Number Crunching

Only time for a (very) brief post this evening, as I’ve been in London all day and got back much later than expected.

In this morning’s Guardian there was a story about how the UK’s banks intend to pay out a whopping £7bn in bonuses this year. Banks. Remember them? They’re the organisations whose behaviour almost brought this country’s economy to its knees a few years ago and needed to be baled out by the taxpayer, at enormous cost to the public purse.

Meanwhile, the Science is Vital campaign is gearing up for Saturday’s rally. An article over on cosmic variance has raised the profile of this increasingly vocal campaign to stave off cuts which threaten to destroy Britain’s position as a leading scientific nation. The petition has now been signed by over 17,000 people (including the winners of this year’s Nobel Prize for Physics, announced yesterday).

It’s worth emphasizing the numbers behind this story too.  The annual UK science budget, before the next round of cuts, stands at £3.2billion. That’s everything – particle physics, astronomy, chemistry, biosciences, and countless other things.

I need hardly point out the irony. The amount we’re waging an increasingly desperate fight to protect is less than half the amount to be spent on yachts and fancy cars by the people who got us into this mess in the first place. Some of us hoped the financial sector would show some contrition after the disaster of 2007. Fat chance!  Their rescue by the taxpayer has probably just convinced them that however they behave they can always rely on Joe Public to get them out of trouble. It seems they’ve reverted to type.

So let’s have no more of the specious arguments about having to cut science in order to avoid having to cut, say, the National Health Service. Science isn’t as expensive as some people would have us believe, and it’s not a luxury either. It’s vital to our economic and cultural well-being. Each pound spend on science is worth a lot more to this country than  two disappearing into a banker’s offshore tax haven.

In any case the government should just tax the greedy bankers’ bonus payments and use the money to increase the science budget. Better still, put pressure on the banks to themselves invest in science, alongside other areas of innovation, which we know will generate healthy profits for those brave enough to take a calculated risk, rather than going back to the old game of playing around with dodgy property-based financial speculations, which have a good chance of taking us down the plughole for good.

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6 Responses to “Number Crunching”

  1. polariton Says:

    Couldn’t agree with you more. It should also be pointed out that British science has two of the three science Nobel Prizes in the bag this year – because of research excellence that will not continue if the savage cuts take place.

  2. Do governments and the general public care about who gets Nobel Prizes? I mean, they aren’t like Olympic gold medals or anything.

    • telescoper Says:

      They’re worth a lot more than the Gold medal for underwater clay fish harpooning or whatever.

      On the other hand, the BBC hardly covered the physics Nobel Prize at all, so maybe you’re right.

  3. If the state steps in to bail out banks, then the state should cap the salaries. (This happened in Germany. However, the law stipulated that bank managers’ salaries were capped, so some banks were paying non-managers higher salaries than the capped manager salary. But this will be corrected. After the EU outlawed 100-watt light bulbs, a company in Poland started producing 99-watt light bulbs. Lawmakers need to be careful.) Otherwise, customers are free to patronise a bank which pays “reasonable” salaries.

    But one might have to put one’s money where one’s mouth is.

    I recently bought a house. I checked with 3 banks I otherwise do business with for loans. Bank A was a traditional building society (with no overblown salaries), bank B was the German branch of a similar-type bank in France, bank C was a private German bank (known for paying high salaries but which was not bailed out by the state). Bank A didn’t make me an offer (presumably I was too high a risk; this is expected: “sensible” banks which cater to “normal” folks and don’t pay overblown salaries tend to avoid high-risk activities (whether I really am high risk is another question)). Banks B and C both made offers, but C’s offer was much, much better. I opted for C. As long as the bank doesn’t get bailed out by the state, they can pay whatever salaries they want, as far as I am concerned.

    A person who is high risk might be able to do business only with a bank which does risky stuff and such banks tend to pay high salaries and boni. So such folks don’t really have a choice.

    But folks who are not high risk and who don’t like overblown salaries (at least in banks which got baled out) should put their money where their mouth is and deposit in a “sensible” bank. But beware that such banks might not pay as much interest, since the interest they pay comes from the interest they earn from other deals and the riskier the other deals are, the higher the interest (and the more probable that such banks pay overblown salaries).

    Should one deposit one’s money with a bank which pays higher interest but also higher salaries? Is it OK if it hasn’t been bailed out by the state?

    One has to think through moral decisions involving money. Some people don’t invest in, stocks or bonds from, say, weapons manufacturers, but rather opt for less return and put their money in a savings account or whatever. But where does the interest for that deposited money come from? Perhaps the bank invests in weapons manufacturers who pay a higher return and pockets the difference. So having a good conscious about such a decision is probably delusional in many cases.

    A tax on financial transactions would a) generate income for the state by collecting it from people who have enough money that they can afford to speculate and b) tend to slow down more exotic types of speculation. Ideally it should be world-wide, but it is clear that it needs to be at least EU-wide since otherwise people will just trade in a country where there is no such tax. The main reason such a tax doesn’t exist in the EU is because of opposition from the UK government (whatever party happens to be in power; all UK governments have opposed this).

  4. It’s sometimes to get a perspective on these big numbers (although scientists and engineers should be used to big numbers!) but you have done this in a way we can all understand.

    Thanks.

  5. [...] the US, France, Germany are all increasing spending on science now. While we were willing to spend billions to keep banks afloat, as they were too big to fail, science appears to be something the government may be willing to see [...]

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