Why do I feel like London is built by the renters for the investors?

The title is inspired by my feelings when walking through the new bits of Kings Cross between York Way and Caledonian road. Glossy but anodyne buildings renovated at a high cost by investors to rent at a high price, which results in £7 beers (those high rents aren’t magiced out of nowhere). In a perfect world the area would have been built up by the business owner, making profits out of the turnover of the busines and investing it in better buildings. (I don’t know if that’s what happened, that’s just how it looks).

This is something I thought of after going to the London Fairness Commission event, Is London a Fair City at Guildhall this evening. The debate is ultimately derived from the ideas in the book The Spirit Level, Why More Equal Societies Almost Always Do Better.

There were a number of interesting ideas. The London Bridge Trust maintains five bridges but has so much money they have widened their charitable remit (but they still maintain the bridges). Even though housing was supposed to be  the third item it kept bleeding through to earlier items.

Inequality has gotten better since 1915, so we should stop making a fuss. Even though it got better because of changes after the wars that have been going backwards.

If rich people pay more tax we should consider that job done, and not worry about why they have so much money to pay more tax with. It would also help if you clarify whether they pay more in absolute numbers (yes) or a percentage of their income (not so much) This ties into an idea that wasn’t discussed. Everyone was very keen on a proper living wage. Businesses are not keen on this, otherwise they could voluntarily pay more. At the same time they pay low wages, they post profits. This is basically a choice we can make; should that money go to wages or profits. The thing is that wages, especially of poorer people, go straight into the economy as people buy stuff to improve their standard of living. While profits could theoretically go into the economy too, by being invested back in the business, in practise investment in the real economy has stagnated over the last 30 years and profits are more likely to go in to the financial markets. Therefore if businesses pay higher wages and post smaller profits, the economy will be better off (nef has done the analysis). And while you might worry about what spending on ‘stuff’ will do for the enviroment, if we bought leisure, or experiences, or services we can lighten our load on the environment (see Stuffocation, we can save the enviroment without needing the human race to suddenly become perfect).

The final question was a few votes, leading up to whether we should build in the green belt. A poll of the attendees showed a huge majority in favour of rent controls. I’m even a bit reluctant to mention that because the idea has been so thoroughly demonised that I’m afraid people will write off the whole debate as [left wing slur]. But I’m going to go ahead (wait I already went ahead). Almost nobody was in favour of freeing up planning control, probably because only the developers would profit and we are sick of loosing our best buildings (Waitrose in Holloway, I’m looking at you). Finally a few more people were in favour of building in the green belt and that is the craziest part. Why do we want to build in the middle of nowhere or zone 7, or wherever the green belt is, when we could build in zone 2, where the jobs are and the infrastructure already exists. Compare these two screen shots of Islington and Prenzlauerberg in Berlin (where I lived, three stops from Alexanderplatz), a pretty good bit of Berlin that is gentrified because everyone wants to live there.

Islington London Prenzlauerberg Berlin

And bear in mind most houses in Islington are three stories while every house in Berlin is five stories with handsome high ceilings all the way up. And interesting little shops and cafes everywhere, because they have the people to shop in them. I’m not saying there is an easy solution to this because I’m not sure building an extra house in the back of every garden will work and I don’t want to knock down handsome Victorian houses, and so many modern buildings are hideous, but, but, but, but, Zone 2 can fit more people in (Waitrose in Holloway, after knocking down a five storey building to build a two story one, I’m looking at you). So no to Greenbelt building, commuting never made anyone happier.

Was that something about how to beat the stock market?

In my previous post I mentioned that one of the unpredictable things Pounstone’s book can predict is the stock market. As the whole thing runs on people (not numbers) that sounds quite doable.

http://imgs.xkcd.com/comics/engineer_syllogism.png

The advice is

  1. buy index funds
  2. use their special patented method to figure out when to sit out of the market and keep your investments in cash, and when to buy back in (they fall down on the patented part by describing the method for free)

Poundstone doesn’t explain the first step, though Pete Comley does in his excellent book Monkey with a Pin. This book was inspired by the observation that 85% of fund managers don’t beat the market. Hence the value of index funds, which are the market.  When I first found out what an index fund is a few years ago I naively thought it was a new invention that would devastate the city. If people can get the same or better results for less money why wouldn’t they? I guess if psychics can earn money, and if there are whole professions where the experts guess right less often than chance, the fund manager doesn’t have to worry.

