Pretending to see the future
We must admit, we’re having some trouble getting our heads round the lead story in today’s Herald. Under the headline “Row flares as Treasury blasts SNP oil dividend”, the paper quotes Danny Alexander outlining what the Chief Secretary to the Treasury appears to believe is a devastating case against independence – namely, that if you were to calculate oil revenues over the period since devolution, Scots would each be a grand total of £1 a year worse off independent than if Scotland remained in the UK.
We suspect that while Alexander’s figures may not be inaccurate as such – within their own carefully-selected frame of reference – this is nevertheless an example of the Many Small Lies principle (aka the Swarm Of Wasps), in that there are so many absurdly gaping holes in his argument that it’s difficult to know which one to focus on. So let’s see if we can quickly pick out just a handful and give them a brief once-over.
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1. Clearly, for a great many if not all nationalists, the immediate response will be “Independence for a quid a year? Where do I sign?”
We honestly can’t imagine that Alexander thinks a cost of £1 a year will put anyone off independence, even if they’re in the undecided camp. Weighed up against all the possibilities an independent Scotland would present in terms of social justice and choosing policies at odds with the centre-right consensus of England, anyone who sees those things as desirable isn’t going to baulk at paying £1 a year for them.
2. Devolution has nothing to do with the price of oil.
The UK Government’s figure was released to contest Nicola Sturgeon’s statement that according to the last full-year GERS figures available (2010-11), Scots would in fact be £500 better off every year as an independent nation.
According to the Herald piece, however, “Chancellor George Osborne’s department insists it is more transparent to take the entire 12-year period of devolution from 1999 to 2011, rather than the figure for just a single year”.
But why? Devolution has absolutely nothing to do with the world oil market. We doubt that even 1% of oil traders have the slightest idea of what the constitutional structure of Scotland (or the UK, come to that) is. Oil is not extracted by governments, but by multinational corporations – all governments do is tax the profits. So 1999 is a completely arbitrary, meaningless place to start building your statistics from.
Even 1975, when major North Sea production began, is irrelevant for comparison purposes. The past is past. All that matters is what’s going to happen in the future – how much oil is left, and what will its price be?
3. Scarcity is expensive.
The above notwithstanding, there’s only one direction in which the oil price is in fact going to trend in the future. Economics isn’t much of a science, but if it has a single iron law it’s this: as the supply of a commodity falls, its price increases. Analysts argue inconclusively about whether “peak oil” is imminent or whether it’s already happened, but nobody thinks it’s a long way off.
Alexander’s argument rests on the premise that the price of oil may in the future see similar highs and lows to those since 1999. So let’s take a wee look at the graph for the period. (Click picture for larger version.)
When devolution arrived, Brent crude was selling for around $15 a barrel. The current price is almost exactly $100 higher than that, and aside from a single brief blip during the first big dip of the global economic crisis has been on a more or less uninterrupted upward trajectory for over a decade. If we were going to take a long-term gamble on anything on the face of the Earth, we’d put our house on oil prices.
(Incidentally, as you can see from the image above the average price for 2011-12 was significantly higher than that for 2010-11, so Sturgeon’s figure of a £500 benefit for every Scot will need to be substantially increased this year.)
The UK Government itself – which has a history of massively underestimating future oil prices – projects that under the worst possible scenario its experts can envisage, the price of oil by 2020 will be no lower than around $60 a barrel – still 50% higher than the brief low of 2009 – and possibly as high as $150.
By 2030, meanwhile, the official UK Government estimate is a lowest price of $80 and a high of $190, which would leave Scotland awash in riches. Yet to reach its “£1 worse off” figure it seemingly expects Scots to believe that it might instead fall down to $20 or even lower for years at a stretch, even as it tells the rest of the world the opposite.
We’re not sure what message the Treasury is attempting to send out about the skills of the UK Government’s economic forecasters, but it seems to be an unflattering one.
4. There are upsides to a low oil price.
Alexander’s doom-laden prediction is, as we’ve said, predicated on the price of oil plunging as low as $20 a barrel for years at a time. And while that’s hugely unlikely to happen, if it did it would certainly be bad news for the Scottish Government.
At the same time, however, it would be tremendous news for the public – the price of petrol would drop like a stone if oil spent any significant amount of time at that sort of level, transport costs would plummet (driving down the price of food in supermarkets, and indeed almost everything else), and so on. Government spending might have to be trimmed (slightly), but we’d all have a lot more cash in our pockets to compensate.
