I am reading Prof. Steve Keen’s book Debunking Economics, which is rather good, so far (I’m about 100 pages into it). Towards the end of chapter 4, however, I have begun to question Prof. Keen’s maths. On p96-98, Prof. Keen develops a formula for calculating the optimal output of a company in a competitive market. I could not follow the logic. I contacted Prof. Keen and he pointed me to this article in which the logic which confused me is on p62.

Prof. Keen asserts that in an “atomic” market (i.e. where different companies do not react to each other’s changes in output volume),

  for all       

where  is the output of the  company and  is the output of the market as a whole. Continue reading →

What are we to make of Fr Philip North’s withdrawal from the post of Bishop of Whitby on the basis that he would not be able to act as a focus of unity? Is it true, as is being reported, that the underlying reason for this is that some members of the local church would not be able to accept his oversight? It seems that the “alternative episcopal oversight” bug has well and truly bitten the Church of England. No longer is a bishop considered to be appointed by God as a minister to the people. Now he (or, indeed, she) needs the unanimous permission of the people themselves and this permission can be withheld on the basis both of gender and of theological difference.

Do you see what is happening here? Our doctrine of church is rapidly unravelling as it gives way to individualism. We started with a simple binary question about the validity of oversight: male or female? This question itself is already dubious. The sacrament of ordination is valid or not. It makes no difference whether one sidelines oneself into a part of the church which is “untainted”, as St Augustine showed so robustly against the Donatists. Now, though, questions about the validity of oversight have exploded into an infinitely complex web of questions concerning theological agreement. Previously, a bishop just had to be the right gender, now he or she also has to agree with everyone under his/her oversight.

How can this possibly work for the Church of England, which celebrates its breadth and diversity? There will always be theological disagreements within the Church of England. Does this mean we can no longer have any bishops at all? What does it mean for oversight which must, surely, at times act prophetically, expressing God’s word in a way people have not heard it before and which makes people uncomfortable? What does it mean for other orders of ministry: must a priest abandon his/her orders if some of his congregation disagree with his/her view on, say, elevation of the host?

Something is wrong. I will end with just one question. Jesus, himself, often made people uncomfortable. Everyone around him, including his close family and disciples, found themselves wrong-footed by him at times. May we also, then, invalidate his ministry and demand a different messiah?

The proximate cause for this post is the present disagreement about the government’s intended “bedroom tax” (or the “under-occupancy penalty”, depending upon your personal bias). However, what I have to say applies to pretty much every disagreement about matters of justice between liberals and conservatives and is vitally important if we’re ever to stop talking past each other. Further, it imposes a significant challenge upon the church.

The issue I wish to raise is that many questions of justice can be either prospective or retrospective. Very often the ‘right’ answer depends on which perspective is pertinent. Generally when liberals and conservatives disagree, they have different perspectives in mind.

Enough vague generalisation. Since we started with bedroom tax, I will illustrate what I mean by discussing social housing strategies. In a perfectly just economy, there would be no need for social housing – everyone would have enough. This is the kind of economy we should most desire. In an almost perfect, but more real, economy, however, there will always be people who, through circumstances beyond their control, do not have enough. This is injustice. In such cases, the law of charity demands that society as a whole help these people. Finally, in the kind of economy we actually have, people who are helped can become institutionalised and some will even take advantage of the system. So we have a very imperfect situation where people who could be doing more for themselves do not and everyone else has to make up the difference. This is another kind of injustice.

Now, before anyone howls in protest, let me say that the cost of charity will always be that it is, to some degree, an exercise in casting pearls before swine. This is simply true. Nonetheless, it behoves us to count the cost and then be charitable anyway, especially bearing in mind that many of the recipients really are deserving causes. After all, was the cross not the clearest example of this strategy? Love always costs more than it should, but love is also big enough to bear it.

The real question, then, becomes not whether we should be charitable but how we manage our charity. The conservative (speaking broadly) will view the situation prospectively – speaking of what will happen in the general case of society as a whole. The liberal, however, will view the situation retrospectively – speaking of what has happened in the particular cases of those who have fallen between the cracks.

You see this in the language used. In this BBC article, for example, those opposed to the legislation speak of a particular “153 families under-occupying two-bedroom homes”, whereas those in favour speak of the “bill for housing benefit topping £21bn a year and rising”. Neither party is incorrect. Both have very important concerns which, in an ideal society, should be addressed. And both parties think their concerns trump those of the other party.

My contention is that the prospective case (i.e. the what will happen in general) and the retrospective case (i.e. what has happened in particular) must both be addressed. But they cannot be addressed by the same thing. I think that when we are discussing general policy, then the right thing is to look at the general case. However we must never make the mistake of thinking that general policy is an iron rule that must govern every particular case and in particular cases we must always place compassion ahead of the general rule.

