Switzerland and Denmark go negative

Negative nominal interest rates arrive.

Government interest rates have, in real terms, been negative for quite some time. Britain, the US, and Germany are all in the position where they are being paid to borrow money. This creates some rather interesting incentives for governments: they can fund massive investment programs at minuscule expense, they can use money which would be spent on interest payments on more valuable projects, or they could even just stop collecting taxes entirely.

Unfortunately, political considerations have meant that most governments have been unwilling to show even the slightest innovation when responding to a situation in which the most basic rules of the game no longer hold. And, when negative interest rates came to business, the same thing happened.

Unilever and Texas Instruments are also borrowing below the rate of inflation, but when presented with free money, businesses – even ones like Google, supposedly staffed with the world's greatest blue-sky thinkers – don't do anything other than sit on monstrous cash piles waiting for a more favourable investment environment.

Now the trend has spread in a different direction. Two banks – State Street Corp. and Bank of New York Mellon – have announced that customers holding accounts in Swiss Francs or Danish Crone will be subject to a negative interest rate. That's negative in nominal terms, so in real terms it's an even sharper penalisation of savers.

These two currencies are experiencing some of the tightest squeezes because they are both pegged closely to the euro (Denmark is in ERM II and Switzerland has enacted a ceiling on how much it can appreciate relative to the currency), while also being in strong demand because they are not actually the euro – making them the star choice for investors who want to hold european assets without taking the risk that the eurozone will messily implode.

Conventional wisdom says that nominal negative interest rates can't happen. Savers will merely withdraw their money and keep it in cash to avoid the "fee". This doesn't seem to be happening, probably because the value of having a bank account in another countries currency is high enough that it's worth paying for the benefit. Conventional wisdom, yet again, is apparently wrong.

The Matterhorn, Swiss icon. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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In praise of the late developer

The success of late developers proves that our obsession with early achievement is wrong.

A fortnight ago, I fell into conversation with the head teacher of a local school. “You’ve got to create room for late developers,” he said. “The obsession with early attainment doesn’t suit most children.”

We were soon finishing each other’s sentences – talking about long-term confidence rather than short-term hothousing, how children don’t develop in a linear way, and the value of having transferable skills rather than a single focus from a young age.

What a shame, I reflected, that his message doesn’t reach a wider audience. We hear so much about prodigies and precociousness – Serena Williams and her pushy father, Tiger Woods and “tiger mothers” – and so little of the counter-argument: the high achievers who emerge at a slower pace in more balanced circumstances.

Our conversation ended when we both departed to watch England play Scotland in the Six Nations tournament. Only then did I learn that the head teacher’s son Huw Jones was playing in the centre for Scotland. He scored two tries, just as he did last autumn in his home debut against Australia.

Jones’s career is a tacit endorsement of his father’s philosophy. In his penultimate year at school, Huw was still playing mostly in the second XV. Five years on, he is a burgeoning talent on the world stage. The two facts are connected. Jones didn’t just overtake others; he also retained the naturalness that is often lost “in the system”.

As boys, he and his brother made up their own version of rugby practice: could the ­attacker sidestep and run past the defender without setting foot outside the five-metre line? They were just having fun, uncoached and unsupervised. But their one-on-one game was teaching the most valuable skill in rugby: the ability to beat defenders in confined spaces.

Jones had access to superb opportunities throughout – at home, at Canterbury rugby club and then at Millfield, the independent school in Somerset well known for producing sportsmen. But at Millfield, he was far from being a superstar. He seldom played “A-team” rugby. The message from home: just keep enjoying it and getting better and eventually your time will come.

There was a useful precedent. Matt Perry, who won 36 caps for England between 1997 and 2001, had been a “B-team” player at school. What matters is where you end up, not who leads the race at the age of 16. Jones also developed transferable skills by continuing to play other sports. “Don’t specialise too early,” was the mantra of Richard Ellison, the former England cricketer who taught at Millfield for many years.

When Jones was 18 and finally blossoming in the school’s first XV, rugby agents started to take an interest, promising to place him in the “academy” of a professional team. “But I’d seen so many kids take that route and seen how bored they got,” his father, Bill, reflects. So Bill advised his son to go abroad, to gain experience of new cultures and to keep playing rugby for fun instead of getting on the tracksuited professional treadmill.

So Jones took a teaching job in Cape Town, where he played men’s club rugby. Instead of entering the professional system, as one of a bland cohort of similar-aged “prospects”, he served his apprenticeship among players drawn from different backgrounds and ages. Sport was shown to be a matter of friendship and community, not just a career path.

The University of Cape Town spotted and recruited Jones, who helped it win the South African university competition. Only then, in 2014, did British professional rugby teams start to take a serious interest. Jones, however, was enjoying South Africa and stayed put, signing a contract with the Stormers in the Super Rugby tournament – the world’s leading club competition.

So, in the space of 18 months, Jones had gone from being a gap-year Brit with no formal ties to professional rugby to playing against the world’s best players each week. He had arrived on the big stage, following a trajectory that suited him.

The level of competition had escalated rapidly but the tries kept coming. Scotland, by now closely monitoring a player qualified by birth, gave him his spectacular home debut against Australia last autumn – remarkable but not surprising. Finding his feet ­instantly on each new stage is the pattern of his career.

Those two qualities – first, instinctive ­try-scoring; second, a lack of vertigo – are connected. Amid all the jargon of professional sport, perhaps the most important qualities – freshness, ingenuity and the gift of surprise – are undervalued. Yet all of these rely on skills honed over many years – honed, but not dulled.

Shoehorning all young players into rigid, quasi-professional systems long before they are ready comes with risks. First, we seldom hear from the child prodigies who faded away (often damaged psychologically). Many players who are pushed too hard miss their natural learning arc; the narrative of their ambition, or the ambition imposed on them by parents, is often out of step with their physical and psychological growth. Second, systems have a habit of overestimating their contribution: they become blind to outsiders.

In a quiet way, Jones is a case study in evolved education and not just sport: a talented performer who was given time and space to find his voice. The more we learn about talent, as David Epstein demonstrated in The Sports Gene, the clearer it becomes that focusing on champion 11-year-olds decreases the odds of producing champion adults. Modern science has reinforced less frantic and neurotic educational values; variety and fun have their virtues.

Over the long term, put your faith not in battery farming but instead, in Bill Jones’s phrase, in “free-range children”.

Ed Smith is a journalist and author, most recently of Luck. He is a former professional cricketer and played for both Middlesex and England.

This article first appeared in the 23 March 2017 issue of the New Statesman, Trump's permanent revolution