire.  Which helped spread the best of Western Civilization around the world from the United States to Canada to Australia to Hong Kong.  And beyond.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , ,

The High Taxes of French Governing Socialists are driving French Tax Exiles to London

Posted by PITHOCRATES - March 3rd, 2013

Week in Review

The Left says over and over again people aren’t going to move to escape high tax rates.  Well, as it turns out, they will.  The socialists recently took back the presidency of France.  Basically running on the platform of raising taxes to confiscatory rates.  Assuming that the rich will just smile and say, “Merci.  J’aime être taxés.  Il me fait sentir patriotique.  Vive la France.”  Which translates to “Thank you.  I like to be taxed.  It makes me feel patriotic.  Long live France.”  Which is how governing officials believe rich people should feel about paying higher taxes.  And get righteously peeved when they don’t.  Such as when Gérard Depardieu moved out of France, renounced his French citizenship and became a Russian citizen to avoid paying those confiscatory tax rates.  Becoming a tax exile.  And he wasn’t the only French national to leave France for more friendly tax shores.  As a net migration from Paris to London followed the socialists return to power in France (see Paris mayoral candidate Nathalie Kosciusko-Morizet: I want to lure the French back from London posted 3/1/2013 on The Telegraph).

The French Right’s brightest hope to reclaim Paris after a dozen years of Socialist rule wants to woo back London’s burgeoning Gallic population by making the City of Light Europe’s cutting-edge, family-friendly “place to be”.

In an interview with The Daily Telegraph, Nathalie Kosciusko-Morizet, 39, warned that Paris must reclaim its “historical role of leading the way” if it wants to stop the “gap widening” with London.

A third French lycée is due to open in London to cope with the rising demand from the city’s French population – estimated at 400,000 as a growing number flee the Socialist government’s tax rises.

This led Boris Johnson to exclaim: “Bienvenue à Londres. If your own president does not want the jobs, the opportunities and the economic growth that you generate, we do…”

After 10 years of Socialist rule in Paris, NKM hopes to seduce both the city’s conservatives and a chunk of “bobos” (bourgeois bohemians), pointing to Boris Johnson as proof that the Right can win major cities.

“I don’t buy the prevailing theory that capitals are becoming increasingly Left-wing,” she said…

Paris was not business-friendly enough, she claimed, as the city was “not an early adopter” in providing new solutions to help them develop.

So many French are becoming British that they had to open a third French school in London to handle the burgeoning Gallic population.  In fact, the British are welcoming the French invasion.  Any student of history will find the irony in that.  (Here’s a hint. The French and the British were at war with each other for much of their history.)  Swelling the French population in London to about 400,000.  Because of those high socialist tax rates.

Not only are they working and paying taxes in Britain now but they are also doing something else.  They are NOT paying taxes in France.  So raising tax rates in France did what?  It chased jobs out of the country.  As well as taxpayers.  Ultimately reducing tax revenue.  The exact opposite of the intended outcome of their new tax policy.  For when it comes to confiscatory tax rates people will not say, “Merci.  J’aime être taxés.  Il me fait sentir patriotique.  Vive la France.”  But, instead, they’ll simply say, “Au revoir.”

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , ,

Quality suffers in the NHS as they continuously have Fewer People do More with Less

Posted by PITHOCRATES - January 27th, 2013

Week in Review

During the Summer Olympics in London last year the British showcased the National Health Service (NHS) during the opening ceremonies.  To show the world how great it is.  And how much the British people love their NHS.  For it is national health care at its best.  Well, the best that can be expected when your costs exceed your revenues.  And you have to ask fewer and fewer people to do more with less (see Police investigate hospital where dummy was taped to baby’s mouth by Sam Jones and agencies posted 1/27/2013 on the guardian).

A NHS trust criticised for its “appalling standards of care” has been forced to apologise after a baby boy was found with a dummy [i.e., a pacifier] taped to his face in one of its hospitals…

A separate, highly critical report by the Healthcare Commission in 2009 revealed a catalogue of failings at the trust and said “appalling standards” had put patients at risk.

In a three-year period from 2005 to 2008, the commission said, between 400 and 1,200 more people died than would have been expected.

In February 2010, an independent inquiry into events at the trust found it had “routinely neglected patients”.

A recent report, conducted by a team of independent experts on behalf of the regulator, Monitor, concluded that Mid Staffs was “financially and clinically unsustainable”.

It recently emerged the trust had paid out more than £1m in compensation to 120 victims of abuse or their families.

Not quite what they were portraying during the opening ceremonies.  Now there is more good in the NHS than there is stuff like this.  But what it shows is the dehumanizing nature of national health care.  Fewer people doing more with less.  Which means they have to ‘mass-produce’ health care.  Input as many people as possible into the system.  Process them as quickly as possible.  Then kick them out of the system.  And just as overworked people in factories complain about being overworked and underpaid, and quality suffers because of it, so is it, too, in hospitals.  Which leads to someone taping a pacifier to a baby’s mouth.  Appalling standards.  Routinely neglected patients.  And higher than expected death rates.