But this also means that two different parties are involved: the central authorities who make the general rules, and the local authorities who interact with particular people on the ground. Both need the freedom to operate on their own initiative. The trouble with conservatives is that they want to control local policy and the trouble with liberals is that they want to control central policy. However, centralised government must be free to set the general rules for society looking forwards, without particular parties with localised concerns interfering. On the other hand, centralised government is not in a position to make decisions based on compassion and charity because it does not interact with the particular people who face hardship. So local authorities must be given freedom by central government to recognise when the rules do not apply.

Now, here’s the problem: what I have just said is brilliant as a utopian ideal, but it is simply not likely to be realised. And this is where I think the church comes in. Indeed, this is where the church has often been the miracle which breaks the rules against utopian ideals. But this is also where the church very often fails to live up to its calling to be that miracle.

The reasons why the church is the answer are that the church is present in every local situation, the church is unconstrained by central government budgets and the church is built upon charity – indeed upon the charity, the charis, the free gift of grace, the incarnated Lord Jesus Christ himself. Too often we forget this. Too often we think that our provider is not God, but the state. Too often we think we hear Jesus saying, “I was hungry and thirsty and you wrote to your MP”.

Now, don’t misunderstand me, the church should also be involved in setting general policy. But we must remember to do so in the prospective mode. At the same time we must work locally in the retrospective mode. This will cost us. This will mean that the money often comes from our own pockets. This will mean that our own houses become places of refuge. And, most significantly, this will mean that we need to start living in a way which makes us available to be the incarnated grace in our communities.

I have often been struck when met at the church door by a homeless person that the local church is usually not structured to deal with homelessness. I compare this with the model of St Benedict, whose monastic communities would host anyone who came to the door at any time of the day. There is an intentional, strategic structure to a Benedictine monastery so that when the local, particular need occurs there is a community with the resources and will to respond. In contrast, our churches resemble a special interest club which is only ever present for the few hours each week when it is busy managing internal business and unable to accommodate a need from outside.

I said previously that the church is present in every locality, that it is unconstrained by resources and that it lives on charity. In truth, I think we often forget to be present. We often forget that our God is well-enough resourced to create universes. And consequently, we find ourselves struggling to believe in charity. The more I think and read and pray, the more I am coming to the conclusion that Benedict had the right of it. We need to be structuring our churches as intentional communities which live by a rule that makes sure we are local and generous.

That is really what I wanted to say about bedroom tax. But the more general principle, about prospective and retrospective justice, requires a few more words because I see this pattern everywhere. Another example is our attitude to children born out of wedlock. Prospectively, it is good and right that we desire this situation not to occur – as a matter of justice to the children and to those who would otherwise become inadvertent parents. Retrospectively it is imperative that we care both for those who accidentally find themselves pregnant and for their children. Past ages have done very well with the prospective view, but caused real harm to those who broke the taboo. The present age has resolved the past injustice, but at the same time is losing any notion of what marriage means, causing a vast social mess of broken relationships. Similar issues surround the issue of abortion. We need a society which can take both the prospective view and the retrospective view. And, once again, I think the church is well placed to motivate for the former while being the incarnated Christ in the world which picks up the pieces in the latter.

I’ve just read the Telegraph’s article on  Bishop Justin adding his weight behind a bill to restrict charges on payday loans. At the end of the article there is a quote from a Wonga.com spokesman saying that their loans only cost 1% per day. This is already extortionate when you consider the Bank of England charges only 0.5% per year! However, as we’ll see, the true cost makes 1% per day look very generous. The spokesman goes on to say, “It would be brilliant to sit down with our critics and explain how it works.”

So, let’s actually do that, then. I visited Wonga.com‘s web site, which quotes an APR (annualised percentage rate) of 4214%. Yes, you read that correctly, when forced by law to tell the truth, their interest rate is equivalent to thousands of percent per year. Most banks and credit cards charge single or low double figure percentages. So 4214% is a lot. And it looks bad. Which is why Wonga.com’s website then explains that things are not really as bad as they seem, that they are forced by law to quote APR and that APR is not actually an appropriate way of representing their products.

Why is APR not appropriate? Their answer is that, firstly, their interest is not compounded, and, secondly, APR is an annual rate whereas loans from Wonga.com cannot last anywhere near as long as a year. In other words, APR is not comparing apples with apples. This is deeply disingenuous – APR is specifically required by law so that there is a way of comparing apples with apples, regardless of details like compounding and term. It also conceals the fact that, owing to some playing about with definitions, the 1% per day does not actually include the entire cost of the loan. There is also a “transmission charge” of £5.50 – which is effectively an interest by another name.

So what is APR? I’ll give two definitions, both of which are correct and both of which allow us to explore Wonga.com’s offering. Firstly, APR is a way of comparing loan products in terms of how much extra I pay back over and above what I borrowed. In Wonga.com’s example which gave the 4214% APR, £207 is borrowed for 20 days and the total to pay back is £254.42. For me to have the same experience with my bank account overdraft, my bank would also have to be charging 4214% interest. This is an exact like for like comparison for anyone who has a bank overdraft facility that is at least as large as £207. It cuts away all the dissembling: the fact is I could borrow the same about of money for the same time period for about a 20th of what Wonga.com charges.