So Pete Comley pointed out the very important point that half of the ‘growth’ of the stock market is just inflation. Perhaps ‘just’ inflation is unfair. Inflation proofing an investment is pretty useful. Though Pete Comley showed that if you put cash in the highest interest account you could find, once  a year, then over the last 20 years (not including current low rates) you would actually also beat inflation.

So if you invest £17,250 and 23 years later you have £27,500, that looks like a respectable 4.2% per annum gain, but if inflation averaged 3.5% that was really only a 0.7% gain. Comley further calculated that overall per annum return on investment over the last century, after subtracting out inflation,  is 5% and average investement costs are 6%, giving overall returns of minus 1%, which would look perfectly respectable after inflation, say,  4%.

So beating inflation is not to be sneezed at. Actually since reading Monkey with a Pin I think Poundstone is the first person I’ve read who discusses the value of markets after adjusting for inflation.

If fund managers are not beating the market and the market is going up anyway because of inflation, which you get for ‘free’ just by owning unmanaged shares, then the next step is to minimise costs.

If you have an index fund of the market that is going up 5% a year with 0.5% annual fees (the maximum you should pay for an index fund, you might get a little less) and you compare it to a fund that is consistently beating that index (the market) by 1% a year, 6% overall, but which charges 2%, then I don’t even need to plot the graph to show you that lower fees are more important than small gains.

I like graphs so I’m going to plot it anyway.

Index fund returns

See how compounding interest doesn’t make much difference for the first 10 years and takes off after 20 years. But look at the huge difference when costs are 0.5% (red) vs costs of 1.5% (green). A mere extra 1% knocked almost a quarter off the final income. And while the expensive hedge fund at 2% interest and 20% of profits (purple) did beat the index fund, it would have to beat the market by 3% consistently for 30 years. Good luck finding a manager who is in the top 15% for 30 years running and who won’t retire in that time.

There are a lot more to the costs that I didn’t discuss (if the market goes up by 5% and fees are 0.5% you get less than 4.5%)and I didn’t even get round to the superspecial unpatented Poundstone method to beat the index funds. That’ll have to be another post.

Why I’m getting rid of my reward cards (I’m only a little paranoid)

I just finished reading William Poundstone’s: How to predict the unpredictable. It turns out we are actually quite predicable. Each chapter covers one topic and finishes with tips on how to win at e.g. rock paper scissors, tennis and the stockmarket (check out the table of contents on amazon ‘look inside’).

One point is that we really have no clue what random looks like, If you map 50 coin tosses as black and white squares, the random one (middle) looks fake and the fake one (top) looks random. In the random set, each coin toss has a 50/50 chance of being different from the previous one. In the one we think of as random, there is a 75% chance the next block will be different from the previous one. We have to go up to a 90% chance of a colour change (bottom, ) before we begin to think it looks fake.

Looks Random Sept2015

This is the law of small numbers. A pschological trick making us think the rules that govern large numbers (50/50 outcomes of 1000 coin tosses) will also govern small numbers (not really, there’s a pretty high chance of not getting a 50/50 split in 5, or 10, coin tosses).

Next up is passwords and PIN numbers, with estimates that 11% of the population uses 1234! If you found a debit card, and tried the three most likely PINs (1111 at 6% and 0000 at 2%) you’d have a hair under a 1/5 chance of getting the right number.

The tip for passwords is to find a random password generator, generate a few passwords and find one that is easy to make up a story to help you remember. Then only use it for a few important secure sites and not every time some online form asks you for a password. Personally I’m so sick of account names and numbers I’ll stop right there rather than sign up to another one. I’ve been reduced to buying theatre tickets by phone, which was actually just as easy.

Poundstone did fall down on one aspect. He describes the Target campaign where they looked at the buying habits across 25 products and found they could tell when someone was pregnant almost to the week (the list included suddenly buying certain vitamins and scent free lotion). They would then send these women flyers for baby stuff and as long as they mixed it up with lawnmowers, so the women didn’t know they had been targeted specifically, they were happy to start the new phase of their life as a Target shopper. The story includes the angry father of a sixteen year old, who then found out she really was pregnant.

Here Poundstone says the new predictions challenge not only privacy but also our illusion of free will. But I disagree, it is definitely a privacy issue. Target even agrees re adding the lawn mower ads ‘as long as the pregnant woman thinks she hasn’t been spied on‘.

It’s an interesting grey area. It is not unreasonable for the shop to have records of your buying habits, but putting them together gives them data you don’t want them to have. Maybe the moral here is pay attention to an upcoming need for new laws, get rid of your reward cards, and pay cash rather than card. I’m reluctant to do the second, but then I never do spend the points, so I’m putting it on my to-do-when-I-get-round-to-it list. Though I did just sign up to the Paperchase reward card, I’m hoping there is a limit to what they can figure out from my stationery spending. The second requires planning and effort, but is something I aim to do more often than not (I’m also going to put a big sign on my back saying ‘suitable mugging target’). The first one is on the back burner. I’m hoping someone else will set up a campaign group and start lobbying MPs to ban shops scanning our faces, recording everything we do in them, saving that data and paying attention (via algorithms) to all the data.

Finally, make sure you delete your cookies before shopping on line, you’ll probably get better prices.

Ugh, why is living in the future so tedious.

How to collect a bacterial digestion toolbox

I’ve just read Giulia Enders book Gut, though I prefer the German title (Darm mit Charm, Intestines with Charm, it rhymes).

She popularises some not well enough known facts (sitting on the toilet is not the way forward, crouching is better, or at least put your feet on small stool and lean forward to get the same result, see: 7 basic things … you’re all doing wrong).

My favourite idea was the observation that the genes of all the huge variety of bacteria in our stomach, add up to more genes than our entire genome. So that when toddlers go through their phase of stuffing everything they can in their mouth, they are actively collecting their bacteria digestion toolbox.
I know we tend to dismiss observations, until we understand WHY they happen, so this adds in to my epidemiology classes.
We learnt that you can tell how a bacteria spreads by looking at the exposure of a population. This graph (dredged out of my memory, google search was not kind),

Epidemiology of bugs
Epidemiology of bugs

shows lots of exposure from 1-2 years of age, exposure then levels off (no more people are getting exposed) but then takes off again in the teenage years. We were taught this is characteristic of germs spread through the mouth. Babies/toddlers go through a phase of stuffing everything they can in their mouths, but then stop, until you are a teenager and ‘oral exploration becomes fun again’.
So without thinking about it I just assumed babies have a poor sense of hygiene.
But Giulia suggests they are deliberately collecting as many bacteria as possible to build up their bacterial food digesting toolbox (especially useful when you transition from uniform milk to all the different kinds of food we eat). Japanese gut flora even have a seaweed digesting gene from a marine bacterium, helping them digest seaweed (and some of the benefits of eating soya are much stronger in the Japanese, suggesting you need the right stomach bacteria to get the full benefits). Also as the stomach ties in to the immune system the baby may also be training up it’s immune system.

So babies do have a poor sense of hygiene, but by design, not by accident.

It was also interesting to learn that your stomach doesn’t rumble because you are hungry, but because it has been long enough since your previous meal, that your stomach, and lower intestines, are completely empty and it is spring cleaning (might coincide with you getting hungry again). My stomach was rumbling the very morning after reading this and now I know why.

Do what’s nice and/or what’s right

I just read Terry Pratchett’s A Blink of the Screen, and only just now discovered his series with Stephen Baxter, the Long Earth, this was one of my favourite short stories on a topic I love (many worlds, though I am mildy freaked out by the idea in New Scientist last week that there might actually be many worlds. I’m happy with this idea in fiction, not so much in reality).

The story that made me think most was about Granny Weatherwax (the deleted scene from The Sea and Little Fishes). She is respected but not liked, because she does what has to be done.
So when several children were murdered she saw the guilt in the murderers mind (also where the bodies were buried), got him to confess and saw him hanged, which was a better fate than he would have got without Granny Weatherwax as the villagers were really quite upset about the child murdering thing.
Yet then, in the story, the villagers began to think, well maybe he wasn’t such a bad chap, what if Granny Weatherwas made him confess (technically she did).
So Granny Weatherwax ended up as the bad guy in this story, getting lots of dark looks.

But thinking about it there is something she is doing wrong. By organising/commanding the villagers to execute the murderer, she took away their sense of agency and ‘self’ determination. She made a decisions for the villagers, which she should have made with them.

