Models

(This is not a post about the fashion business. Nor, despite deriving inspiration from discussions of an economic character, is it directed at such discussions exclusively).

We use models all the time. We have no choice: it is the principal way we humans have of putting order on, making sense of, the world of experience. No-one decides to do it, and it is pretty much impossible to decide not to do it. In the current jargon, we are "hard-wired" to be modellers.

Some of the models that we use were designed by others, but when a perfectly suitable one is not to hand, we will design our own. This is very rarely done entirely "from scratch": we usually adapt models we receive from others. (In this latter way, we can all be slaves to the ideas of some long-dead philosopher in Keynes' memorable phrase, especially if we fail to notice).

Models are not always so-called. Another word for the same thing, albeit not usually as formalised, is "narrative", or even less formally as in Tyler Cowen's talk in this TED presentation, which I strongly commend to you, as "stories". "Framing" is a cognate activity. "Paradigm" is yet another word for a model of this type.

Less benign or neutral words are "stereotyping" and "stigmatising", "labelling" - all of these are also consequences of a modelling process.

Whatever name is used, the process is similar. I am going to call it modelling.

The point that I want to make about modelling is that it is both inevitable, and yet inevitably is just as fallible as all human cognitive activity is. Only the simplest models remain useful for long; one that lasts even one normal human life-span is unusual. It is prudent to be sceptical of all models, not in a negative or destructive way (because all models have some useful function for someone at some time) but to avoid falling into error through over-attachment to them.

Why ? Because a model incorporates beliefs about how things are. Many of these beliefs will turn out to be incorrect. (In some formal models, the truth of the beliefs is explicitly a mere assumption.In less formal models, mere assumptions are unfortunately rife, and, worse, unacknowledged. Worse again, this is fairly common even in formal models).

Dangerously, a model may continue to work well for a long period even though it incorporates assumptions which no longer correspond as closely to reality as they may once have done.

Of course, this is a counsel of perfection: no-one can avoid this trap entirely. Even Socrates, who, as far I know, first formulated the radical scepticism which I am advocating, was, after a fashion, killed by his refusal to abandon a fatally flawed model.

So-called "scientific method" is a powerful tool in the service of this Socratic endeavour. It is not fashionable or popular in certain quarters to say so, but science, as we now understand the word, is not primarily a constructive activity: most of the time of scientists is spent discovering flaws in the models, sometimes their own, used to describe reality.

On "Getting Away With It"

Any resemblance of any hypothetical characters mentioned hereinafter to real persons, living or dead, is purely coincidental.

Consider this scenario:

It is a "stark and dormy" night. (Who said Bulwer-Lytton is forgotten ?) On an unlit road, a tanker's valve somehow spontaneously opens - nobody ever provides a satisfactory explanation as to how or why - and the road surface is soon covered in a black-ish, smelly, viscous liquid. Some minutes later, a motor-car encounters the liquid, the driver - whom I shall call Mr Cooper - loses control and a very nasty accident happens, resulting in several deaths.

Cooper survives, however.

Is he jailed ? Prosecuted ? Arrested, even ?

No. Instead, he lives on, a free man "without a (legal) stain on his character". As Pat Rabbitte once asked, though, is he happy ?

Many people consider this to be outrageous. Four years later, some - and not just the predictably ignorant or intemperate - still mutter about how "the crook got away with it" (and believe it).

Now, unless you are new here, you will not be surprised to learn that my natural inclination is to resist such talk. I will ask to know which crime the unfortunate Cooper is supposed to have committed, why his broken tail-light or out-of-date driving licence had anything to do with the tragedy, even though they were criminal offences - albeit very minor - and so on.

My guess is that, even if you did not "buy" similar arguments already made by me in this series, you might see some value in them in the context of the hypothetical Mr Cooper.

It's an interesting exercise to discuss - as I have done with some people - why "the Coopers" are likely to get more sympathy (and, in my view, more justice) than "the bankers". Let us not detain ourselves with that discussion now. (We can return to it if there is a desire to do so).

However, in this article, I am going to explore the other side of that argument.

Let's go back to Cooper, and make the picture painted of him a little less straightforward, and thus, arguably, more realistic.

