Demography and other impostors

I like to think of myself as a family man. I like to spend time with my kids. I try hard to listen to what they have to tell me about their lives, despite having a personal tendency to talk rather than listen. I like my kids; they are nice people. And they are growing up quickly. Despite a two-year age gap between them, they are both on the cusp between being children and being adolescents. I suspect that too many of us adults have forgotten what a difficult time adolescence can be, and end up being quite unsympathetic to this natural transition from childhood towards adulthood, which is the root cause of what was once renowned as "the generation gap".

Much as I love to spend time with my children, I also enjoy the quiet time at home when they are in school. This routine will be shattered on Thursday this week, when both of my kids will be at home. This is because teachers at both of their schools will be on strike, hence the schools will be closed on "health and safety" grounds. At first I was irritated by this break into my sacred time alone, but then I considered the issue much more closely, and understood that this strike has been called because of what can only described as an attack on the pension rights of the teachers. I use the term "attack" not as hyperbole, but because that is what is the government's policy truly is.

A pension is a long-term contract between employee and employer, by which a portion of the employee's wages are deferred in order to provide an income after retirement. The deferred wages (int he form of so-called employee and employer contributions) are placed into a pension fund, which invests the monies in the various financial (and other) markets, hopefully generating returns which will provide a decent level of retirement income (pension). Any changes to a contract must surely be negotiated to an agreed conclusion by both parties; anything else must surely constitute a breach of contract. And, although there may be a logical rationale behind the government's decision to change pensions (raise the retirement age, increase the level of contributions, move from defined benefit to defined contributions), to do so unilaterally seems to me to be both legally questionable and ethically wrong.

My interest in pensions began back in the late 1970s. Between doing my Master's degree and my PhD I spent time as a filing clerk for Sotheby's London office. At that time a number of pension funds were engaged in the purchase of fine art. Despite having little but a layman's knowledge of pensions or pension funds at that time I was bemused by this strategy. One consequence of this was finding myself undertaking a PhD thesis on the investment behaviour of UK pension funds. Back in 1980 I recall vividly reading the report produced by the committee chaired by former Prime Minister, Harold Wilson, on the functioning of the financial system. It was then that my attentions were drawn to what has since become known as the "demographic time bomb", whereby society is ageing. We have seen increasing numbers of pensioners and reduced numbers of people of working age. This is one of the rationales underlying the current government's position on pensions. However, more than thirty years have elapsed since I first learned of this demographic time bomb.

Some would argue that it is unfair to the current (coalition) government to blame them for the current attack on pensions, when so many governments have previously failed to grasp the mettle. However, it is not the issue of pensions reform which I am criticising; rather it is the way in which this has been approached in a dictatorial fashion by the government. In a democracy the government is elected to represent the people, including teachers. When democratic government tries to dictate to the people it is in breach of its mandate, and cannot be surprised when people react strongly in opposition. If the government believes its actions to be correct and appropriate it needs to make the case and convince those who will be affected. There needs to be an attempt at consensus. There has been no such attempt. Thus, although I agree that pension reform is increasingly crucial and that the current system is rapidly approaching a tipping point, I remain firmly in the camp of the striking teachers. I shall look forward to spending Thursday with my offspring, and hope that the strike forces the government to rethink how best to go about reforming pensions, not how to impose it on others.

Young Lions on morphine?

Benjamin Franklin is reputed to have said that the only things in life which were certain are death and taxes. The truth is that the only thing in life which is certain is uncertainty itself. Nowhere can this truth be more self-evident than with the English weather! As I write, in the middle of "flaming June", the weather in London has been increasingly uncertain. A fortnight ago we were being warned of drought conditions. No sooner had that been reported on the news than the skies opened up and we were treated to a downpour of seemingly Biblical proportions. Even on a single day the weather in London has been so changeable that it is impossible to know how to dress on a given morning.

Life is full of uncertainties. None of us know in advance when we shall pass on, nor when we shall be fit and well or ill and infirm. Parents want the best for their children, for them to exceed their own accomplishments, but this too is uncertain. Some people will make provisions for dealing with life's uncertainties, while others will acknowledge the fact of life's uncertainties and try to live for the moment; enjoying where possible what life has to throw at them.

Of course, for most of us there is a balance to be struck. We want to protect against those of life's uncertainties for which such provision is possible, while also trying to enjoy the moment and not anaesthetise the joy out of living. When it is possible to insure against uncertainties, it is because institutions have arisen which can calculate the probability of a given event (such as insurance companies), without being able to guarantee to whom such an event will impact. Economists refer to such situations as being of risk rather than uncertainty. Investing in the stock market is a situation of risk; life expectancy in general is one of risk, but of uncertainty for any given individual.

When it comes to football the distinctions between risk and uncertainty can be equally blurred. The result of any given match is one of uncertainty, while the winners of a football competition over the course of a season is one of risk. Nowhere has this blurred distinction been more evident than in the EURO under-21 competition, hosted in Denmark.

Last night the England U21 team were dismissed from the competition after failing to win any of their three group stage matches. At the start of the competition they had been hailed as one of the favourites, along with Spain. But England's failure to progress mirrored the failings of the senior team in last year's World Cup in South Africa. Given the players at the manager's disposal, their track record playing for their individual clubs in the English Premier League (EPL) and the facilities available, it remains one of life's unanswered questions as to why English sport is so conspicuously unsuccessful in international sports, especially football?

Watching England U21s over the past week or so, the notion that a team is built in the image of its manager seems questionable. As a player, Stuart Pearce was renowned for his lion-hearted spirit, his passion and commitment. His young players this past week failed to manifest such characteristics. While able to defend stoutly, there was a distinct lack of creative flair, with too few goal-scoring chances being carved out. If I had to had to pay to watch these England performances I might have been inclined to ask for my money back! Something appears to happen when good EPL players turn out for the English national team. The usual excuses of a long hard season are trotted out, but somehow these do not apply to foreign players who ply their trade in the EPL. The fault, therefore, must lie with the management team. After all, as the old Russian saying goes: a fish rots from the head. Time to go fishing for something fresh?!