Yeah, I probably should have been an economist.

I sometimes like to think that money doesn't actually exist, but is merely a way of exchanging something for something else. So a pension fund is nothing more than a way of exchanging some of my own productivity now for someone else's productivity when I'm old. In earlier ages that agreement was made through family relationships (younger people work harder to look after older relatives), but now the agreement is made through some vague illusion we call "money".

Yes, my "stuck with" language shows that the optimism of late-2011 has quickly faded...!

As a consequence of brevity, I wasn't entirely clear in my description of the co-ops' legal position. They're not *obliged* to pay interest on share capital; but they *are* obliged not to pay dividends. The capital they raise is therefore obliged to be debt-like in its returns and in its inability to enjoy a share in any prosperity, although legally it is risk capital so it is equity-like in being loss-bearing.

http://www.hmrc.gov.uk/manuals/ctmanual/ctm40505.htm

I'd quite like to own one or two shares, just to see what it feels like. Let's chat at some point...

I don't really like government debt either, but we seem to be stuck with that too...

I didn't know that about co-operatives. Can you point me to a link?

He objects to banks guaranteeing the nominal value of capital entrusted to them (P3). [If one considers a fixed-interest account, one can see that banks guarantee *more* than the nominal value deposited, since they add interest.] But a defined benefit scheme works by taking a sum of money from the pensioner and promising a certain income in old age: it doesn't just guarantee a nominal lump sum, but a real-valued income stream, which is possibly more bonkers than banks' guarantees of deposits! The taxpayer stands behind these promises.

So if you don't like banks because they make promises they may not be able to fulfil, then you must really hate defined benefit pension schemes. (Is now a bad time to point out that USS is a defined benefit pension scheme?)

Defined contribution pensions don't have that problem, because the retirement income you achieve depends on the return you get on your investments. However, DC schemes tend to encourage/force pensioners to take out an annuity, ostensibly to give some security of income. But the way that life companies achieve this is by making guarantees and then buying interest-bearing government debt in order to satisfy the guarantees. There's a ton of clever stuff involved in avoiding over-promising or under-delivering; but of course it could all go wrong. Again, the taxpayer stands behind these promises -- in two ways, this time.

So once again you're caught in the interest-bearing debt/potentially over-promised scenario. Basically, I'm arguing that if you don't like banks for Mills' reasons, then you can't like pension schemes either.

It is possible to buy shares through brokers, of course, and I can make several suggestions if necessary. (If you were speaking personally, catch me sometime or drop an email.) But I don't think anyone should view equities as a simple alternative to a savings account, because it really depends what they want the money for and on what time-scale. As a very long-term investment for income, sure; as a means of putting something aside in case of unemployment, they'd have to be nuts. If someone is thinking this hard about the place of interest in the economy, it would be profitable to turn some attention to the thornier questions of personal finance!

Some other thoughts. What about government debt? And how do you square this with a preference for co-operatives, which by law pay a declared rate of interest on share capital?

On point 6, maybe it's worth distinguishing between owners of capital (share-holders) and producers of capital (business managers)? A productive businessperson needn't own very much capital at all.

I don't think his case is that capital should always be used by the most productive users, but that productivity is generally better than non-productivity. Other factors would be regional: I would want my capital to be used to support the economy in the region in which I live, generally.

One "ordinary person" action I'm thinking of is: if we have money to save, to invest in shares rather than in a fixed-rate savings account. (I haven't the faintest idea how to do that though - suggestions welcome!) I don't know if pension funds are part of the whole interest-based loan thing; do they not generally own shares in things rather than make loans? I don't know much about pensions either though...

Point 1 is basically correct, although your summary could be refined a little: bankruptcy can still happen for a business with no interest-bearing liabilities, since it will always have employees whom it owes a living and trade creditors it has not yet paid.

I don't believe the factual claims made in point 2, not least because if banks really only lend to the safest bets (point 1) then you wouldn't see so many bankruptcies. Moreover, *wealthy* individuals, quite famously, don't borrow: they buy outright. (Does he mean *rich*; i.e., people without much financial capital but with a large projected future income?) I *do* believe, for future reference, the background assumption that a sane economy will see capital directed by people who know what they're doing with it. (I.e., not politicians!)

Point 4 is fun. It's worse than you or Mills make out, because taxpayers, ultimately, may not be able to support bailouts either. I really don't like government backing of industries. It's so terribly statist, and breeds moral hazard prodigiously.

Point 6 is highly debatable, as it depends strongly on background assumptions. Curiously, if one believes that productive users of capital should have access to more capital (cf. point 2), then one must work hard to complain if rich people who are also productive users of capital (I do not assume that all the former are also the latter) accumulate yet more. Mills tries hard to do this, but not, I believe, successfully.