5. “£1 a year worse off” means a big win for independence.
Alert readers will perhaps remember as far back as December 2011, when the media all reported the results of the Scottish Social Attitudes Survey. The ongoing large-scale poll recorded differing levels of support for independence according to what people thought the effect on their personal finances would be.
When people were presented with the proposition that independence would make them neither better nor worse off (and we’re going to include a difference of £1 a year in that category), the result was a thumping 47% Yes, 32% No.
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So that’s that. As a piece of scaremongering, “You might be £1 a year poorer independent” is such a remarkably feeble effort that it raises questions about what the reality might be, if that’s the WORST picture the No camp can manipulate statistics into painting. It’s also intriguing that Westminster is telling the rest of the world such a different story about the likely future price of oil to the one it’s telling Scotland.
We don’t want to labour the point. So we’ll leave you with a song.
PRETENDING TO SEE THE FUTURE
(Danny Alexander, 2013)
“Avoiding this is like avoiding a plague
We can’t understand the advances we made
We’ve tried to resist but it’s so hard to say no
We’re pretending to see what the future will hold
We appear to be in control of our fate
Just like soldiers believe they’re in control of a war
But its moving so fast we cannot see what we’ve done
we’re losing our eyes just to say that we’ve won
[CHORUS]
My mind’s made up, my heart is broke
My fortune’s made but I feel so choked
I can’t understand how we could ever believe
The things we asked for but never received
We never understood the times we asked
The way we wasted all that passed
This neglect is final it’s a stage we must
Endure to ever hope to see the first
My mind’s made up about the things we did
We never saw, we believed, we couldn’t say what we’d missed
So by making these noises we cannot control
The things we hoped that we’d never forego
We appear to be in control of our fate
Just like soldiers believe they’re in control of a war
But it’s moving so fast we cannot see what we’ve done
We’re losing our eyes just to say that we’ve won
By making these noises, what the hell are we trying to prove?
We’re just wasting our time, we should be being useful
So we’ll see you the same time, same place next year round
With the same kind of a product and a very similar sound”
As someone eagerly commented to the article in the Herald asked – Where do I pay my pound?
Incidentally isn’t that the same amount the Herald charge those online readers (that don’t know how to clear their browsers cashe)for their first months online news from the herald?
Yeah, I saw the massive Herald headline with the “£1” highlighted, in the newsagents this morning (I never buy it), and thought it must be a misprint.
Aah, so that’s that, then. We won’t be £500 better off after all, only £499. We may as well pack up now and go home.
I read recently that the price of crude is projected to be $240 a barrell by 2040. I also remember reading, about a year ago, a statement by Sir Ian Wood that there could be a hundred years before it dries up. Oil captive technology is developing at a staggering rate. The oil geologists in Aberdeen are rated as the best in the world. Just consider the multi billion investments made in the north sea last year alone. I’m not in the oil industry, but if we accept that the oil companies aint stupid, why make such massive Investments in an area with limited future supply?
We haven’t even mentioned the oil companies investment in renewable energy in the north sea. The north sea is an ideal location for carbon capture and storage, utilising future disused oil rigs.
Given that the unionists figures just on the oil price are probably wrong (stun us with another!), and that the economic case for independence is much more likely to be closer to the SG’s predictions than Westminster’s, can somebody more au fait with the economics tell me whether either sides calculations take into account potential opportunity savings attendant on independence (such as reduced defence expenditure), or are they just based on “current” spending patterns?
That Michael Moore is an eejit is now beyond all reasonable doubt,
We are now faced with the terrifying prospect of independence costing us each less that 2p per week.
I can see the headlines “Shock, horror. Hardworking Scottish familes face being 5p a week poorer under slippery Salmond’s independence”
Into derision is the direction the NO campaign is travelling.
Galen10: the latter.
We can analyse this in economic terms as much as we like (and well done Rev – I’m not saying it didn’t need to be done) but, sadly, I feel the only impact of this story will be in – once again – the Herald’s choice of words for its banner headlines (see ‘Difference of Tone’ yesterday).
‘Row’, ‘blasts’ etc. will only add to the impression for the casual observer that the case for independence has taken yet another knock. News stories are written from the top down and reasoned analysis, refutation – all the things that can often reveal the original assertion as claptrap, will always be way down the columns where only a minority of readers ever get. I haven’t seen the Herald’s on-street billboards this morning yet but I’m betting it will be more of the same – and remember, those are read by substantially more people than the actual paper!
So independence will cost me a pound a year? But at $20 a barrel for oil, I’d only be paying 40p a litre at the petrol pumps, saving at least £1,000 a year for my £1.00 cost.
Now why on earth would I vote for that?
As I said on the Herald, £1 a year to end Westminster rule sounds like a deal to me. What a complete non story.
Don McC – that’s a superb point. Might just have to edit that in right now.
I do a daily dawn patrol of the newstand at the supermarket (I’m now using Tesco since Morrisons started charging customers to use their car park) and I saw that headline. I read it many, many times. One pound? £1? A sterling pound? One British Pound? Shouldn’t there be an ‘M’ after it, or at least two or three zeroes? That is a front page story? In huge type, with a giant colour photo of something? I wonder if the Herald has its tongue in its cheek…
There’s No Tomorrow
This is a good site for news on oil prices and trends, untainted by Unionist (or Nationalist!) politics. Lots of very interesting articles and comments.
link to theoildrum.com
Slightly O/T but needs saying.
We are all aware of the sad decline of the printed media in Scotland and articles such as the above from the Herald are only fuelling their demise.
I am absolutely convinced that there is still a need and a desire in Scotland for good balanced journalism in printed format. It strikes me that pretty much every journalist in Scotland lives in fear of their livelihood and the ability to support their families.
To that end it’s pereectly understandable for them to fear their paymasters in London and “tow the line” accordingly.
I appeal to every juournalist in Scotland to make a stand and throw off the shackles of London editorial rule and write what you know to be true. The people of Scotland will respond and flock to the newsagents (I know I will!) once again. We want a balanced and fair debate on the future of our country and at this moment in time your not giving us one.
Come on guys, make a stand and save your profession! Your fellow Scots need you to print the truth regardless of what side of the independence fence you reside and not what your bullied into.
Apologies for the rant again Rev!!
Vote Yes in 2014
So, we can get rid of all our useless MPs like Michael Moore, Maigrit Curran, Ian Davidson and David Mundell as well as our unelected lords like David Steel and Jim Wallace plus clear our land and sea of nuclear weapons, be in complete charge of our economy and foreign relations, design our own policies to suit the needs of our own population and geography and in the worst possible case scenario they can think of, we’ll only be a £1 worse off? What’s not to like?
On a more serious note, what really concerns me in all this is the complete contempt they obviously hold us in, to think we’re too stupid to analyse figures such as these and have so little pride in ourselves and our country that we’d sell ourselves and our families and friends for a quid.
I did wonder at the reasoning behind using the devolution years as a basis for their calculation and the only explanation can be is that they are warning us about the folly of thinking that we can run things ourselves (even though we have had no say in the exploitation of this resource).
Given that they would have framed the study in such a way as to come up with the worst figure possible, and based it on current UK spending priorities and borrowing, I can’t see how the loss of £1 a year advances their case any. It really is an odd piece of propaganda; unless they’re going for the ‘Honest John’ approach.
And how does the treasury’s £2B a year tax grab, which saw record drops in production, effect the figures?
@Rabb
We want a balanced and fair debate on the future of our country and at this moment in time you’re not giving us one.
I would argue, Rabb, that they are indeed giving us one – as far as I can see there’s not a day goes by when we don’t get well and truly shafted.
I expect polling has shown that people will vote Yes if they are no better off or heaven forbid far better off.
So to claim oil prices in 1999 are relevant to 2014 is pushing it.
The price in 2014 will be over 100 USD per barrel, and at that price Scots are better off. Other than political anoraks this is significant as for many people just want more money to pay their bills.
The line should be, with independence you will OF COURSE all be better off financially, oil money is going to do that, but there are of course other reasons to be independent.
Denying at 100 plus per barrel that Scots will be worse off is lunacy and needs to be explained as such.
Herald is struggling to say a quid worse off since 1999, clearlry the figures for 2011 and 2012 and 2013 will not do their case much good.
Perhaps the Herald as a bastion of Unionist economics would like to work them out????
I would rather believe Soames and his golden egg from the goose analogy than Moore saying oil money is basically of no benefit.
Tell that to the Kuwaitis, Russians and Saudis and they would laugh all day. This means the London pollies know that this is an issue; frankly if people are far better off even the Govan faithful will vote Yes in the safety of a polling booth, and as no rational explanation is conceiveable the best they can do is muddy the waters.