This is what happens when you nationalize health care.  And have an aging population.  The aging population shrinks the tax base which shrinks tax revenues that pay for health care.  While at the same time increasing health care costs to deal with that aging population.  Which leads to fewer people doing more with less.  And the problems they’re having in the NHS.  As we will have under Obamacare.  For Obamacare will be working with an aging population.  Where fewer people will have to do more with less.

www.PITHOCRATES.com

Share

Tags: , , , , , , ,

Britons protest yet another Hospital Closure in the Cash-Strapped NHS

Posted by PITHOCRATES - January 27th, 2013

Week in Review

The American Left celebrated the passage of Obamacare.  Even though it wasn’t really what they wanted.  Full blown national health care.  Like in Britain.  Where everyone has equal access to health care.  Though some may have to drive farther than others (see Lewisham Hospital: 15,000 march against closure plan posted 1/26/2013 on BBC News London).

At least 15,000 people have marched in protest against proposals to close services at a hospital in south London…

Under proposals, its A&E will close and the maternity unit be downgraded after neighbouring South London Healthcare NHS Trust ran up debts of £150m.

The government said “doing nothing is not an option” and is to make a decision on 1 February…

Lewisham’s A&E unit would then be downgraded to an urgent care centre, meaning emergency cases would be seen at nearby hospitals. The maternity unit at Lewisham could also be slimmed down, meaning complex cases would be dealt with elsewhere.

South London Healthcare NHS Trust, which runs three hospitals, was placed in administration last year when it started losing about £1.3m a week.

The problems it faces are not unique. Last year it was reported 20 trusts had declared themselves financially unsustainable in their current form.

So this is what we have to look forward to under Obamacare.  Hospital closings.  Longer drives to emergency rooms.  And complex births becoming more complex.  All because free health care is very, very costly.

The UK is losing millions at these NHS trusts (the bodies responsible for managing the hospital finances) because of their aging population.  People are having fewer babies these days than the generation in retirement.  So you have fewer people entering the workforce to replace those leaving the workforce.  So there are fewer people paying the health care costs.  While the number of seniors consuming those costs is growing.  And you just can’t raise tax rates high enough on a shrinking tax base to sustain this health care model.  So you have to cut costs.  And you do that by closing hospitals.  Or putting patients on the Liverpool Care Pathway for the Dying Patient.  A quasi death panel in the UK.  And whatever equivalent there will be under Obamacare.

This is what the American Left wants in America.  For America, too, has an aging population.  Though those on the left are sure they will be spared from what will most probably become horrible conditions in our hospitals for the rest of us.  For while they condemn us to equality of care where everyone receives equally substandard care they will enjoy a different kind of equality.  Where they are more equal than others.  And won’t have to suffer what the ordinary Britons are suffering through now.  Or what ordinary Americans will soon be suffering.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , ,

With Further Escalating Train Fares it may be Cheaper to Drive in Britain than to Take the Train

Posted by PITHOCRATES - August 18th, 2012

Week in Review

Britain privatized their trains in the Nineties.  But they still have to subsidize them.  Despite incredibly high rail fares (see Rail commuters face ‘Great Train Robbery’ as fares rocket by up to 11% with some season tickets costing £6,000 by Ray Massey posted 8/14/2012 on the Daily Mail).

Rail passengers face fare rises of up to 11 per cent next year after a higher-than-expected jump in the inflation rate.

The increases will add hundreds of pounds to annual season tickets, with some commuters seeing season ticket fares to London crash through the £6,000 barrier.

And there is no end in sight to the inflation-busting hikes, as ministers admitted they will continue every year until at least 2015.

Train company bosses, whose firms will pocket much of the extra cash, passed the buck by insisting it was not their decision to hike the fares – it was government policy.

From next January 1, train firms can raise their ‘regulated’ fares – which include rush-hour commuter travel, season tickets and off-peak fares – by three percentage points more than the RPI inflation figure for July, which was revealed yesterday as 3.2 per cent.

That means commuter and other ‘regulated’ fares will be allowed to rise by 6.2 per cent…

But passenger groups, campaigners and unions said it was a ‘rip-off’ and yet another ‘Great Train Robbery’ that would benefit only rail bosses and their bonus pots at the expense of hard-pressed travellers and commuters…

By 2015 the annual cost of commuting to London from Birmingham will have soared from £9,004 to £10,663, which accounts for 28 per cent of the average London salary, says the campaign group.