Breathalysed at the scene, he tested positive and while the subsequent blood test showed the alcohol in his blood was well below illegal levels, it also showed traces of psychotropic substances. At the time, however, the law did not specifically make it a criminal offence to drive in this condition.

Police investigation also revealed that Cooper's vehicle had at least two tyres marginally "bald", and that he had almost certainly been both driving too fast for the conditions and, worse, had been doing so with a telephone clamped to an ear with one hand.

All that said, the police had no doubt that none of these circumstances contributed to the tragedy, in which Cooper lost not only his only two children but several close friends who happened to be on the road at the unfortunate time. Even if Cooper's vehicle had been in perfect condition, even if he had had no alcohol or other intoxicants in his blood, had had his licence up to date, and had been driving with perfect care and attention, the people would have all died anyway.

Despite these circumstances, should the police charge Cooper with DDCD ("dangerous driving causing death") or less serious offences under the Road Traffic Acts because, otherwise, he will "get away with it" ?

Am I alone in wondering how a man involved in such a horrific scenario will ever get over it ? To me, the question of him getting away with it is out of place.

I would like to hear from those with a contrary view.

(We are not going to detain ourselves at this point with exploration of the culpability of Lehman Brothers, the haulage firm which owned the oil-tanker - imagine that ! - or of any other dei ex this particular machina. But don't forget the disclaimer above.)

MOPE: "Most Oppressed Profession Ever" ?

In Ireland, the grievances of Northern nationalists have occasionally been exaggerated, leading to the derisive label of MOPE ("most oppressed people ever") being applied by some of the more cynical among us.

I am often reminded of this when reading the complaints of some independent financial advisers ("IFAs") in the United Kingdom. A current example is this article by Alan Lakey of Highclere Financial in Hemel Hempstead. Mr Lakey has been a vociferous critic of financial regulation for quite a while (at least 5 years, if I recall correctly), and there is much to criticise. As with the Northern Irish nationalists, the "hype" about the precarious position of IFAs reflects real grievances, not imaginary or invented ones.

However, in the recent article, Mr Lakey parades two "hoary old chestnuts" beloved of the "IFA community".

Expanding the Complaint

A big bone of contention is that

Unlike a court, the FOS is able to depart from the specific allegation being levelled and pick through the advice process looking for some aspect it does not like. This inquisitorial process often results in the original allegation being rejected but another, often disassociated matter, being used to uphold the complaint...Some of these are clearly vexatious or devoid of logic yet the FOS invariably accepts jurisdiction causing the adviser hours of unnecessary work, interaction with his PI insurer and, potentially, payment of a £500 case fee.

(Emphasis added by me)

This is based on a misconception of how judges - at least the better ones - deal with cases. Particularly with litigants-in-person, a judge will seek to be sure that s/he understands the real source of what has given rise to the proceedings. If that means permitting the claim to be amended, that will be done.

I would doubt that Mr Lakey could sustain his charge that vexatious, illogical claims are invariably added to original complaints, but I accept that when it does happen, as it probably does, it is not a nice experience, for the reasons mentioned by him, and others.

Limitation Rules -A Human Right

Another area causing outrage is ...[that the] FOS totally ignores the 15-year long stop.The lack of a long stop is the most emotive as it singles out our industry for a removal of human rights. No rationale is used for this confiscation of rights apart from some mumbling about the long-term nature of financial advice.

This is where Mr Lakey really "loses it" and loses me, too.

The idea that benefitting from the English (or any other) statutory rules on limitation could be regarded as a "human right" is - I cannot think of a more polite word - ridiculous. All limitation rules are inherently arbitrary and work a lot of injustice in themselves. (Sadly, that does not mean that we can do without them, but that's a story for another day). For that reason. presumably, they are restricted to "legal proceedings", and complaints to the FOS are not legal proceedings.

To put it another way, it is said that the limitation rules do not extinguish the right but merely remove the remedy of being able to sue (in court) to enforce the right.To my mind, it is entirely reasonable that the FOS, not least because of the very long-term nature of some financial-services contracts, should leave open the possibility of examining complaints about events older than the 15-year long-stop.

Naturally, to do that raises difficulties of evidence on all sides, and one would expect that the FOS would not neglect this. Nor should it fail to have regard to the normal legal approaches to protests by defendants that there has been unconscionable delay in making or pursuing a claim, and similar protests.

