Can the Church compete Wonga out of business

Leaving aside the interesting use of 'compete' as a transitive verb (an evolution I'm perfectly happy with, but I know people whom I imagine will be frothing at the gills). I have two or three reactions to this. The first is that it is great that the church is being led from the front into something that aims to tackle a manifest evil. Another reaction of alarm because my other reaction is to doubt that it is possible (I'm not sure that I'm supposed to admit to doubt -but there it is ;) ). Here's what's going on:

 The Archbishop of Canterbury has warned the online lender Wonga that the Church of England plans to force it out of business - by competing against it.The Most Rev Justin Welby told Wonga boss Errol Damelin the Church planned to do this by expanding credit unions as an alternative to payday lenders.The plan is to create "credit unions that are... engaged in their communities", he said. BBC News - Church plans to 'compete' Wonga out of business:

So, can it be done? and why would I doubt it?
I'll start with the cause of my alarm. You see, I have experience of credit unions. I support them and would encourage the initiatives to make them a fuller part of the fabric of our collective life. They are a good thing. But (you knew there was a 'but' coming, right?) there is a sense in which it isn't competition. The credit unions I know about -and I think it's standard practice- need for their members to have deposited money with them and to have waited for a few months before they can apply for a loan. By my reading of the matter, this won't help a lot of people for whom saving will be an issue and it won't help in the matter of crisis loans which I suspect are the big issue precipitating a slide into chronic debilitating indebtedness.

So my alarm is that I'm not sure that CUs can help many of the people that need the help. That said, it may be that they can begin to do two things: one would be to mop up people who aren't in the direst of straights but are aware of their precarity and can begin to invest; the other would be to be helping to create a culture which supports more prudence and greater solidarity.

So can it be done? I'm not (yet) convinced. But what gives me pause is that Justin is a finance guy; he probably knows something I don't. I hope to see more detail in time. I've not yet seen anything about the clergy Credit Union which I think he's counting on to help kick-start things.

Individual donation drops in groups

I reckon that this may be partly what the Church of England has been hamstrung by in the past in relation to giving: there would be a vicious cycle of low donation which discourages others to give (and in any case 'trust money' had been sufficient to keep things going) because evading responsibility in a group is easier. By contrast it probably helps understand why events such as Comic Relief tend to help -they overcome the negative group effect by creating a new and different group dynamic in relation to giving.

A University of Missouri anthropologist recently found that even when multiple individuals can contribute to a common cause, the presence of others reduces an individual's likelihood of helping
Individual donation amounts drop when givers are in groups 

They're still investigating and hypothesing why. The front-runner idea is this:

perhaps potential givers did not want to be 'suckers,' who gave up their money while someone else got away with giving nothing. Selfish behavior in others may have given individuals an opportunity to escape any moral obligation to share that they might have felt

The article links to the bystander effect, and I think that's probably right. What I'm interested in though is how this plays into thinking about corporisations. Part of the matter is perhaps a study in how attitudes are aggregated and how less social attitudes tend to be easier to foster.

"The pro-socials caved to the pro-selfs," said Panchanathan. "Generally, people who started off refusing to give anything would not budge. If one person gave nothing, their partner would tend to reduce the amount they gave, even if that partner had originally argued for giving a larger sum."

So that would be an indication of how fallenness 'infects' corporatised entities: tendencies are amplified, yes; pro-social attitudes can be amplified but so can counter-social attitudes and behaviours. And, of course. sometimes we want to encourage counter-social behaviours: if the corporisation is doing wrong, then having people opting out or minimising their involvement could work for the good. It would be a good thing if donations to terrorist organisations could be cut, for example.

Who controls the world?

A good question. Well, it's complex. Literally.

 ... a richer, data-driven understanding of the people and interactions that control our global economy. He does this not to push an ideology -- but with the hopes of making the world a better place

In the talk, James Glattfelder tells us about the application of complexity analysis maths to financial systems in particular ownership and control.

This approach has been very successfully applied to many complex systems in physics, biology, computer science, the social sciences, but what about economics? Where are economic networks? This is a surprising and prominent gap in the literature. ... it turns out that the 737 top shareholders have the potential to collectively control 80 percent of the TNCs' value. Now remember, we started out with 600,000 nodes, so these 737 top players make up a bit more than 0.1 percent. They're mostly financial institutions in the U.S. and the U.K. And it gets even more extreme. There are 146 top players in the core, and they together have the potential to collectively control 40 percent of the TNCs' value.
James B. Glattfelder: Who controls the world? | Video on TED.com

Remember this when banks threaten to charge for ATM use 'and be outraged

Remember that they are lending your money out several times over and making profit on the interest. By having your money in their bank, you are giving them the means to makes huge amounts of further money -that alone should be sufficient fee for you to have elementary access to your money. Anything more is egregious profiteering.