That’s a lot of money, £10,663.  Based on today’s exchange rate that comes to about $16,741 US.  Or about $321.94 each week.  So how much gas would that buy?  A lot.  Who pumps $321.94 of gas into their tank each work week (5 days)?  I’m guessing not many.  If we did what would that get us?  Well, let’s make a few assumptions.  If gas was $6/gallon that would get us 53.7 gallons of gasoline.  Or as they say on the other side of the pond, petrol.  If you’re driving something shoe boxy like they do in Europe that gets 35 miles per gallon on the highway that would let you travel 1,878 miles each work week.  Or 376 miles each work day.  Or 188 miles one way.  And another 188 miles back home.  So how far are Birmingham and London from each other?  Approximately 120 miles.  Which means ‘saving money’ by using mass transit will cost more than driving a car.  As you can drive a distance three times longer for the same cost as the train.

The above figures don’t even take into account government subsidies.  So on top of these incredible rail fares are government subsides.  Making passenger rail even less of a bargain.

Trains are simply not the bargain people claim them to be.  Other than hauling heavy freight.  Where only a ship can compete with them.  But passenger rail?  It’s a money loser.  Requiring heavy government support.  Or astronomically high passenger fares.  Or both.  Why are they so expensive?  Because they require so much infrastructure.  And enormous amounts of people to make them work.  Which is why in the transportation industry they are least affected by spikes in fuel costs.  Because unlike trucking, bussing and flying, fuel is not their greatest expense.  Because everything else costs so much more than fuel.

This is something to keep in mind whenever politicians talk about building passenger rail.  Especially high-speed rail.  Very few of these can pay for themselves.  Freight railroads can operate at a profit for they are the best alternative to transporting heavy freight.  But when it comes to transporting passengers there is always a better alternative.  And a more cost efficient alternative.  From flying to driving to taking the bus.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , ,

Greece, Rome, Western Civilization, Alexandria, Londinium, Enlightenment, Adam Smith, Free Market Capitalism and Gender Equality

Posted by PITHOCRATES - April 17th, 2012

History 101

Greece gave Western Civilization Math, Science, Engineering and Philosophy

History has been a political struggle over power.  Kings and emperors and priests and nobles had it.  While other kings and emperors and priests and nobles wanted it.  They fought wars.  They oppressed their people.  They’ve committed acts of genocide on their enemies.  And on their people.  To get that power.  To keep that power.  And that’s the way it was for a long time.  The ruling class at the top battling it out.  While the people suffer abject poverty, famine and genocide at the bottom.  Until something came along to change that.  An advanced civilization.  That could produce a food surplus.  Freeing up people to become artisans.  Specialists.  Who could invent and make things.  To make life better.  Especially for a large group of people called the middle class.

The Greeks and Romans took civilization to new heights.  When Edgar Allen Poe wrote To Helen (1845) he chose Greece and Rome to describe his most beautiful Helen.  Because Greece and Rome were that beautiful.

On desperate seas long wont to roam,
Thy hyacinth hair, thy classic face,
Thy Naiad airs have brought me home
To the glory that was Greece,
And the grandeur that was Rome.

Western Civilization began in Greece.  Food surpluses freed the great thinkers.  Math, science, engineering and philosophy took roots in Athens and spread through the Greek world.  The Hellenistic civilization.  That Alexander the Great spread east all the way to Iran and the Indus Valley.  And south into Egypt.  Where he founded the great city of Alexandria.  Repository of some of the greatest Greek books of knowledge.  When Rome conquered Greece they spread that great Hellenistic civilization east to Spain.  North to France and Germany.  Even to England.  London itself was once a Roman city.  Londinium.  And everywhere the Romans went they brought with them Greek math, science, engineering and philosophy.  Building engineering marvels.  And creating a very high standard of living.

Where the Romans went they also built roads.  Primarily to move their legions throughout their empire.  But they also used them for trade.  Where they traded the goods made by that rising middle class of artisans.  Economic activity was bustling.  Until the government grew.  To pay for an ever larger government bureaucracy and military they started taxing that economic activity.  And regulating it.  Rather harshly.  Restricting freedoms.  Eventually tying farm workers to the land.  Even their children.  Turning that once bustling economy into feudalism.  Serfdom.  Until the growth of government expenditures made the Western Empire so weak that the Germanic barbarians sacked Rome.

Enlightened Thinking and Adam Smith’s Wealth of Nations helped make Great Britain the Leading European Power

While Europe went through the Dark Ages the Eastern Roman Empire continued on.  Centered on Constantinople (modern day Istanbul) on the Bosporus, she was smack-dab in the middle of the trade crossroads between Europe and Asia.  And continued to prosper economically.  Until the Arabs began attacking her.  And the Christian Crusaders.  Who came down to reclaim the holy land for the Catholic Church.  Where they fought Muslim Arabs.  As well as Orthodox Christians.  While in the area they visited the sights.  Including that great repository of books in Alexandria.  Which they packed up and brought back to Europe.  And changed the world.

As the Christian monks translated these books all of Europe read them.  Math, science, engineering and philosophy.  Kicking off the Enlightenment.  Advanced economies appeared in the Italian city-states as they controlled trade in the Mediterranean.  But with all that Greek knowledge Portugal, Spain and the Netherlands built bigger ships and learned to navigate across the oceans.  Moving the center of trade from the Mediterranean to northern Europe.  The Europeans established colonies in the Old World.  And the New World.  France and England soon followed.  Trade exploded.  And fortunes were made.  But something really special was happening in England. 