On the evidence point - which is normally the main difficulty - it is relevant to wonder, nearly a quarter-century after the 1988 Financial Services Act, whether it should not be severely embarrassing for the industry to be be still worried that its paperwork might not vindicate its position.

An End to Imprisonment for Debt ?

In a note written in 2006 (you'll find it here) I confidently asserted

No-one in Ireland goes to prison because they cannot pay a debt

Though correct as to the position in law, arguably I was wrong because of the failure to observe due process by some judges.

Earlier this year, it was reported that the relevant legislation was to be challenged on constitutional grounds, with the Irish Human Rights Commission supporting the challenge.

A decision reported in "The Irish Times" this morning (See follow-up note dated 26 October 2013 below) suggests that this may not be necessary.

The report is, as is normal, written for the general audience and is not necessarily complete as to what lawyers would regard as the relevant details, or the detailed ratio decidendi. (I note that Eoin O'Dell has recently repeated his criticism of the delay in publishing the full judgments of the Irish superior courts.) That said, O'Neill J.'s decision as reported seems to me to admirably set out the standards which ought to apply when a creditor applies to a court to have someone imprisoned for failure to pay.

(As an aside: why are so many of the cases which get publicity initiated by credit unions ? Does it reflect sub-normal attention to public relations ?)

Note that a failure to pay by itself is not a ground for such an application: the failure must be to comply with a previous order by the court that the debtor pay a specific amount. Now, it may not be generally realised, but in Ireland, when such a failure occurs, the creditor may realistically have very little legal option but to apply for such an order, even if putting the debtor in prison is of no use, and indeed may be counter-productive. The creditor may not be unreasonable in believing that to apply is the only way to get the debtor's attention.

However, this is by no means always the explanation for the application, or if it is, something is going wrong on a regular basis, because yesterday's case, as well as the case referenced here (and here), all appear to be cases of "can't pay" rather than "won't pay". In all of the latter cases, and, I suspect, in virtually all cases of this kind, the debtor has failed to turn up in court, or, as it is often censoriously expressed, has ignored the summons to attend.

Judges are invariably wont to take umbrage at this, and my sympathy for debtors notwithstanding, I tend to agree with this, at least up to a point. I cannot agree, though, that, as has happened, it is appropriate to sentence someone - in absentia - to prison for up to three months because the judge is annoyed with failure to turn up.

It appears likely, as well, that creditors are either encouraging judges to do this, or failing to suggest more suitable alternatives such as adjournments.

Presumably encouraged by Conor Devally S.C., the debtor's counsel, O'Neill J. has now made such inappropriate happenings much more unlikely, if not completely impossible, by interpreting section 6 of The Enforcement of Court Orders Act,1940 in a new way.

The said Section 6 reads as follows

• ( a ) where a debtor is liable, by virtue of an instalment order, to pay a debt and costs either in one payment or by instalments and such debtor fails to make such payment or fails to pay any one or more of such instalments accruing due while such order is in force at the time or times appointed in that behalf by such order, the creditor may, at any time while such order is in force or within twelve months after it has ceased to be in force, apply to a Justice of the District Court for the arrest and imprisonment of such debtor;
• (b) on the hearing of an application under the next preceding paragraph of this section, the Justice may, if he so thinks proper but subject to the next following paragraph of this section, order the arrest and imprisonment of the debtor for any period not exceeding three months, and thereupon the debtor shall be arrested and imprisoned accordingly;
• ( c ) the Justice shall not order the arrest and imprisonment of the debtor under the next preceding paragraph of this section if the debtor (if he appears) shows, to the satisfaction of such Justice, that his failure to pay was due neither to his wilful refusal nor to his culpable neglect;
• ( d ) on the hearing of an application under paragraph (a) of this section, the Justice, if he so thinks proper, may, in lieu of ordering the arrest and imprisonment of the debtor, treat such application as an application under the next preceding section of this Act for the variation of the said instalment order and thereupon the said next preceding section shall apply as if such application were an application thereunder;

O'Neill J. appears to have decided that section 6(c) may not be interpreted so as to place the onus on the debtor to satisfy the court as to his or her inability, as has been the practice - in accordance, to be fair, with the most obvious meaning of the words - but that it must be shown beyond reasonable doubt that s/he is either wilfully refusing, or is culpably neglecting, to pay. This, the standard of proof in criminal cases, is appropriate because the criminal sanction of imprisonment is involved.

