Debt and more debt: student loans and family formation

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“Education is the best provision for old age.”  Aristotle

News

Results of a survey of teenagers in Britain this week show that half of them are less likely to apply to university due to steeply rising tuition fees.  The British government will allow universities to raise maximum fees from £3300 to £9000 a year starting in 2012; two thirds of institutions say they plan to charge the full amount.

Proponents of raising tuition fees and making students pay for them through loans make an economic argument.  Graduates earn more with a degree, so can repay the debt from their higher salaries (under the new rules 9% of everything earned over £21,000 will repay loans, and any balance will be written off after 25 years). 

However, this ignores the relational implications of loading students with high levels of debt.  In previous generations, graduates in their twenties would have saved up for two major events: buying a house, and getting married/starting a family.  These two milestones are now reached later, due largely to the rising ratio of house prices to salaries, and the tendency to cohabit or marry later.

With rising student debt, those who still go to university will take even longer to buy their own home or start a family.  The delay in family formation puts greater pressure on women than men, as their remaining fertile years become fewer, and the health risks (to both mother and child) of having children in their late 30s or 40s increase. 

The cumulative impact of these factors will be to reduce birth rates; one long term consequence will be fewer people of working age to support retired people – adding fuel to the fire of the looming pensions crisis.

Raising tuition fees and leaving students with high levels of debt may save government expenditure in the short run, but even in purely financial terms, the collateral damage to relationships may end up costing the nation far more than it saves now.  The relational loss in terms of postponed marriage and fewer children is impossible to measure.

Read on...

The changing trends surrounding patterns of cohabitation and marriage in the UK is a research concern of the Jubilee Centre; their latest report, ‘Cohabitation: an alternative to marriage?’ has just been published and can be read here.

Walk the talk

Although irresponsible use of debt is behind the global financial crisis, it is still seen as a solution of choice to a range of economic problems.  How might you help your family or colleagues to recognise the long term consequences of debt and to explore other solutions instead?

The last word
From the Bible, 2 Corinthians 12 verse 14 “…after all, children should not have to save up for their parents, but parents for their children.”

Allies and rivals: lessons from the Blair-Brown relationship

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“It is the privilege of posterity to set matters right between those antagonists who, by their rivalry for greatness, divided a whole age.”  Joseph Addison (1672-1719)

News

Documents leaked to a pro-Conservative British newspaper last week provide evidence that several of the current leaders of the Labour party were involved in a campaign to oust Tony Blair and replace him with Gordon Brown as leader of the party – and therefore Prime Minister – back in 2005. 

The present Labour leadership have dismissed it as “ancient history”, but the documents have once again cast light on the chronic tension between the two most senior government leaders from 1997-2007: Prime Minister Tony Blair and his Chancellor Gordon Brown.  Despite the oft-repeated statement that all was well, the actual relationship between the two men – whose combined leadership was crucial to governing the country – was ‘volatile and sometimes ferocious’, to quote a BBC journalist.

Backstabbing has been a feature of politics at least since the Ides of March in 44 BC, but there is always a high cost when those who are charged with leading a government (or any organisation) are fighting for control of the levers of power. 

In democracy, the relational art of compromise is a political necessity; no one person has all the insight, wisdom and experience to take the best decisions for wider society.  Dictators prove that daily. 

The ability to listen carefully, to forgive, to emphasise a common purpose, to practice humility, and to recognise what is best in others are some of the relational qualities needed for effective leadership.  By the same token, envy and selfish ambition in a senior colleague are a toxic growth that should be weeded out, or it may bring down the organisation.  The same principles apply from the home to the board room and all the way to Downing Street.

Read on...

Rivalry has continued to characterise the top of the Labour party; Ed Milliband narrowly defeated his brother David to win the leadership election last year.  A review of the recent book by Dorothy Rowe on sibling rivalry, ‘My Dearest Enemy, My Dangerous Friend’, can be read here.

Walk the talk

Ambition is good, but it needs periodic refining to rid it of the subtle but corrosive influence of envy and jealousy.  Do you need to examine your own heart for this?

The last word
From the Bible, Matthew chapter 12, verse 25: "Every kingdom divided against itself will be ruined, and every city or household divided against itself will not stand.”

E. coli, cucumbers and counting costs

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“To feel keenly the poetry of a morning's roses, one has to have just escaped from the claws of this vulture which we call sickness.”  Henri Frederic Amiel

News

The death toll from the outbreak of a rare strain of e coli in Germany has now passed 30, and it continues to cause heavy economic losses right across Europe.  The combination of the deadly effects of this particular bacteria, the slow response from the German authorities and the difficulty in isolating its source has heightened the anxiety felt by consumers all across the continent. 