The second way to look at APR is to ask how much it would cost me over the period of a whole year if I borrowed money for that length of time without making any interest payments. In the case of Wonga.com, the way to do this is to roll credit. That is, to pay off one loan with another. And because we are not making interest payments, it means we have to add the accrued interest of the previous loans to every new loan we take out. Which means, contrary to what Wonga.com claim, interest is compounded. It’s just that it isn’t Wonga.com who are compounding it, but the customer. Given this definition, to borrow £100 for a year would cost a customer several thousand pounds overall! (Although, technically the customer would be bankrupt long before then because Wonga.com won’t lend you more than £400).

So, APR turns out to be an excellent way of showing just how expensive a loan product is. It sweeps away word games that call some of the expenditure “interest” and some of it “transfer fees”. And it forces one to be honest about this being a loan that can only ever make sense over a short period and as a one-off. Any kind of habitual use of this kind of product is deadly. To be fair, Wonga.com are also upfront about this: they advise people not to use their service if it is too expensive. But one must ask who would ever chose a loan product that is twenty times as expensive as credit cards or bank overdrafts. The answer, of course, is those who are utterly desperate and have no other recourse. It is exactly such people who will not suddenly after pay day have enough to pay back the original loan plus the extortionate costs and somehow be sufficiently in the black next month not to need another loan.

I’ll finish off with a worked example, just to illustrate in real terms what I have discussed above. We’ll start with a £100 loan, just to tide us over until pay day, a week hence – because it has been an expensive month. The front page of Wonga.com’s website calculates that we will have to pay £112.78 out of next month’s pay-cheque to cover the loan. (That’s £5.50 trasfer fee plus £100 plus interest on both amounts). Sounds good, only costs us £12ish, let’s do it. Towards the end of the next month we realise this has also been an expensive month – after all, there was £112.78 less to go around off an income which was already stretched. We borrow £113 (rounding off), making the next repayment 126.68. As this continues, the loan progresses as follows:

After a year we are in debt by more than four times the initial amount (i.e. more than 400% in a year where most days we were not actually in debt to Wonga.com). Wonga.com will no longer lend us enough to cover last month’s debt – their cap is £400. So the children are beginning to go hungry. But the real evil is only just beginning. As you will have noticed we’re having to take the loan out earlier and earlier each month at an increasing rate and we’re having to borrow more each month at an increasing rate. Very soon we’ll be borrowing £400 all the time. Every month we’ll have to pay over £125 in costs. The only thing saving us from spiralling completely out of control is that Wonga.com won’t lend us more than £400 or for more than 43 days. And that is why they claim that APR is not appropriate – because you’ll never get to paying 4214% interest – you’ll starve first.

It is being widely repeated that the church is misogynistic to deny women access to the “top” posts. Let us accept the charge of misogyny, but the rhetoric about “top” posts must be challenged. Any woman (or man for that matter) who might become a bishop is first and foremost a deacon (which means a servant). Church hierarchy is not a parallel of the world’s hierarchies. There is no “career progression” in the church.

I hereby submit that a far better word than “hierarchy” would be “lowerarchy”. Jesus tells us that whoever wants to be first in the kingdom must be the servant of all. Bishops do not occupy the top jobs, they occupy the bottom jobs. Just look at the vituperative invective levelled at ++Rowan, or the pressure on +Justin – I would not wish the “highest” post of archbishop on my worst enemy. We do not have a “glass ceiling”, we have a glass floor. And this betrays the true problem with barring women from the episcopate: that the church and the world are robbed of their service (which is destructive) and that their calling is frustrated (which is very painful).

This is a message the world desperately needs to hear. It is one of the linchpins of the Christian message: it is found across the New Testament, from Jesus and his first/last sayings, to Paul and his brilliant hymn about Jesus emptying himself in Philippians 2. This is a message the world needs to hear because it is so obsessed with success – and so plagued by failure. This is a message which would transform our economy (which we now know to be desperately broken). This is a message which would heal the deep, deep pain in Israel/Palestine.

For too long, the church has fallen into the same trap as the world. For too long we’ve been obsessed with status. For too long we’ve spoken of “senior” posts. For too long, we’ve insisted that Father knows best.

In Durham Diocese, where I serve, we have a visual metaphor which captures what I’m trying to say. The bishop’s seat in the Cathedral sits on a platform some four metres above floor level. At one point this was the highest bishop’s chair in all Christendom – a sign for all to see of the vainglory of the Prince Bishops. These days, on Maundy Thursday the bishop kneels to wash feet below the foot of his seat – humbling himself below all. This is the message the world needs to hear.

But how? Well, currently the church has the interest of the media – let us use it. When asked about the glass ceiling, let us respond by saying it’s far worse than that. That women are not desiring to be bishops because they want success but because they want to serve. That, in fact, even presently men do not seek this post – it seeks them. And let us point out that the world might learn something from the servant hearts of the women who are already “senior” in the church. Let us be clear that we don’t have a political challenge on our hands, so much as one of mission. And let us speak, always, of Jesus, the servant king.