Update on Saturday, October 26, 2013 at 09:51AM by Fergus O'Rourke

Unfortunately, I can no longer find the original 2009 links, but for those seeking more detail this one and this will, I think, prove useful further reading

Just Because He's Paranoiac ...

Despite the fact that we agreed on how to vote on the Lisbon Treaty, there are not many things that I find attractive in Declan Ganley.

The feature that I probably find least attractive is his political amateurism and his unsophisticated tendency, very reminiscent of the British euro-sceptics, to see the "evil hand of Brussels" behind every question that he finds uncomfortable.

Some of his other unattractive debating faults can be seen at work here.

However, it is quite clear that "they" are indeed out to get him. Having, as they see it, single-handedly sabotaged "the project" by his intervention in the Lisbon referendum, and having managed, as they see it, to get the EU's most euro-philic electorate (see statistics quoted here) to deliver a perverse decision, the forces ranged on the other side of that argument are naturally keen to weaken Ganley before the re-run of the referendum which they plan to have next year.

On last Thursday night,"Prime Time",Ireland's leading television current affairs programme, broadcast what struck me as more or less a 40 minute hatchet-job.

It was not completely unfair to Ganley. It did

• demonstrate that, despite his English accent, he is as Irish as anyone else born and bred here
• allow him to answer many of the negative points made against him
• give him scope to make points of his own to some extent

However, the programme's most interesting sections concerned Mr Ganley's activities in Latvia,Russia, Bulgaria, Albania, and the U.S..

Latvia

The chief focus of this was what seems to have been an exaggeration by Ganley of his influence as a very young man on a junior minister in the first post-soviet government. It was careful,though, to allow an "expert" to explain to us that the area of Riga in which Ganley worked was largely controlled by gangsters and illicit traders.

What was the point of this ?

Russia

The only point of this section seems to have been to note that Ganley held his Russian forestry venture through a Cypriot company and to give time for another "expert" to dilate on the lack of transparency associated with use of Cyprus-registered companies and how the Russian gangster class were very fond of using Cyprus.

So, if you use a Cypriot company, you are ipso facto a gangster, right ? I don't think so, but I would be surprised if most viewers did not take that impression.

Bulgaria

For some reason, all we heard about this was that Ganley made a lot of money from the sale of his cable-television investment in Bulgaria. No detail whatsoever was given.

Albania

This was the most sensationalistic section of the programme.

We were shown the body of a man lying on a deserted roadway. The body is of someone who worked for Ganley's company at one time many years ago. We are told that shortly before being murdered just recently, this man had started to reveal secrets of criminal activity.

Ganley denies ever knowing him, but eventually concedes that he may have been connected. So what ? We are not told.

What we are told is that Ganley was involved in Albania's "privatisation voucher" scheme, and we hear a very old man tell us at some length, through an interpreter, how he lost all his life's savings through the collapse of the scheme. How Ganley was alleged to be culpable is not explained. One of Ganley's American associates says that the Albanian government aborted the scheme, which cannot be blamed on Ganley, but I suspect that the significance of this will have escaped the television audience, for the most part. Was this accidental ?

United States

We get a fairly detailed account of an alleged attempt by Ganley to acquire by stealth a mobile-phone operator's licence in Iraq. The response of Ganley and his associates suggests that this was a very murky episode one way or another. Which way is impossible to judge. Why the full story could not be summarised for us in comprehensible way may be a story in itself, but the way it is presented is not to Ganley's advantage.

SIPO

SIPO is the Irish government body which regulates the spending of money for political purposes.

It was suggested on the programme that Ganley had failed to "engage" with SIPO, which he denied, and quotation was made from a leaked letter, allegedly on its way to Ganley from SIPO, which gave him an ultimatum. We were not shown the letter; it does not appear that Ganley was, either. (And I gather from a not-particularly-reliable source that it has been reported that he still has not received it).

Summary

This was a shoddy piece of biassed reporting. I would like to think that we won't get any more of this, but I suspect that I will be disappointed.

However, I am not so certain that the cumulative effect of this kind of story will be as intended.