Today the Robert Koch Institute, responsible for disease control, announced their conclusion that the contamination has indeed come from a farm producing bean sprouts in Lower Saxony.  Over the last two weeks the suspected culprit has moved from Spanish cucumbers to salad vegetables in general, before focusing on the locally grown bean sprouts. 

Given the severity of the health scare, the consequence has been the near collapse of the market for tomatoes, lettuce, cucumbers and peppers in many European countries.  Spanish farmers estimate their losses at over €175 million so far, and say it could take months for sales to recover.

This crisis illustrates how, in a closely interconnected EU, the decisions made in one part of the continent can have a devastating impact on third parties 2,000 miles away.  The German health officials, anxious to contain the disease outbreak in Hamburg, indicated that Spanish cucumbers might be to blame, although the evidence was not conclusive.  This ended up wrecking the relationship between Spanish (and other) farmers and their customers right across the continent.

In any relationship, there is a risk of injustice whenever consequences of actions cannot be matched by accountability.  Relational leadership involves learning to factor in the wider consequences of decisions to third parties, particularly when those parties have no means of holding the leaders accountable. 

Read on...

Harvard risk consultant David Ropeik has written an insightful article on the difference between the low statistical risk of being affected by this E. coli outbreak and people’s higher perception of that risk, which has led to major economic losses to farmers.   Read the article here.

Walk the talk

We all make hasty judgments from time to time; is there someone who has ended up hurt as a result of one of your judgments, based perhaps on inaccurate information, to whom you need to apologise or make amends?

The last word
From the Bible, James chapter 1 verse 19: “Take note of this: Everyone should be quick to listen, slow to speak and slow to become angry...”

Fair play and foul: two extremes of international football

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“Academe, n.: An ancient school where morality and philosophy were taught.

Academy, n.: A modern school where football is taught.”  Ambrose Bierce

News

Last Saturday, Barcelona Football Club won the UEFA Champions league title for the third time in six years, defeating Manchester United 3-1.  Barcelona’s characteristic style involves keeping possession of the ball, quick passing, and waiting for gaps to open up in the opposing side.  How do they do it so well? 

In searching for the secret of Barcelona’s success, two things stand out.  One is the fact that the club is owned by 150,000 of its fans rather than foreign tycoons or big name shareholders. The other is La Masia, the club’s youth academy, which recruits boys from around the world and provides a unique blend of soccer training, academic study and character development. 

“We want to make them better players and better people by teaching them about respect, teamwork, humility, sacrifice, applying themselves and commitment,” explains academy director Carles Folguera.

Most of Barcelona’s squad is home grown, and the fruit of La Masia’s relational values is seen in the way trust and consistent teamwork are as much in evidence as the talent of the players.  Even the world’s number one player, Lionel Messi, who scored the crucial second goal for Barcelona, never hogged the ball or tried to outshine his colleagues. 

If only the same could be said for FIFA.  Wednesday’s re-election of 75-year-old Sepp Blatter after the withdrawal of his challenger amid various allegations of corruption has brought the sport’s governing body into disrepute.  This week’s Economist explains how FIFA uses the World Cup “to sustain a global network of patronage”, and details how much of its vast revenues it spends on itself.

One thing which makes football the ‘beautiful game’ is the way which everyone has to play by the same rules, which ensure that if you don’t play fair, you don’t play at all.  Human nature always tends towards bending or breaking the rules to gain some advantage; this is kept in check on the football pitch by an impartial referee.  In the marbled halls of FIFA, however, there is an urgent need for a different kind of whistleblower.

Read on...

An article on Pierre de Coubertin, the values which he sought to build the modern Olympic movement on and their final expression in “excellence, friendship and respect” can be read here: http://www.sportingpulse.com/assoc_page.cgi?c=1-3653-0-0-0&sID=138368

Walk the talk

How much do we rely on ‘star players’ for the success of our organisations?  Winning teams may not need them, if they encourage each member to play to the strengths of their colleagues, and cover for their weaknesses.  Is there a lesson you might learn from Barcelona’s example?

The last word
From the Bible, Ephesians 4, verses 2-3: “Be completely humble and gentle; be patient, bearing with one another in love.  Make every effort to keep the unity of the Spirit through the bond of peace.”