The villagers should have had a chance to decide for themselves what to do with cool heads, it is explicit that in the heat of the moment they would have horribly killed the murderer. Talking over the issue with cool heads they might have decided to go ahead and execute the murderer, but it would have been their decision. Or they might have decided some alternative form of penance was appropriate and he might have been able to live and possibly redeem himself.
It is a pity, just because it is a fantasy world, to throw all ethics out of the window and ignore the non-death penalty we have chosen to live by in real life. Ironically Terry Pratchett usually subverts this trope. In Small Gods he explicity refused to kill off the torturers, saying it would be harder, but better to redeem them.

Anne Fine’s characters also set up this dichotomy between being nice and doing the right thing, arguing that all niceness is based on spinelessness and the people who do the right thing (care about seat belts in cars) will always be disliked.

However, I think/hope this dilemma (be nice or do what is right) is a false dichotomy. The problem was not in executing the murderer, it was in making the villagers decision for them. Even if you know the answer and the discussions are long and tedious, you end up with better decisions that everyone can get behind (not necessarily that they agree with).

I didn’t expect it to go horribly wrong in THAT manner

This section from The Order of the Stick by Rich Burlew (one of my favourite comics) perfectly summed up how I felt reading yet another article about sweeteners being bad.

In that exact manner?

Ho hum, more cancer, perhaps some other general toxicity.

But no, new research on mice but also a few humans, suggests that the sweetener is bad in the exact way sugar is, but much more so.

So the idea is sugar (and presumably all the simple carbs that get immediately converted into blood glucose, like white bread, white pasta and white rice) rack up your insulin. Eventually your body can’t cope and you have glucose intolerance, i.e. when you have  a shot of glucose your blood sugar doesn’t come down quickly enough, your own insulin is not working. This is pre-diabetes.

It turns out the sweetener can achieve this in JUST FIVE DAYS. And here I’ve been waiting for sugar to do the trick, like a mug.

So saccharine, sucralase and aspartame do the trick in a few mice,  and saccharine did the trick in 4 out of seven humans. And whether it worked or not seemed to depend on your stomach bacteria changing (the people who survived the saccharine had bacteria that didn’t change). So if you want a cool free blood glucose monitor and if you enjoy pricking your fingers all the time, you know what to do.

Here’s the link to the New Scientist article (seems free to view at the moment) and the original Nature paper (not at all free to view).

Self help doesn’t help, or why we should chuck out all those books

I just read SHAM recently by Steve Salerno, about how Self-Help and Actualisation Movement is a never ending source of  sales, as people just keep buying the books and going to workshops, but never actually self-helping themselves into being able to get on with their lives. Nobody just buys one book, reads it and changes. They keep spending more and more money on feeling something is wrong but never getting better and the gurus take advantage of this.

Steve then commented on people who have survived a terrible accident, perhaps loosing fingers and toes to frostbite, who can then make a fortune on the motivational speaker circuit, even if their accident was due to stupidity and they only survived because other people helped them at great personal risk. Unsurprisingly, the terrible accident that leads to a lucrative new career is then described as ‘the best thing that ever happened to me’.

On the other hand I have read that post-traumatic personal development is a real thing (sort of ruins the theme of my argument, but plenty of people just get on with their lives and don’t become a SHAM guru).

This then seemed to be the explanation of Aron Ralston’s comment in an interview in 2010 when 137 hours came out.

There he said that actually he didn’t learn anything through his adventure. He went in to that canyon thinking he was pretty good. He came out knowing he was  pretty good. He then argued that being dumped by his girlfriend led to more personal growth than chopping his own arm off.

It seemed this was  a rejection of the  self help movement lecture circuit. though checking just now, wikipedia says that he does now give motivational talks. At any rate I always loved that comment as it shows we can grow as a person in our own lives, without having to go to extremes to do so. This is also the theme of Gretchen Rubins’ The Happiness Project.

Continuing on from SHAM and the idea that people will constantly read new self help books but never put the work into practise. This idea is covered in Marie Kondo’s book on tidying. She argues that we should always throw away all materials from courses/seminars we take. There are always books where you could learn the stuff, but we go on a course to benefit from the passion of the teacher and from the learning environment. Personally I have certainly found that just having the time to think about a project can move it forward tremendously even if the class doesn’t provide any extra facilities compared to being at home. But if you do not put the content of a course into practise, the paperwork is meaningless. You might plan to reread the materials but you never do (I never have done, for n=2). Just chuck the paperwork out. You can always get a book from the library or go on another course if you want another crack at learning the stuff.

So I have chucked out my copy of ‘How to win friends and influence people’. I don’t need a copy of either book to appreciate the joke in the title of ‘How to loose friends and alienate people’.

Mill said it first

It’s a bit annoying when you read or learn something new, that you think is the best thing since sliced bread and will result in a great change as soon as everyone learns the new info (if only the world really worked like that) and then it turns out the idea has been around for ages and perhaps just having the idea is not enough. After reading The Spirit Level, I came across this quote:

It is only in the backward countries of the world that increased production is still an important object: in those most advanced, what is economically needed is a better distribution.

Mill, 1848, Principles of Political Economy.

Though to be fair, we hadn’t invented GDP back then. If Mill had known what a wonderful number that is, that counts only paid work, but not unpaid (mostly women’s) work, that counts pollution and the effort to clean it up as two pluses, then  he might have thought twice about this.

Intelligence and SAT’s

I’m just in the middle of Debbie Stiers ‘The Perfect Score Project‘ (recommended by Gretchen Rubin) where Debbie sat the SAT 7 times in a year to get a perfect score and to motivate her son to get good enough grades to qualify for financial support and survive the competition with all those clever foreigners vying for his future job in the current depressed economy (times are quite bad, though I’m not sure if the foreigners are the problem. I think money creation ) is the problem).

As part of Debbie’s project she underwent a barrage of IQ tests and found them very similar to the SATs, they were both developed by the same person in the US and there are tables to convert one to an estimate of the other.

Debbie then wondered if she should announce her SAT scores. She felt IQ is fixed and unchangeable, therefore personal (and she has not announced her IQ score), while SAT results are influenced by study and therefore mutable and therefore OK to announce (also as the name of the book suggests: Debbie did improve her score).

The interesting thing is that SAT used to mean Scholastic Aptitude Test and was supposed to measure something unchanging and fixed (like IQ). Once enough companies grew up promising to improve your score, and were shown to work (1975), it became the Scholastic Assessment Test (1990-93).

This ties in to Dan Hurley’s book Smarter: The New Science of Building Brain Power looking at whether you can improve intelligence. The answer (officially according to the science) used to be no, but there is a new field, only 6 years old, saying actually yes it can (a bit controversial). This contrasts with the SAT’s as similar to an IQ test which were though to be unchangeable, but are now known to be studyable, and with various friends who have assured me that a)intelligence can be increased and this has been known for years (psychology degree); b) this is rubbish and intelligence can’t be changed (psychiatrist).

It’s food, but not as we know it: Elmlea tricked me

Yesterday I happened to pay attention to Elmlea (as Morrisons was entirely sold out of double cream). ‘Double what?’ I thought as I saw the lable. Buttermilk with added oil.

The Unilver description sums up everything wrong with our understanding of food.

Elmlea is the real alternative to cream, and is a blend of buttermilk and vegetable oils and is classified as a dairy cream alternative (DCA). 100 ml of fresh single cream has 200kcal while the same serving of Elmlea Single Light has only 124kcal – so feel free to spoon some on your puddings!

The number of calories in a food is not what determines how fat we get. Wild animals manage to not get fat without counting calories. We do not need to carefully measure what we eat, carefully decide how much to exercise and make sure the number balance. That’s not how our fat cells work. We need avoid foods that mess up our natural fat regulation and appetite mechanisms (refined carbs).
Fat is not fattening.
In any case this is not very relevant as the healthy animal fat is replaced with a very similar amount of oil (around 30+% vs just under 50%).
They don’t specify which oil so it safe to assume it is the cheapest oil. Look at this description of soy bean oil.

It’s not easy getting mass quantities of edible oil from soybeans, which are small, brittle beans containing less than 20 percent oil. First you have to drench them with hexane, a toxic chemical solvent that is known to cause nerve damage in humans. The hexane percolates through the soybeans several times and is then removed from the oil (any residues that remain are small).

After that you have to treat the oil with sodium hydroxide and phosphoric acid, then bleach it with a filter, and deodorize it under heat and an intense vacuum. Then often the oil is hydrogenated or interesterified, allowing it to be more stable for frying or other high-heat conditions. Calling any of this “natural” is a farce.

(from Huffington Post , from an interveiw with Melanie Warner about her new book, Pandora’s Lunchbox.

Does this really seem like a better alternative to cream? Cheaper, with bigger profit margins for Unilever, yes. Healthier?
(However, I have to admit, it doesn’t go off as quickly, I did find a some leftover elmlea at the back of the fridge and I was surpised it hadn’t gone off).