We are all expert economists now

So, twenty "expert" economists say the government should start to cut it's spending now and sixty-four "expert" economists say it should not. What fun. That tells us all we need to know about "expert" economists. Economics is not an empirical science. Even when a decade or two suggests that a particular policy is likely to promote growth or limit inflation, the next decade might throw-up different circumstances that render previous policies wholly useless.

What I find so fascinating about the current debate is that it revolves around essentially simple concepts, albeit concepts that the "experts" seem determined to make complicated.

Take Mr Earnest, a diversity facilitation counsellor. He creates and adds no value anywhere yet some public sector body is stupid enough to pay him £15,000 after tax. He spends it all, that's £15,000 going into tills and helping to pay the wages of those employed by the businesses he patronises. Take him off the payroll and give him £10,000 in benefits rather than £15,000 in nett salary and the amount he will put in tills is reduced by at least £5,000, with a knock-on effect to the financial well being of the businesses that previously enjoyed his custom.

Then take Mr Widget who works in a factory and also receives £15,000 after tax and would receive £10,000 in benefits if made redundant. He also spends his £15,000.

The effect of each of them being made redundant is the same, their redundancy diminishes the amount of cash sloshing around in tills in the places they shop.

There is, however, a significant difference between the two. Mr Earnest can never make a contribution to the economy other than to spend his salary. Nothing he does in his job can ever add to the country's wealth because he does not produce anything and he does not add value. On the other hand Mr Widget's job does add to wealth provided the company he works for can sell its products at a profit.

If you had to choose between spending taxes to save Mr Earnest's job or Mr Widget's, which would you choose? I would think the answer is obvious, you save the job which has the potential to add value to the economy rather than the one which is guaranteed never to add value.

But does it make sense to save either job? The problem with using taxes to save Mr Widget's job is that it could not guarantee that his employer's business will be profitable, so there is no guarantee that saving his job will add to wealth, it might just be a wasteful subsidy. We've had plenty of experience of government throwing money into non-profitable businesses, it is almost certain to be a complete waste because government cannot create a market for goods where the market says there is no market.

So, why not save Mr Earnest's job given that Mr Widget's is going anyway? At least Mr Earnest's spending power will allow Mr Patel's Merrymart to continue to employ old Doris on the till for three afternoons a week. That's all very well, until one realises that the money paid to Mr Earnest does not come from a magic money tree. It comes from taxes raised from profits and from taxes that reduce other people's spending power. Why is it better for Mr Earnest to receive £15,000 of spending money rather than for other people to have £15,000 of reduced taxes so that they can spend the same amount? In terms of the economy as a whole the direct effect is the same.

My view, for what it's worth, is that what matters is not the direct effect but the indirect effects. The most obvious indirect effect of reducing government spending on non-value-added activities is that it allows taxes to be reduced so that break-even businesses become viable because their overheads are lower. Not only does this give them a reason to continue, it also generates genuine profits which, in turn, generate affordable taxes. Although it is a trite point, it is worth saying that the employment by government of hundreds of thousands (if not millions) of people in non-value-added activities does not generate wealth. That they are employed by government rather than the private sector carries no magic. Every pound they are paid can only be spent once. Either they spend it or the person from whom it was taken spends it, either they save it or the person from whom it was taken saves it, either they invest it in a potentially profitable business or the person from whom it was taken does the same. A pound in Mr Earnest's pocket is not worth any more than a pound in Mr Widget's pocket or that of anyone else. Yet every pound in Mr Earnest's pocket comes from personal or business profits and reduces the ability of those people or businesses to make further profits.

One can test the sense of keeping Mr Earnest in a job very simply. If his spending is beneficial it must follow that employing a further ten diversity facilitation counsellors would be ten times as beneficial and clearing the dole queue by employing all unemployed people in non-value-added government jobs would solve all our economic woes. It's just nonsense in loud trousers. Maintaining non-value-added jobs is nothing but a drain on resources. It drains resources now by requiring tax to be taken from the value-added side of the economy and it drains resources in the future by building up debt that must be repaid with interest.