Check it out; it/s so basic that you'll find this kind of info all over the internet.

Fractional reserve banking - Wikipedia, the free encyclopedia: The nature of modern banking is such that the cash reserves at the bank available to repay demand deposits need only be a fraction of the demand deposits owed to depositors. In most legal systems, a demand deposit at a bank (e.g., a checking or savings account) is considered a loan to the bank (instead of a bailment) repayable on demand, that the bank can use to finance its investments in loans and interest bearing securities. Banks make a profit based on the difference between the interest they charge on the loans they make, and the interest they pay to their depositors

If they can't turn a decent profit without resorting to this kind of penny-pinching, they really shouldn't be looking after anyone's finances ...

Fred Goodwin stripped of knighthood -the danger now is tokenism

I'm worried that a scapegoating dynamic will end up distracting us. As David Fleming of Unite said:

this will do nothing to bring job security to the staff across the banking sector who continue to work under a culture of excess and greed at the top. Action from the government is needed in banking reform, not simply empty rhetoric on knighthoods or shareholder activism

What we need to recall, furthermore, is that a big part of the problem was -and is- that our governments don't do something about the 'too big to fail' issue in banking. Scapegoating one guy who was taking advantage of it, admittedly, is scarcely going to allow our money to sleep easily in its mainframes.

Fred Goodwin stripped of knighthood | Business | The Guardian

Banking reform bill, first reading

House-for-Duty Priests - do the figures add up?

This is the normal package I've noticed being advertised: "It is expected that for a House-for-Duty appointment the priest will carry out Sunday duties plus at least 2 other days each week. The house is for themselves and their family." What I'm wondering is where that apparently standard package comes from? I'm curious because I'm not sure that it is a well-founded figure. In fact, I think that it is probably over-pricing the house and/or underpricing the value of the ministry offered.

The latest I heard was that the cost to the CofE of a stipendiary post is £42k. This is made up of about £22k stipend, about £10k housing and £10k pension and other on-costs. Now, let's say a week consists of 21 sessions of potential work and let's take away 5 of those; 3 for a day off and 2 others to get a life (it really ought to be more but I'm aware of the realities in many cases). That gives us 16 sessions. On this schema, the house-for-duty package seems to be 5-7 sessions (2 or 3 per day and one for Sunday).

Now, if we take the whole £42k, then the stipend is worth about 8 (or 9) of those sessions, the on-costs about 4 and the housing about 4.

I hope it is now clear that, on this basis, a house for duty post, if offered pro-rata, should be asking for a work commitment of no more than Sunday duties and a further 3 sessions (1 or 1.5 days, depending).

Of course we should note that the £42k figure shouldn't really be treated as entirely remuneration; some of the on-costs are the kinds of things that are costs to the employer but not normally counted as remuneration. In addition we should note that there is a difficulty about insisting that housing goes with the job (in the case of stipindiaries) and then 'charging' a high rate for it when given the choice families might choose a cheaper house and more disposable income. There should be a notional discount in the figures for the value to the CofE of keeping someone 'on site'. These consideration would have the effect of reducing the sessional-value of a house for duty.

Now, why worry about this? Surely most house-for-duty priests are early retirees? Well, yes, at the moment. However, look at the financial situation. It does seem to me likely that in the future we could be seeing a greater number of self-supporting ministers who may be earning from another job or portfolio of work (eg consultancies). In the latter case, the abmount of their available time is crucial. Whether a house-for-duty post asks 1.5 or 2.5 days of them makes a difference to their earning capability and therefore to the viability of the self-supporting part of their portfolio. In other words, the housing needs to be costed properly so as to make for a fair possibility of the housing offer for SSMs.

Now if we said that the real figure for remuneration is £36k, then a session would be worth about £2.25k pa. On that basis the stipend would amount to about 9 or 10 sessions per week and the housing to 4 or 5 ie Sunday plus no more than 4 sessions which might reasonably equate to 2 days max. Obviously this figure is closer to the actual H4D advertised package. This would appear to be, then, the kind of figure actually being used somewhere to determine the value. Which means that we should stop being presented with the whole £42k figure as if it were remuneration ...
House-for-Duty Priests � Bishop David’s Blog:

Robin Hood tax: what the Republicans tried to censor....