Thanks to all that enlightened thinking the English took the lead in Europe.  And the world.  Modern farming practices improved yields and created great food surpluses.  She had representative government in her Parliament.  The rule of law.  Banking institutions.  Joint-stock companies to raise large amounts of capital.  An insurance industry to manage the great risks of transoceanic trade.  And an economist up in Scotland who wrote a book about new ideas in economic thought.  Adam Smith.  Who wrote The Wealth of Nations.  Championing something he called the Invisible Hand in free market capitalism.  Taking away the economic decisions making from the kings and emperors and priests and nobles.  And giving it to the people.  Which Great Britain embraced.  Kicking off the Industrial Revolution.  Other European nations followed her lead.  As did one young upstart nation.  The United States.

Famine has been Rare in Western Civilization since the 18th Century

Western Civilization dominated the world in every measurable way.  Economic output.  Living standards.  Public health standards.  Gender equality.  You name it and the free market capitalism of Western Civilization made it better.  The general path of emigration of great minds traveled in one general direction.  From eastern/southern Europe to Germany, France and Great Britain.  Then on to the United States.  Or directly to the United States.  Where free market capitalism was the freest.  Making the Untied States the new world superpower.  Following the Industrial Revolution with even greater innovation.  Providing ever greater living standards.  And individual liberty.  For everyone.

The freedom in free market capitalism brought women into the workforce.  Take the automobile.  When Henry Ford first mass produced the car it was not people-friendly.  Men started our first cars by turning a hand crank.  Sometimes losing a finger or breaking a wrist in the process.  Once started he adjusted his goggles and gloves and took the wheel.  His face being the bug screen.  His muscles being his ‘powered’ steering.  Clutching through the gears.  Gearing down and stomping down on the breaks to stop.  It was man’s work driving our first cars.  Dirty, filthy man’s work.  The automatic starter, automatic transmission, power steering and breaks, though, changed all of that.  All American developments.  Allowing women in heels and a short dress to start and drive a car as well as any man without losing any of her dignity.  And she could sip a latte on her drive to work.  While listening to music.  And on those hot days she didn’t sweat through her clothes before getting to work.  Thanks to air conditioning.  Another American invention for the car.  And she’s able to enjoy this freedom because of some other inventions.  Two in particular that let her pursue a career.  And enjoy any activity whenever she chooses.  The birth control pill.  And the tampon.  Again, products of Western Civilization. 

Women in Western Civilization have it pretty good these days.  Where for the most part their standard of living has caught up to men.  There are some earning disparities.  But a lot of that is due to women leaving the workforce to raise children.  And then reentering at a later time.  Having to play catch-up with those who didn’t leave the workforce to raise a family.  Not too bad when you consider what women are going through where they don’t embrace free market capitalism.  For not only do they have none of these everyday comforts we take for granted but they often go without food.  Up until the 18th century famines were pretty common.  But with the advances we’ve made in farming and our other institutions we have that give us a modern and bustling economy (and our high living standards) there really haven’t been any famines in Western Civilization since the 18th century.  There may have been a few but they were very rare.  Unlike the famines in the 20th century that killed tens of millions in Russia, the Soviet Union, China, North Korea, Southwest Asia, Southeast Asia and Africa.  But famine is not the only thing killing people in these countries.  They have also suffered the greatest acts of genocides.  As rival groups battle each other for political power.  With the innocent masses stuck in the crossfire.  Something a prosperous middle class has put an end to in Western Civilization.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Wells, Cesspools, Night Soil, 1854 Broad Street Cholera Outbreak, Fresh Water, Sanitation, 2004 Indian Ocean Earthquake and Tsunami

Posted by PITHOCRATES - April 10th, 2012

History 101

Overflowing Cesspools in 1854 London led to a Cholera Outbreak along Broad Street

People eat and drink.  And, as a consequence, they poop and pee.  This made moving into cities a little more complicated than living in the country.  Or on a farm.  Where you drilled a well for your drinking water.  And built an outhouse (or privy) to do your business in.  Basically a small structure over a hole in the ground to provide a little privacy while you contemplated world affairs.  You kept the two separated so your business didn’t seep into the water table that fed your well.  As people moved into cities they brought their poop and pee with them.  Obviously.  And before plumbing and sanitary sewer systems people used chamber pots and dumped them out of their windows after using them.  Or built cesspits (or cesspools) to store their human waste.  Under their houses.  Where the liquid would leach into the ground.  While the solids broke down.  As the pile of the remaining solid waste grew men came around at night to remove this ‘night soil’.  Which they turned into fertilizer.

