As the UK faces the possibility of hyperinflation, any retired or soon-to-be retiring academic faces the annihilation of the value of their pension. With the Government poised to print vast sums of money in an attempt to keep the lockdown-struck economy afloat there is a looming danger of a rapid and massive take-off in inflation. However, because of the way the Universities Superannuation Scheme (USS) is structured this means that as inflation takes off academic pensions will become rapidly devalued. If hyperinflation takes hold they will become practically worthless.
The University and Colleges Union (UCU) has been fighting battles to preserve the 'defined benefit' nature of the USS scheme and also argue against big increases in pension contributions. But little attention has been placed on a change to the USS conditions that were introduced a few years ago which strip away a lot of the protection against inflation.
The rules state, in effect, that the pension income will be fully protected for only the first 5% of annual inflation. Above that only HALF the inflation will be matched by increases in the pensions.
For example, of annual inflation rate hits 50% this means that the value of an academic pension will decline, in one year, by 22.5%. And inflation could get worse than that with the Government printing the amount of money that seems set to happen!
Of course in recent years inflation has been low, but under the new conditions many people in the financial world fear that inflation will take off as the Government, in effect, prints money. We may have been lulled into a false sense of security by the Government's policies of 'quantitive easing' in recent years which did not lead to inflationary consequences. The effects were contained within the banking system itself. But what the Government is going to do now is to give lots of money direct into the real economy. That is a different matter. History does not record good outcomes for this strategy which leads to hyperinflation. The most recent example is Venezuela, historically The Weimar Republic. Enough said!
Sure, printing money reduces the value of Government debt, but it ruins anyone on a fixed, or partially fixed income including people on pensions that do not fully uprate pensions benefits in line with inflation.
No doubt in present circumstances University managers will seek to 'persuade' lots of academics to take early retirement. But they won't find many volunteers. Most people might risk jumping out of a plane if they have a parachute. But not without one.
Of course there are remedies. One is to alter the terms of the USS so that pension payments are fully protected against inflation as measured by the CPI. Another broader measure os form the country in general to pay a much higher level of taxation to get the country out of the terrible mess we are in without turning us into another example of Venezula or the Weimar Republic.
Friday, 24 April 2020
Wednesday, 15 April 2020
Saturday, 11 April 2020
The Times newspaper; a paragon of hypocrisy about free speech?
The Times exposed its own hypocrisy today when it said that universities 'should not turn a blind eye to baseless propaganda' - ignoring its own promotion of climate scepticism through publishing the views of Matt Ridley.
Under a headline 'Spreading Falsehoods' a Times leader today criticises three named academics for spreading conspiracy theories, variously about how the WHO or the West was using the C virus as a bioweapon. Well, to make my own view clear, I condemn anybody who spreads such nonsense and I call upon them to stop it. But should the universities take action against them? I think not!
The Times says:
'Real news outlets are reporting the state of medical knowledge and safeguarding public health. Their efforts are being undermined by dilettantes who lack specialist knowledge. Those who share conspiracy theories under the guise of academic affiliation are trading in falsehood. Their institutions should not turn a blind eye to baseless propaganda'.(1)
It's very interesting that The Times should complain about how science is being undermined by 'dillettantes who lack specialist knowledge' when it publishes climate scepticism by Matt Ridley. Take for example the article published in 2018 by Matt Ridley discussing theories of global cooling when he says, for example:
'the argument that the world is slowly slipping back into a proper ice age after 10,000 years of balmy warmth is in essence true' (2)
This is utter nonsense of course. The climate science tells us that the temperature of the Earth is increasing much more quickly than anything that can be seen in the last 10,000 years or more and that this is associated with anthropogenically induced warming. No doubt Matt Ridley might excuse his article as being a wind-up or something; but then I'm sure the peddlars of the current conspiracy theories have parallel excuses.
The plot thickens when one considers the articles that the Times' publishes on protecting academic freedoms. Only a couple of months ago the newspaper published an article by the Education Secretary Gavin Williamson which said, among other things:
'The University of Oxford has adopted strong codes of conduct that champion academic freedom and free speech, explicitly recognising that this may sometimes cause offence. Every university should promote such unambiguous guidance'. (3)
Aha, so, putting these various strands together, Universities must defend free speech even though people are offensive.....but they must crack down on academics who spread offensive conspitary theories?
This doesn't make sense really - unless you come to the conclusion that it's ok to be anti-science if this doesn't offend your own prejudices, or to put it more bluntly 'Freedom of speech is ok so long as it isn't offensive to my own general worldview'. It's called hypocrisy.
But, for universities, you do get the impression that they cannot win. Somebody is always going to complain whatever happens on campus.
Perhaps in view of all this, universities should simply ignore what opinion leaders say in The Times and regard these articles instead merely as sometimes irritating pieces of entertainment.
(1) 'Spreading Falsehood' Times Leader, April 11th page 29
(2) Matt Ridley 'Global Cooling is not worth shivering about - The Earth is very slowly slipping back into a proper ice age but technology should enable civilisation to survide it' January 8th 2018
https://www.thetimes.co.uk/article/global-cooling-is-not-worth-shivering-about-pmdn8gp07
(3) Gavin Williams February 7th 2020 'If universities can't defend free speech Government will' https://www.thetimes.co.uk/article/if-universities-cant-defend-free-speech-the-government-will-jwmnfznh7
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