I'm tempted to say that if the USAmerican Republican in the 90's engineered effectively to censor the idea, then it's an idea worth knowing about. Of course it's now being taken seriously.
What’s not to like? | Inside Story: "Republican senators in the United States had started misrepresenting Tobin’s proposal as a “UN tax.” This was nonsense, of course: taxes can only be collected by governments. Yet that fact didn’t prevent the Republican-controlled Senate from including in the bill authorising payment of US dues to the United Nations a clause prohibiting payment if Tobin’s idea was even discussed in the UN."
The article this quote's from gives some helpful details and summaries of research related to the tax. Here's the summarising final paragraph.

American Nobel economics laureate Paul Krugman argues that a financial transaction tax “would be a trivial expense for people engaged in foreign trade or long term investment; but it would be a major disincentive for people trying to make a fast buck (or euro, or yen) by outguessing the markets over the course of a few days or weeks.” “What’s not to like?” he asks. Critics claim that it would be avoided, but the centralisation of such transactions makes them relatively easy to monitor – if there is a will to do so. The tax is one way of shrinking bloated financial sectors and of raising revenue from those who have benefited most from the explosive growth in the volume of international financial transactions. •

Support Robin Hood

ACT NOW - SUPPORT ROBIN HOOD!: "It’s time for international bankers to pay something back to society. After the financial crisis and hundreds of billions in bailouts, bonuses and profits are rising out of measure again.
A new proposal – a tiny “Robin Hood tax” on bank speculation – has gathered support from top economists and regulators, and could raise huge sums to stop public service cuts, fight poverty and protect the environment. But this idea faces heavy opposition from a powerful City lobby.
It’ll take a massive public outcry to get our leaders to support Robin Hood and make the banks pay their fair share -- sign below now, then invite everyone to join the merry band:"

PFI -the biggest expenses scandal we don't notice

I've thought this for a long time: perhaps I'm missing something but I think George is right: Monbiot.com � The Biggest, Weirdest Rip-Off Yet: "one of the banks reported to be backing the scheme is RBS. The taxpayer now owns 58% of it. This is likely to rise soon to 95%(18). If the government underwrites the M25 expansion, it will in effect be bailing out RBS twice then charging itself for the privilege – and for the bankers’ fees, including salaries and bonuses. RBS – in other words you and me - already has �10bn invested in PFI schemes in this country(19), for which we are paying extravagant rates."

Corporate socialism: badged 'free markets'

This is provocative:

There is not and has never been a free market in the United States. Why not? Because the Congressmen and women now railing against financial socialism depend for their re-election on the companies they subsidise. The legal bribes paid by these businesses deliver two short-term benefits. The first is that they prevent proper regulation, which allows them to make spectacular profits and to generate disasters of the kind that Congress is now confronting. The second is that public money which should be used to help the poorest and weakest is instead diverted into the pockets of the rich.

It comes a propos of a reflection on the bank-shore-up in the USA. Read the rest of the article before you throw chairs at me; but I would be interested in responses if there are any.
Monbiot.com � Congress Confronts Its Contradictions: "There is not and has never been a free market in the United States.

Money and finance alternatives: TerraTRC

A few years back, I found myself preaching and, looking to illustrate faith, took our monetary system as an example. It works because we have faith that if we accept as payment the tokens we call money, then in turn we will be able to tender them in payment. This caused more of a ripple than I'd anticipated. It hadn't occured to me that, in the first place, lots of people wouldn't have already realised this and in the second place that it would be somewhat unsettling. The article I've referenced (just click the post header), gives a good overview of how currency works and the summary statement is this: "Ultimately, money (especially money that is not backed by real goods or services) is in essence a trust that lives and dies only in human hearts and minds. Money systems, including our current one, are filled with mechanisms and symbols that aim at keeping that trust alive. Civilizations are built on trust, because it is at the core of the self-confidence required for a civilization to grow and survive.
Conversely, when a society loses confidence in its money, it loses confidence in itself. Entire civilizations have collapsed with the collapse of their money system".
But the really important point of this site is to highlight the great instability of our current free-floating currencies (they are not tied to anything tangible, the gold standard having been abandoned some 30 odd years ago), the speculative frenzy that this has created in the financial markets and the dangers inherent in this system. It is for these reasons the alternative is offered. Now I have to confess, also, that as a child/teenager, I thought that the system being proposed in this article, was in fact what must happen in order to determine the relative values of currencies against one another. It just seemed a logical way to proceed. I was surprised, doing A level economics, to discover it wasn't the way things worked. So what is this plain and logical alternative? Basically, to use a basket of goods and services as a standard to determine relative values of currencies. This would bring a number of advantages.
"The TRC™ is poised to dramatically change barter and counter-trade along with creating, stability and predictability in the financial and business sectors by providing a standard of value for international trade. This will be the first time since the gold-standard days that a robust international standard of value that is inflation-resistant would become available. Most importantly, it will resolve the current conflict between short-term financial interest and long-term sustainability. This mechanism would work in parallel with national currencies. Finally, this proposal would need no new legislation or international agreements to become operational."