I'm sorry

It is with great regret that I must announce the need to take steps to reduce my blood pressure.

Normal service will soon be resumed.

Hi-ho, hi-ho

I'm not really returning to blogging. To be more precise, I do not currently have any intention to return to blogging. A while ago I said that about work.

It was March 2005. While sitting in my study at home after a morning of gentle paperwork it was time to check recent emails before going into work in the afternoon. At first it was a bad bout of indigestion, perhaps I just needed to take a nap or a green chewy antacid thing, so both were tried. But no. After about half an hour it was apparent that I was having a heart attack - a myocardial infarction as the medics would say. One artery supplying blood to my heart was blocked causing the part of my heart muscle that relied on that particular supply of fresh blood to be starved of oxygen and to die. I had heard heart attacks described as "like having a giraffe stand on one leg in the middle of your chest". That's not wrong as far as I can tell, never actually having had a giraffe stand on any part of me with any number of legs.

In a way the most difficult part of the event was phoning for an ambulance for myself. Had I been present when someone else suffered similar chest pains I would have called 999 with alacrity. It's rather different when it's you and the hope remains that it is indigestion even though it's obviously a heart attack. Just a good fart is all it will take to prove your self-diagnosis wrong, so you don't pick up the phone until the pain is almost unbearable.

Eight days in hospital and the knowledge that I'll be popping pills for the rest of my earthly had a profound effect. One conclusion I reached was that I had to stop work, so I did. The decision was made easier by the fact, for fact it is, that on returning home I opened a file in a pending case and broke out in a cold sweat at the thought of having to present that case in court. Perhaps my work was a convenient scapegoat for the recent trauma, but a terrifying cold sweat is not something you forget easily. So I retired.

It was easy enough for the first three year or so. There were things to do, assets to rearrange, final taxes to pay and many other things beside. Once they were all done a gap was apparent. For the first time in my adult life I had nothing to do. That is rather a strange sensation when you have spent your life being more busy than you can really manage. It is no coincidence that I then started this blog. For more than a year my need to do something was satisfied and then I realised I had said everything I wanted to say. Actually that is only part of the picture. I had opined on all the subjects that matter to me but I also knew that blogging was a distraction in my need to do something, a temporary and infrequent solution.

Last week an old friend asked me to cast my piggy eyes over the papers in a difficult case he had in the Court of Appeal. It involved an area of law that has always been of special interest to me since I lectured on the subject more than a quarter of a century ago. What fun it was. A couple of days in the library to make sure all recent developments in English, Australian and Canadian law were understood, preceded two days of discussing the issues and developing a "game plan" for the presentation of the appeal. By happy coincidence while I was on library duty I ran into the QC who heads the set of Chambers from which I used to practice. After the usual pleasantries he declared that he wished to persuade me to come out of retirement and return to the practice of the law. As usual his timing was impeccable. Working on a really interesting and difficult case took me back to what I enjoyed most. I needed no persuasion.

A few administrative things have to be sorted out and then I will be back at work, back doing what I do best (although I only do it moderately well). I have long been a believer in the old sayings, one of which is never say never. I did say never in 2005. On meeting old colleagues since then and being asked when I will be back "never" was the response also in 2006, 2007 and 2008. That was then. This is now.

Hi-ho, hi-ho it's back to work I go.

Why I'm no longer here

Those nice fellows Messrs Pogo and Wadsworth have kindly expressed concern for my wellbeing, so I will endeavour to put their minds at rest and explain why I decided to stop blogging.

True though it is that I have a dicky ticker, failing liver and still-swollen leg, I haven't felt so hale and hearty for years.

I decided to stop because I feel I have said everything I have to say and am not prepared to repeat myself continually in order to keep the blog alive.

Being primarily an essay blogger rather than a provider of snappy short comments or data, there are only so many topics you can cover before engaging in pretty dull repetition. I drafted many pieces over the last few weeks but didn't publish them because the points I was making had already been made, sometimes more than once. It was enormously frustrating and I knew it was time to say "thank you and goodbye".

The writing has been on the wall for a while, hence the fall-off in the number of postings over the last few months. I could keep the blog open and post every now and then when something novel or unusual happens in politics, the economy or the law, but that isn't consistent with what this blog has been and I wouldn't find it satisfactory. I can still make any points I really want to in comments elsewhere.

It has been a wonderful experience and has helped me develop my thoughts on a wide range of subjects. It has also been hugely flattering to know that people deliberately visited to read what I had to say and were prepared to spend their time debating points I had made. But when it's time to stop it's time to stop. And now it's time to stop.

Time gentlemen please

I think I've said everything I want to say, except this:

A very big and sincere thank you to all those who have taken the time to comment on my meanderings, especially those with the good sense to agree with me.

As the old song goes, it's been great fun but it's just one of those things.

And now to a new chapter in my life. Goodbye everyone.

The impenetrable problem with rape

The crime of rape has three elements: (i) there must be intercourse (vaginal or anal, the distinction between buggery and rape was removed some years ago), (ii) the victim must not have consented to the act and (iii) the perpetrator must not have believed that consent was given. Most, but by no means all, contested allegations of rape revolve around consent. Either it is in question whether the alleged victim consented or the defendant asserts that he (or she) genuinely believed the other party did consent.

A typical case involves a woman alleging that she did not consent and the male defendant saying he believed she did consent. Sometimes the woman is not contradicted when she says she did not consent and the trial revolves solely around the state of mind of the man. Say it is indeed the position that the woman did not consent but that the man believed she did. From her point of view what was done to her was every bit as bad as if the man knew or believed she did not consent. From the man's point of view he did nothing wrong because there were no signs that the woman was not a willing participant. In such a case the woman is a victim because she was forced to have intercourse against her will, however the verdict should be not guilty because the man believed she gave consent. It's not a happy state of affairs.

Take a slightly different example, again the woman did not consent but it is not clear whether the man believed she consented. For so long as guilt must be proved beyond reasonable doubt, the verdict should again be not guilty. Again the woman is a victim but the man's guilt has not been proved.

For tactical reasons it is sometimes best not to challenge the alleged victim when she says she did not consent - it might be that such an attack could backfire for the defence where the woman is seen as vulnerable. In many cases, however, the woman's consent and the man's belief in consent revolved around the same evidence. If she showed no outward signs of lack of consent, that is consistent both with her actually consenting and with the man believing she consented.

There is only one way to ensure that a conviction for rape follows where the woman did not consent to intercourse and that is to remove any need for the man's state of mind to be considered. This is fraught with difficulties because the man could then be convicted and given a lengthy sentence when there was no way in which he could have thought he was doing anything wrong. That is just as much of an injustice as it is for a woman to find her attacker is acquitted because of his belief even though she did not consent. A half-way house is possible by reversing the burden of proof when it comes to assessing the man's state of mind. Once the jury is satisfied that the woman did not in fact consent, it could then be for the man to make a positive case that he believed she did consent. In such a situation reasonable doubt would not help him, he would have to prove that he positively believed she consented. Although it would be unusual for the burden of proof to be placed on a defendant in a serious case there are numerous examples in the law of defendants having to prove particular defences once the prosecution has laid the necessary foundations to make a case against him.

Whether reversing the burden of proof would improve conviction rates is pure speculation. One possible result is that more attention will be focussed on the woman's state of mind in cases where, at present, a tactical decision is taken to concentrate on the man's state of mind. If his state of mind has to be proved and hers only has to be subject to a reasonable doubt, it would not be surprising to find a shift in tactics to match the shift in the law.

I have never read of any proposed change in the law that provides a sound answer to the fundamental difficulty arising in cases where the woman does not consent but the man believes she does. Politicians can bleat until they are blue in the face about the need for a higher conviction rate in rape trials, but for as long as the law takes account of the man's state of mind their protestations will just be hot air.

A true charity

Last week we received a sad reminder of what real charities do. The former footballer and football manager Sir Bobby Robson died at the age of 76 after having suffered from one type of cancer or another for more than fifteen years. During that period he set up the Sir Bobby Robson Foundation to fund research related to cancer and, in particular, to assist in clinical trials of new anti-cancer drugs and treatments.

The Sir Bobby Robson Foundation is funded by private and corporate donations, using Sir Bobby's name and reputation and those of many other figures from the world of football to persuade people and companies to part with their cash. This type of charity is the very epitome of what a charity should be. The work it funds could be funded out of taxation if someone in government chose to do so, as it is Sir Bobby decided he wanted to see more spent in the field so he went about raising money specifically for that purpose. Could other aspects of cancer research make a case for additional funding? Could other areas of medicine make a case? Of course the answer to both questions is that they could, but that is nothing to do with it because it was Sir Bobby's decision what should happen to the money raised in his name.

It is reasonable to infer that those who have given to this charity would not have volunteered to pay additional tax in the same amount. Even if they had paid voluntary additional tax they would have had no say over where it went once it was in the hands of the Treasury. Instead they chose to delve into their post-tax income to fund a specific area of work regardless of whether the government considers it of sufficient priority to warrant additional money.

That is at the heart of true charities. They are about individual priorities rather than priorities laid down from on high. This reflects the position that has been taken consistently through time, until very recently. The law has not asked the question "is this organisation a charity"? Rather it has asked "is the purpose for which this organisation exists a charitable purpose"? The distinction is extremely important because it places the emphasis on the general purpose for which an organisation exists not on the specifics of how that organisation seeks to attain that purpose. The reason for this is that different people have different views of the benefit of certain types of activity which are considered by law to be charitable. Because charitable donation is an individual thing, reflecting the values of individual donors, the law does not claim to have better judgment than the individuals who make voluntary donations. Provided the general purpose of the donee falls within the established categories of charitable purposes, the wishes of individual donors are respected.

For example, preventing suffering to animals is a charitable purpose, both under the old law and under the Charities Act 2006. Those of us with the good sense to despise cats can recognise that others take a different view and an organisation dedicated to preventing suffering to cats is, on the face of it, fulfilling a charitable purpose. Of course there are certain formal requirements to ensure that such an organisation is indeed concerned with its stated charitable purpose before it can be registered as a charity, but all of that is secondary; if its stated purpose is not charitable it doesn't get off the starting blocks.

As with so many things, the current government considers charitable status to be a political matter and has placed one of its most loyal Labour Party puppets in charge of the Charity Commission so that only those organisations that further Labour Party policy will be afforded the tax and other privileges that go with being a registered charity. Recently they decided that education is only a charitable purpose if it accords with the Labour Party's view of what schools should do. This was never an issue before because government recognised that all educational facilities are beneficial to some children and that was sufficient in itself for bona fide educational establishments to be afforded charitable status.

The danger with this new approach (which is almost certainly unlawful) is that it introduces narrow political considerations into a field which, for more than four hundred years, has stood outside factional politics and has respected the values and judgments of the little people whether or not they accorded with the views of the government of the day. Part of the process of politicising charities has been to refer to them as "the third sector", the other two being government and private business. Instead of charities being numerous separate organisations dedicated to specific charitable purposes they are lumped together and even have their own Minister of State. Once they have been classified in this way the government can seek to justify ever greater regulation and control, citing the amount of money charitable organisations administer as justification for any amount of interference. Once that is accomplished it is inevitable that the "third sector" is treated as something for government to control in ever increasing detail; in effect making it a tool of government policy rather than a diverse collection of individual organisations each with its own priorities, procedures and aims.

Where does the Sir Bobby Robson Foundation stand in this brave new order? At the moment it can operate as Sir Bobby wished it to - adding research facilities which did not otherwise exist and concentrating its work in the north east of England. But for how long? When will it be required to merge its work with other cancer research conducted within the NHS? When will it be required to limit its research into only those matters government considers a priority? Who knows, but I'm not holding my breath.

Others write about the misuse of charitable status by overtly political campaigns, details of many of which can be found at fakecharities.org. That is bad enough. To subvert the very essence of charitable work by seeking to impose value judgments based on political considerations over and above the values and judgments of individual donors is to deny the very basis of charity.