Point 7 is a bare fact. Mills really does need to show it is bad, rather than simply assuming that it is so. I can see potential upsides to rapid re-allocation of capital which require a more careful argument than he gives. Especially given he wants capital to go where it will be best used (point 2)!

His case is tenuous, not least because his point 2 (which contains the only real bit of decent economic theory) conflicts with half the rest of his case. However, tilting back towards more equity investment (and not only in business) would, I agree, be a good thing for other reasons. My main reason is a 'moral' one (I don't mean 'moral' in the strong sense of sanctity) about the benefits of ownership in society.

In my view, this is not a 'little people can do big things too' issue. The status of debt in an economy is a systemic issue which has to do partly with culture, but also with institutions and the rules of the game.

In that context, I suggest two things. Firstly, abolishing government savings guarantees. Secondly and in parallel with the first, a very carefully time-tabled over-turning of limited liability.

'Ordinary person' actions, if they're to mean anything, must involve the most significant assets we own. Our homes, if we own them, are hard to do much about. Our pensions, on the other hand, could be taken into our control, although there are significant financial implications with doing that, as well as practical hurdles. Nevertheless, a defined benefit pension looks a lot like this dangerous idea of loading investment risk onto the taxpayer through pension guarantees, while most defined contribution schemes end in an annuity which is a scheme of interest payments. And either way, one might find that the funds are invested in companies of which one disapproves.

As you know, I sometimes toy with the idea that the state should not compel people to fund this kind of research if they don't think it's worthwhile. In other words, research could be funded by voluntary contributions, a mixture of rich benefactors, and not-so-rich people voluntarily giving (say) 1% of their income towards research. This could go towards specific areas of research, or be given to RCUK to be distributed as they see fit (and the Haldane principle could become a reality!). That way, if people think astronomy (say) really enriches their lives, and they'd like more of it, then they can express that with their wallets. And my question will answer itself. (See - I'm not completely anti-market!)

But all of that is completely fanciful in the actual world, I suspect.

Still no answer. But academics are meant to ask questions, not find answers, right?

I think that really is the tricky question. Because it's obviously worthwhile to know more about the universe even if the knowledge has no application. But it's also worthwhile to be able to do a whole host of other things we might do with the resources, too: and we can't do all of them!

Direct comparisons are quite invidious, but even in the state-funded sector we could think about education, healthcare and other things which we also think are important. And then, of course, the government has to raise the taxes in the first place, which causes less activity in market sectors of the economy: retail, manufacturing, agriculture and so on. How much of that are we willing to give up for the other stuff? (Especially given that we often can't really choose what precisely it is that we would give up to get the knowledge.)

That's not an answer, but I hope it sharpens the question.

So where are you living now?

BTW, you can't become a Northerner just by living here. Some kinds of superiority can only come by breeding

Thanks for dropping by! I'm a northerner now - we should meet up!

Fair point about the second summary and the problem of guilt. I agree. I suppose "dealt with" should be expanded to make clear that both the guilt and the sinfulness need to be dealt with.

Also agree about multiple ways of summarising the gospel. But I suppose my concern is that I often hear the gospel summarised in the same kind of way, something not unlike my Summary 1.

"Earth" was deliberate, as it happens! I know it's unconventional, but would you say I should have put "heaven" instead?

The first one misses out any concept of:

- personal transformation
- community and kingdom

These are both clear and strong in the second, and I would argue they are exceptionally important in the Bible. "The good news of the kingdom" is the Bible's summary of Jesus' preaching, which would be difficult to see in the first.

However, justification by faith alone is certainly not as clear in the second. I think we need to see how the problems of both guilt and sinfulness are dealt with in the gospel. If God took away our guilt but not our sinfulness, heaven would be horrific. If he took away our sinfulness but not our guilt, then he has abandoned his own justice.

However, I'm not sure every gospel summary has to include every angle. For example, summaries that focus on guilt/innocence, or shame/honour, or fear/power are all legitimate. However, our teaching as a whole needs to address the imbalances that will necessarily be there in our summaries.

(BTW, did you mean to put ("heaven") instead of ("earth") in the second one?)

We're discussing philosophy of science!

"It's is about the validity of ID as science"

That's a philosophical question.

"they are at best post hoc rationalisations of what scientists actually do, not the drivers of the process"

That's a philosophical statement.

But if we can't even agree about what it is we are discussing, maybe we should call it a day?

To
"And I still don't think you've grasped the difference between the statements "ID is not science" and "ID is not true"."

So what the hell are we discussing?

I understand the difference perfectly well.

This is not a discussion about philosophies of science. It's is about the validity of ID as science. I have no particular interest in philosophies of science because, as I explained, they are at best post hoc rationalisations of what scientists actually do, not the drivers of the process. Labelling the pragmatic view that we use science because it works as "instrumentalism" is just such a post hoc rationalisation. Attaching that label to it makes no difference whatsoever for the reasons why we accept the findings of science as useful.