There were drawbacks with this, though.  For human waste is full of disease-causing pathogens.  Which made it a little risky to use as fertilizer.  Worse were these disease-causing pathogens leaching into our drinking water.  Which it did in London.  In 1854.  In the Soho district of London.  Where the new sanitary sewers did not yet reach.  On Broad Street.  That ran along the River Thames.  Where the water table is relatively high.  So when you drill a well you don’t have to go too deep.  Or you could get your water directly from the River Thames.  As the city’s population grew more and more people packed into houses.  Greatly increasing the production of human waste.  Quickly filling the cesspools beneath their homes.  And as they filled to capacity they overflowed.  And leached into that high water table.  And into the River Thames.   Which took in this burgeoning growth of disease-causing pathogens.

But then people start getting sick.  A lot of them even dying.  From a nasty outbreak of cholera.  Spread by disease-causing pathogens.  Back then people thought ‘bad air’ caused cholera to spread.  As well as other diseases.  Something John Snow refused to believe.  So he studied the pattern of deaths.  And he found a common factor.  The people who were dying drew their water from the public pump on Broad Street.  Determining that the source of the cholera outbreak wasn’t ‘bad air’.  But bad water.  Coming from that pump.  Contaminated from those overflowing cesspools.  Such that people were drinking their own waste.  This marked a new beginning in public health.  And public sanitation.  Perhaps the greatest of public goods that allows people to live in crowded cities.

The 2004 Indian Ocean Tsunami took out the Systems that kept Wastewater from Contaminating Fresh Drinking Water 

As cities and regions became more populated this balancing act of fresh water and sanitation became more critical.  Where fresh water flowed into our homes and wastewater flowed out and into the sanitary sewer system.  And on to the wastewater treatment plant.  Where treatment made the water safe to reenter the ecosystem.  And our drinking water supplies.  If all the pieces worked well the water flowed in only one direction.  Towards the wastewater treatment plant.  But if something should happen to interrupt or reverse that flow the wastewater would contaminate our drinking water.  And, sadly, something often happens.  Events that damage the infrastructure that manages that flow.  Such as war.  Earthquakes.  And tsunamis.

An earthquake in the Indian Ocean on Sunday, December 26, 2004, created a massive tsunami.  Sending walls of water as high as 50 feet crashing into Indonesia, Thailand, Sri Lanka, India and other coastal regions surrounding the Indian Ocean.  The damage these waves caused was devastating.   The advancing water just swept away communities on the shore.  After the waves receded more than 150,000 were dead or missing.  Millions were homeless.  In a hot and humid climate.  Where corpses everywhere began to decompose.  And injured people with open wounds invited infection.  As bad as the horror of that day was there might be worse yet to come.  For the conditions were perfect for pandemic disease.  For included in that destruction was the infrastructure that managed that water flow to wastewater treatment plants.

This was the greatest fear.  The tsunami waves wiped out the electrical grids that powered the pumps that maintained that water flow.  So the wastewater backed up into the drinking water.  Dense populations in tropical conditions with no fresh drinking water available to drink and with raw sewage backing up into the streets spelled a world of trouble.  Because people need to eat and drink.  And, as a consequence, they poop and pee.  But when the infrastructure is gone that separates the one from the other humans can’t live for long.  Because their waste is full of disease-causing pathogens.  Especially when the prevailing weather conditions create a natural incubator for these diseases.

In America’s most Populated Cities you can Turn On Any Water Tap and Drink the Water without Worrying about Cholera

Thankfully those areas hit by the 2004 tsunami did not suffer greater population losses due to outbreaks of cholera, diphtheria, dysentery, typhoid or hepatitis A and B.  Thanks to a fast-acting international community.  Providing some $14 billion in humanitarian aid.  Delivered in large part by the U.S. Navy and other military forces.  Who possessed the resources to move that aid inland to where the people needed it.  Chief among that aid was fresh drinking water.  And sanitation facilities.  To prevent the spread of disease.

It took some time to understand the connection between clean drinking water and public health.  But people did have some understanding.  Which is why a lot of people drank beer in early communities.  Because the brewing process killed the pathogens in the water.  Perhaps our first water treatment process.  They may not have known this.  They may just have correlated drinking beer to healthier living.  A good a reason as any to drink and be merry.  For those who drank beer did not suffer some of the same diseases that befell others.  As in the cholera outbreak in 1854 London.  Where the monks in a monastery adjacent to the outbreak area escaped the pandemic.  Why?  Because they only drank the beer they brewed.

Americans travelling to Mexico are careful about what they drink.  Drinking only bottled water.  Or beer and liquor.  To escape an unpleasant condition that can result from drinking the local water which is not as ‘treated’ as it is in the U.S.  Emphasizing a point few appreciate in America’s most populated cities.  Where you can turn on any water tap and drink the water that comes out of it without ever worrying about cholera, diphtheria, dysentery, typhoid or hepatitis A and B.  Which we’ve only been able to do for about a century or so in America.  While poor and developing countries are still struggling to do this even to this day.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Marine Insurance, General Average, Mesopotamia, Genoa, Middle Class, Capitalism, London Coffeehouses and Lloyd’s of London

Posted by PITHOCRATES - April 3rd, 2012

History 101

It was in Genoa that Marine Insurance became a Standalone Industry

Risk management dates back to the dawn of civilization.  Perhaps the earliest device we used was fire.  Fire lit up the caves we moved into.  And scared the predators out.  As we transitioned from hunting and gathering to farming we gathered and stored food surpluses to help us through less bountiful times.  To avoid famine.  As artisans rose up and created a prosperous middle class we also created defensive military forces.  To protect that prosperous middle class from outsiders looking to plunder it.

As we put valuable cargoes on ships and sent them long distances over the water we encountered a new kind of risk.  The risk that these cargoes wouldn’t make it to their destinations.  So we created marine insurance.  Including something called ‘general average’.  An agreement where the several shippers shared the cost of any loss of cargo.  If they had to jettison some cargo overboard to save the rest of the cargo or to save the ship.  Some of the proceeds from the cargo they delivered paid for the cargo they didn’t deliver.  Some merchants who borrowed money to finance a shipment paid a little extra.  A risk ‘premium’.  Should the shipment not reach its destination the lender would forgive the loan.

So how long has marine insurance been around?  A long time.  Some of these practices were noted in the Code of Hammurabi (circa 1755 B.C.).  For ancient Mesopotamia was a trading civilization.  That shipped on the Tigris and Euphrates and their tributaries.  Out into the Arabian sea.  And beyond.  Following the coasts until advances in navigation and sail power took them farther from land.  The Greeks and Romans insured their valuable cargoes, too.  As did the Italian city-states that followed them.  Who ruled Mediterranean trade.  And it was in Genoa that marine insurance became a standalone industry.  No longer bundled with other contracts for an additional fee.

As the British Maritime Industry took off so did Lloyd’s of London

But the cargoes got larger.  And the voyages went farther.  Until they were crossing the great oceans.  Increasing the chances that this cargo wasn’t going to make it to its destination.  And when they didn’t the financial losses were larger than ever before.  Because the ships were larger than ever before.  So as the center of shipping moved from the Mediterranean to the ocean trade routes plied by the Europeans (Portugal, Spain, France, the Netherlands and England) the insurance industry followed.  And took the concept of risk management to new levels.

With trade came a prosperous middle class.  Where wealth was no longer the privilege of landholders.  Capitalism transferred that wealth to manufacturers, bankers, merchants, ship owners and, of course, insurers.  You didn’t have to own land anymore to be rich.  All you needed was skill, ability and drive.  It was a brave new world.  And these new capitalists gathered together in London coffeehouses to discuss business.  Including one owned by Edward Lloyd.  On Tower Street.  Where those particularly interested in shipping came to learn the latest in this industry.  And it was where shippers and merchants came to find underwriters to insure their ships and cargoes.

This was the birth of Lloyd’s of London.  And as the British maritime industry took off so did Lloyd’s of London.  As the British Empire spread across the globe international trade grew to new heights.  The Royal Navy protected the sea lanes for that trade.  The British Army protected their far-flung empire.  And Lloyd’s of London insured that valuable cargo.  It was a very symbiotic relationship.  All together they made the British Empire rich.  To show their appreciation of the Royal Navy making this possible Lloyd’s set up a fund to provide for those wounded in the service of their county following Lord Nelson’s victory over the combined French and Spanish fleets at the Battle of Trafalgar.  They continue to provide support for veterans today.  In short, Lloyd’s of London was the place to go to meet your global insurance needs.  From marine insurance they branched into providing ‘inland marine’ insurance needs.  Providing risk management to property beyond ships plying the world’s oceans. 

The Purpose of Insurance is to Let Life Go On after Unexpected and Catastrophic Events

Cuthbert Heath led Lloyd’s in the development of the non-marine insurance business.  Underwriting policies for among other things earthquake and hurricane insurance coverage.   And Lloyd’s helped to rebuild San Francisco after the 1906 earthquake.  With Heath ordering that they pay all of their policies in full irrespective of their policy terms.  They could do that because they were profitable.  Which is a good thing.  Insurers need to be profitable to pay these large claims without being forced out of business.  Which is why when the Titanic sunk in 1912 they were able to pay all policies in full.  And to continue on insuring the shippers and merchants that followed Titanic.  To allow life to proceed after these great tragedies.  And they would do it time and again.  Following 9/11.  And Hurricane Katrina.

This is the purpose of insurance.  Risk management.  So unexpected and catastrophic events don’t end life as we know it.  But, instead, it allows us to carry on.  Even after some of the worst disasters.  Because life must go on.  And that’s what insurance does.  Even people who rely on a particular body part for their livelihood have gone to Lloyd’s to buy insurance.  Perhaps the most famous being Betty Grable.  Who insured her legs for $1 million in 1940.  Pittsburgh Steeler Troy Polamalu has a lucrative endorsement with a shampoo company.  And insured his long hair for $1 million.  Rolling Stones guitarist Keith Richards insured his hands for $1.6 million.  America Ferrera (Ugly Betty) has an endorsement deal with a toothpaste company.  And they insured her smile for $10 million.  Even ‘the Boss’ Bruce Springsteen insured his voice for $6 million. 