TerraTRC:

Cost of ID card and passport rises to £100

It's a while since I have written on ID cards, but this really should be flagged up, an official government report has recently been published. "The report says that the latest estimate excludes the cost of the ID project to other government departments outside the Home Office, including card scanners for GPs registering new patients. The report to parliament admits that the estimate is likely to change, especially as the tendering process, with eight private sector firms bidding to run the scheme, has just started. The final charge for the ID card has not been settled but the government has decided that the scheme must be self-financing."
In other words we are going to be asked to pay a poll tax to finance our own oppression. No, that's too harsh. ... to finance the potential for our own oppression.
Cost of ID card and passport rises to �100 | Special reports | Guardian Unlimited:

The take: the Argentinian experiment in workers' control

This is quite inspiring. What can happen when capital goes away leaving labour and an abandoned factory behind. I have to say that I'm not sympathetic to the boss who decides the factory is not profitable and abandons it, only to try to take it back when the workers manage to make a go of it.
DNAStream - Mutant Television

The Fat Cats Protection League

I seem to recall saying something similar to this that appears in George Monbiot's latest: "the neoliberal project - which demands a minimal state and maximum corporate freedom - actually relies on constant government support."
In fact my point has been wider: that neoliberal society actually relies on a host of 'unliberal' and unacknowledged supports to keep it going: it is in fact parasitic on certain kinds of infrastructure but tends to make rude comments when other people try to have more advantageous infrastructures.
As George points out "The current financial crisis, caused by a failure to regulate financial services properly, is being postponed by government bail-outs. The US Federal Reserve has reduced its lending rate to the commercial banks, while the Bundesbank organised a E3.5bn rescue of the lending company IKB. This happens whenever the banks suffer the consequences of the freedom they demand."
Indeed. They have us by the short and curlies. 'We' can't afford for them to go under, so all of a sudden, in financial crisis they become state-subsidised: where did all that talk of the market, fitness and competition go? We are all state-interventionists when it's to our advantage!
Monbiot then goes on to talk about the PFI fiasco through a case study of a hospital in Derby. It only serves to drive deeper for me the question of how having to pay shareholders in addition to normal costs can make a project cheaper.
Monbiot.com � The Fat Cats Protection League:

World(Bank)Changing: A Letter to President-Elect Zoellick

An intriguing open letter to the incoming pres of the World Bank from the lovely people at WorldChanging (in particular, Jonathan Greenblatt)
"...The Bank should return to its core purpose as a bank of reconstruction and development, but infuse a sense of boldness and creativity into this mission. I might suggest a ten point plan, mixing principles, strategies and tactics, to jumpstart the process:
1. Rethink the Religion of Friedmanism. ...
2. Redefine the Metrics of Prosperity....
3. Embed a Culture of Bottom-Up-Led Innovation into Organization. ...
4. Create a Global Advisory Board of Social Entrepreneurs...
5. Launch Tiger Teams Focused on Big Cross-Border Problems...
6. Embark on a Listening Tour of the Global South....
7. Maintain a Focus on Corruption but Pursue Other Priorities....
8. Elevate Development Marketplace into permanent and persistent program....
9. Experiment to Scale Demonstration Models of Innovation....
10. Collaborate with Corporations and Foundation to Explore New Development Models. ...
You have a tremendous opportunity to change the World Bank and change the world as a result. I hope you will embrace this challenge.
Jonathan Greenblatt"

Interesting reading which by implication tells us what some of the big issues are. I think I would add a further point:
11. Investigate and bring recommendations on how to bring democratic accountability to the bank.
WorldChanging: Tools, Models and Ideas for Building a Bright Green Future: World(Bank)Changing: A Letter to President-Elect Zoellick: