Industry News The Week That Was

Socialism meets crypto, London house prices fall and higher education comes under review

Harriet Green
Written by Harriet Green

Happy Friday, everyone.

I hope you’ve had a good week. It’s the one in which a report warned that AI is ripe for exploitation by criminals, terrorists and rogue states (think fake videos manipulating public opinion, drones hacked into missiles), and the Queen made a surprise appearance at London Fashion Week.

Have a nice weekend!

PS On a serious note, I thought this was an interesting read on gun control: How Banks Could Control Gun Sales if Washington Won’t

THE ROUNDUP

1. London house prices are falling. Why?

This week, Rightmove’s latest house prices index showed that houses in London are taking almost three weeks longer to sell than they did a year ago, pushing average asking prices down by a percentage point in February from a year earlier. This takes the annual asking price for a home in the capital to £627,591.

Rightmove isn’t the first organisation to report a slowdown. Figures from Acadata last week said London prices fell by 4.3 percent in the year to January, and other indexes like RICs and Nationwide have also reported price drops.

House price fluctuations can, in the main, be attributed to expectations around interest rates. Prices boom when the market anticipates they’ll stay low for a long time, and start moderating when there are signs of normalisation, which is what we’re seeing now.

If you fancy reading something a bit different on housing, here, Andrew Lilico argues that there is no such thing as a UK housing crisis. Houses are expensive to buy – so are yachts, he argues. Yet we aren’t experiencing a yacht crisis.

2. The government launched its higher education funding review. But anyone calling for fees to be frozen or scrapped and interest rates to be slashed is barking up the wrong tree.

The government discovered this week that it’s expensive to go to university and confirmed that it wouldn’t scrap university tuition fees. The review will run for at least a year, and will look across HE and whether it represents good value for money, but with a focus on the much-maligned £9,250-a-year tuition fees universities can charge.

The issue is that cutting tuition fees and loan interest rates – which is what numerous MPs are calling for – will not help the average student. Hargreaves Lansdown pointed out earlier this week that graduates would have to earn £30,000 upon leaving university in order to benefit from a rate cut. And even then, they’d save just £8,500 over almost 30 years. Loans or grants to bridge the gap between price and the cost of living would be a more effective way to help the poorest students, while raising the threshold at which repayments start would reduce the debt burden.

Perhaps Tony Blair got it wrong: why do 50 percent of youngsters arbitrarily need to go to university? It’s not that this is too many or too few: it’s that such things should be the domain of the market, not government policy.

My sister works for a large engineering firm and has been involved in their new apprenticeship scheme. By the age of 20, an apprentice could be on £28,000 – the same as a degreed colleague five years older. There are also increasing numbers of degree-in-work hybrids, known as degree apprenticeships, which allow students to study while training as paid employees.

3. Petro: In Venezuela, we’re about to find out what happens when Socialism meets crypto

Who knows what will happen. President Nicolas Maduro, the socialist autocrat who managed to take Venezuela from a prosperous democracy to a nation on the brink of collapse, launched a cryptocurrency this week, designed – he claims – to solve the country’s economic woes.

Those are not woes that most of us would be familiar with: extreme currency regulation (part of a programme of centralising power with the United Socialist Party) saw prices soar more than 2,616 percent last year, which prolonged shortages of every consumable, including food. Closed hospitals, no medicine, no banknotes, abandoned children whose parents hope leaving them will mean they have access to a meal. Last year, it was reported that three-quarters of the population lost an average of 19lbs between 2015 and 2016.

Anyway, Maduro’s latest wheeze is to install a – wait for it – centrally-controlled cryptocurrency that’s back by some of the country’s oil reserves, but the Petro can’t be exchanged for tangible assets. The Petro, Maduro has claimed across his daily appearances on state telly, will be used “in pension funds for all state workers, for our youth, our middle class, and all national tourism.” The President is also studying ways to incorporate it into the “card of the fatherland” ID 15m Venezuelans use to claim government subsidies and regulated food. So far, government claims the presale has raised $735m.

Given that falling oil prices and Venezuela’s reliance on oil have served only to highlight what a disaster socialism is, one is left asking where on earth the value of the Petro – a government-issued IOU – could possibly come from. Economist Steve Hanke (worth a follow on Twitter) summed the situation up well: “Anyone who would waste money on such an obvious sham is a fool. Maduro’s “Petro” is just another elaborate pump-and-dump scheme.”

 

 CAUGHT OUR EYE

Person

The man who’s built a new nation – and 5,500 Brits have signed up for citizenship

Liberland (officially the Free Republic of Liberland) was first proclaimed a nation on 13th April 2015 by the Libertarian Czech politician Vit Jedlicka. This week, it made it into the news because half a million people have now signed up for citizenship. Jedlicka managed to claim a 2.7 square-mile piece of land on the banks of the Danube on the Croatia-Serbia border (which is still in dispute), making it about the size of Gibraltar.

While the legality of the claim is in question, it is the administration plans of Liberland which are worth knowing about. With electronic voting, a government of 10-20 elected officials, an open border policy and funded by cryptocurrency donations, the micronation’s strapline is to create “a society where righteous people can prosper with minimal state regulations and taxes.”

Technology

Dragonfly drones: Cool but cruel?

US R&D lab Draper has developed a “cybernetic micro air vehicle” called DragonflEye. In reality, this new piece of tech is a live, genetically modified dragonfly wearing a backpack of electronics. Attached to the dragonfly’s nervous system in order to control it, the backpack uses very small solar panels to power itself. The insect/robot can be used in espionage and surveillance, and to control things like pollination and other environmental changes. It could be used on other insects, like bees.

I feel extremely sorry for the dragonflies, but for a less emotionally-charged view, I asked a family member who’s at Bristol Robotics Lab about it. Here’s what he said: “the justification for work like this is that we still can’t produce batteries and actuators that are small enough and light enough to fully replicate the motion of flying insects. Through the use of smart materials and intelligent design, strides are being made in this direction (as shown by the Harvard RoboBees), but it will still be a long time before we can achieve the complexity of these biological systems at comparable scales. Until that time, we have to make do with highjacking nature’s incredible designs instead.”

Regulation

Just a special for this week (can’t imagine a weekly reg update being too popular…), because I couldn’t believe my eyes: China is cracking down on funeral strippers.

It transpires that, in rural parts of the country, funeral strippers are often hired to “work mourners into a frenzy”. Apparently common since the 90s, hiring them is part of the tradition of having entertainers at funerals. But Chinese authorities think it’s taking things too far, and that strippers are “corrupting the social atmosphere” (of a funeral), so they’ve been banned. Cash rewards are being offered to individuals who report fellow attendees (via special hotlines) who are flouting the ban.

 

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About the author

Harriet Green

Harriet Green

Harriet Green is a former financial and business journalist. She left City AM earlier this year to set up a company that creates new forms of ownership in public services. She covered fintech, alternative finance and entrepreneurship for four years, but now you’ll more likely find her in a public convenience north of Birmingham. Harriet also works as a consultant for venture-stage tech firms.