People hate insurance companies.  Because they don’t understand how insurance works.  For they only know that they pay a lot in premiums and never receive anything in return.  But this is the way risk management is supposed to work.  And we need risk management.  We need insurance companies.  And we need insurance companies to be profitable.  Meaning that most of us will never see anything in return for all of our premium payments.  So these companies can pay for the large losses of the few who sadly do see something in return for all of their payments.  For insurance companies protect our wealth.  And earning potential.  So life can go on.  Whether we’re raising a family and planning for our children’s future.  Or taking precautions for some unforeseen accident to one of our body parts that may limit our future earning potential.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

UK Budget Cuts Ignite Riots, Gives Glimpse of USA Future

Posted by PITHOCRATES - March 26th, 2011

Unruly Mobs Attack the Police…in London

The riots in the Middle East were ignited by high unemployment, high food prices and little government relief for either.  Some countries have all but degenerated into civil war.  But violent unrest is not limited to the Middle East.  Even some of the most advanced Western economies are having their problems (see TUC protest march: anarchists on the rampage in London by Patrick Sawer and David Barrett posted 3/26/2011 The Telegraph).

Police fought mobs of masked thugs who pelted officers with ammonia and fireworks loaded with coins.

The anti-capitalists started fires, smashed their way into banks, hotels and shops, bringing chaos to Britain’s busiest shopping street.

The violence began as Ed Miliband, the Labour leader, addressed a TUC rally of at least 250,000 peaceful protesters in Hyde Park who had marched from Westminster to demonstrate against government spending cuts.

Yeah, you read that right.  London, England.  Unbelievable, isn’t it?  The violence against the police?  And property?  Wow.  And look who’s doing it.  Bloody anti-capitalist anarchist thugs. 

After five hours of running battles, there were 75 arrests. At least 30 people, including five police officers, were injured. Police said the anti-capitalists threw lightbulbs filled with ammonia at them…

They ordered limited use of “kettling” to contain the rioters but admitted that such was the scale of the violence, they could not protect property.

The UK has big time budget problems.  High taxes are hurting the economy.  Ever increasing public benefits require more and more tax revenue.  And increases the debt.  They cannot sustain this spending without crashing the economy.  Or bankrupting the nation.  But the anarchists don’t care.  Because they’re anti-capitalists.  And simply don’t understand rudimentary economics.  Or numbers with a ‘£’ in front of them.

From Rich Empire to Bankrupt Nanny State

So just how bad are things in the UK?  Bad.  The country is at a crossroads.  It may forever change if it doesn’t change course.  During World War II it was the Nazis threatening their survival.  Today it’s their own spending (see Britain’s leaders should come clean on the true depth of the fiscal crisis by Liam Halligan posted 3/26/2011 on The Telegraph).

The UK’s fiscal crisis is of monumental historic importance. The future of the free world may not be at stake as it was in Churchill’s day. What is in the balance, though, is the prosperity of the British people for at least the next few decades and our status as a top-ranking nation.

This is a common theme among great nations that fall from greatness.  Out of control government spending.  It brought down the Roman Empire.  And the British Empire.  But the great nation that built it remains.  For now, at least.  But the government spending is burdening Britain more than her empire ever did.

Over the last 12 months, then, this country’s “on-balance-sheet” liabilities have risen by £147bn. That’s roughly what we spent on the NHS and defence combined in 2010 – and that was merely, during this last year of “austerity”, the incremental increase in what Britain has put “on tick”.

That’s my point – and I will keep making it until it fully enters the public discourse. It is the total debt numbers that Osborne, the Tories and our politicians in general should focus on, not the size of the annual deficit.

This is another common theme with great nations.  They have big military forces.  To protect what is theirs.  And to maintain the peace.  The Royal Navy built the British Empire.  And maintained world peace.  As did the Roman Legions.  That’s why there was a Pax Romana.  And a Pax Britannica.  These empires ushered in great periods of peace.  And their rule of law and free markets provided great prosperity.  But the prosperity led to entitlement.  And state benefits.  Such as the NHS (National Health Service).  State spending increases to meet the desires of voters.  And that spending is now unsustainable.  They have to cut something.  Because they just can’t borrow anymore.

In 2009, the UK spent £31bn – around 6pc of total tax receipts – on debt interest payments. That’s money down the drain. By 2015, we won’t have reached, in Churchill’s words, some “broad sunlit upland”. After four more years of deficits, debt services costs, according to last week’s Budget, will by then be £67bn a year – or almost 10pc of total tax receipts. These shocking numbers are also likely to be under-estimates, given the UK’s massive “off-balance-sheet” liabilities and the Treasury’s benign assumption of future gilt rates.

These interest costs are staggering.  Any meaningful cuts will have to be greater than the annual debt cost if they have any hope of bringing down deficits.  Or the debt.  And they were trying to make some meaningful cuts.  Almost £100bn.  And we saw what happened.  People took to the streets in violent protest.

All of us – politicians, commentators and voters – should compare the quality of our current national debate, its utter detachment from reality, with the statesmanship and candour of Churchill’s “blood, toil, tears and sweat“. For such hard truths inspired a nation, while winning Churchill untold respect.

Of course, during Churchill’s time, there wasn’t a nanny state.  After enduring World War I and the Great Depression, austerity was an all too familiar way of life.  It isn’t like that today.  Today students protest if they don’t get a free college education.  It is questionable even if Winston Churchill himself could inspire today’s entitlement culture.  They’re just too spoiled, lazy and greedy.

A Look into America’s Future

All right, so that’s what’s happening in the UK.  How about the USA?  We have our problems.  But we’re not as bad off.  Obamacare is not quite the NHS.  Yet.  But we have the same entitlement culture.  Out of control state spending is plunging us into record deficits and debt.  High taxes and regulatory compliance has drawn out the Great Recession.  And when some governors start cutting their budgets to balance their budgets, the people protested.  Our day of reckoning is coming.  And N. Gregory Mankiw wrote how a future president might inspire the American people ala Churchill in 2026.  It’s an interesting look at what could very well be our future (see It’s 2026, and the Debt Is Due by N. Gregory Mankiw posted 3/26/2011 on The New York Times).

The seeds of this crisis were planted long ago, by previous generations. Our parents and grandparents had noble aims. They saw poverty among the elderly and created Social Security. They saw sickness and created Medicare and Medicaid. They saw Americans struggle to afford health insurance and embraced health care reform with subsidies for middle-class families.

But this expansion in government did not come cheap. Government spending has taken up an increasing share of our national income.

Today, most of the large baby-boom generation is retired. They are no longer working and paying taxes, but they are eligible for the many government benefits we offer the elderly.

Our efforts to control health care costs have failed. We must now acknowledge that rising costs are driven largely by technological advances in saving lives. These advances are welcome, but they are expensive nonetheless.

If we had chosen to tax ourselves to pay for this spending, our current problems could have been avoided. But no one likes paying taxes. Taxes not only take money out of our pockets, but they also distort incentives and reduce economic growth. So, instead, we borrowed increasing amounts to pay for these programs.

This part of the story we know.  It’s how we got here.  Or there, as it were, in this tale from the future.  Now comes the debt spiral.  Which will force us to act.  And make decisions no one wants to, or is willing to, now.  Which will be even more painful hence.

For years, the United States government borrowed on good terms. Investors both at home and abroad were confident that we would honor our debts. They were sure that when the time came, we would do the right thing and bring spending and taxes into line.

But over the last several years, as the ratio of our debt to gross domestic product reached ever-higher levels, investors started getting nervous. They demanded higher interest rates to compensate for the perceived risk. Higher interest rates increased the cost of servicing our debt, adding to the upward pressure on spending. We found ourselves in a vicious circle of rising budget deficits and falling investor confidence.

When the treasury tried to auction off some bonds in this tale there were few takers.  So this future president secured a loan from the International Monetary Fund (IMF) with some draconian strings.  The IMF required big cuts in spending (Social Security, Medicare, Medicaid, Obamacare and subsidies – farming, ethanol production, public broadcasting, energy conservation and trade promotion).  And big tax increases. 

We will raise taxes on all but the poorest Americans. We will do this primarily by broadening the tax base, eliminating deductions for mortgage interest and state and local taxes. Employer-provided health insurance will hereafter be taxable compensation.

We will increase the gasoline tax by $2 a gallon. This will not only increase revenue, but will also address various social ills, from global climate change to local traffic congestion.

AS I have said, these changes are repellant to me. When you elected me, I promised to preserve the social safety net. I assured you that the budget deficit could be fixed by eliminating waste, fraud and abuse, and by increasing taxes on only the richest Americans. But now we have little choice in the matter.

If only we had faced up to this problem a generation ago. The choices then would not have been easy, but they would have been less draconian than the sudden, nonnegotiable demands we now face. Americans would have come to rely less on government and more on themselves, and so would be better prepared today.

Even in the future presidents will be making the same promises that they cannot keep.  And make the same lament.  If only we continued the policies of Ronald Reagan.  Kept government small.  And relied on ourselves.  Had we, we’d never be in this financial mess now.  Or hence.

Dead People haven’t a Care in the World

Our own greed will do us in.  Insatiable want of government benefits kills great nations.  Even the UK and the USA are not immune from this.  But the easy political road is to pander to the people.  Give them what they want.  To get their votes.  They do this knowing full well they are destroying the future.  So why do they do it?  Because most of those in government are old.  And when it comes time to pay the piper, it will be a moot point.  Because they will be dead.  And dead people haven’t a care in the world.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

« Previous Entries