I wouldnt worry too much about how the Herald or Scotsman slant their stories, as both papers circulations are in freefall. In fact the Herald no longer publish monthlyABC figures, whilst the Scotsman sells less than 33,000. A sad state of affairs, but entirely self inflicted. Meanwhile I have managed to get All Media Scotland to highlight Newsnet’s story about BBC bias. See link to allmediascotland.com
Rev Stu. Maybe you are next!
This is another great response — that is all very well, this is necessary but it’s time to start setting up our stall, broadcast our wants for our new country.
I watched the SNP get slapped about by the BritNat media and pass the last 9 months on the defensive — a loser’s and losing position.
We need to make our case or watch the same accusation/response/counter accusation/answer activity go on and on to no avail.
If we are to increase in the polls, we need to brush their crap aside and go directly to the doorsteps and push our case to the people. They will respond to what we want; not to our responses to endless BritNat crap. The BritNats are now going to ‘release’ a document once a month right the way up to the referendum using all Westminster’s resources.
Ignoe their crap and put our case to the people.
Rev Stu
Just to let you know that my GoogleMail acct marked you alert as Spam, owing to a number of persons alerting them.
Wonder if somebody is playing silly buggers with your blog posts§
Google is seriously screwed-up at the moment. It’s labelled the whole of Twitpic as a malware site, which means it shows up in all browsers with a dire virus warning. God knows what they’re doing over there – I just spent a hideous 45 minutes trying to get Google Wallet to work, it’s an absolute broken mess. But thanks for the heads-up.
Jeez ! Surely Micky Moore can’t be so out of touch that he is saying something as stupid as that. I wonder if he, or any other of the Scottish MPs and MSPs, are planning to “cross the floor,” and join the majority in SCOTLAND who will VOTE YES FOR INDEPENDENCE.
Scotland is a nation with a surplus of energy for it’s own needs – yet we still have pensioners who die from hypothermia every winter because of Westminster’s policies and taxes.
It is a national disgrace – and we can change that by voting YES ! We have gas and oil, wind and wave power, as well as, tidal and hydro- electric power – as a country, Scotland is self-sufficient in both energy and water – and anybody who says otherwise is a liar !
What happened to the unfolding disaster of Scotland’s relationship with the EU? It seems to have fallen off the radar in favour of the unfolding oil price disaster. I suppose once that’s been milked for a while we’ll move on to the unfolding currency disaster, or the unfolding border controls disaster.
Given that the collision government in Westminster have their mandarins working on a whole batch of unfolding disasters, we’ll be subject to one or the other whisked out like rabbits from a conjurer’s hat to make us gasp and turn away from the folly of imagining that we could ever contemplate self-determination.
As Rev Stu has previously pointed out, it makes no sense to deal with each issue in isolation. A future Scottish budget would incorporate taxation from oil revenues alongside many other sources of revenue; the budget would also be conditioned by savings made on items which at present we have not choice over. Scottish expenditure would reflect the priorities of its government which would be very different from the present Westminster ones. The danger facing the Yes camp is that it may well become bogged down in rebutting these individual disaster stories which will distract attention away from a full understanding of the more multi-faceted and therefore more complex picture that the simplistic disaster stories obscured.
In the meantime we could play ‘Disaster story bingo’ with a prize to the person who can spot the most disaster stories wheeled out in one day or one week.
I bet he included the cost of the London Olympics, Iraq war and Trident in Scotland’s independent figures.
On ther related subject of the freefalling circulation figures of our “national” press it is intersting tha the forays into bonkersism are now appearing in Herald and not the hitherto anti SNP organs like the Record, the Sun, The Mail and the Express.
Having taken the Herald and The Scotman since the 1960s I have abandoned them both.
But being a newspaper addict I still buy a raft of papers daily,all tabloid,and usually dependinga bit on their headline. I cannot bring myself to buy the Mail however though I sneak a read of it in the supermarket then put it back on the shelf displying the back page in the hope that some others may miss buying it by not finding its title page.
My results are interesting. (I ‘ve have never purchased a Daily Sport either though I rather wonder if its the same bum that winks at me from its front page every day0
I occasionally buy a Mirror just to see what England is agonising about. It has very little Scottish content . The Daily Express is a hoot. The only thing more incoherent than its political opinions are those expressed in its letters page which are genuinly hilarious (and usually from the same small group of loonies). It does however regularly print letters from myself, Andy Doig and Alex Orr. Keith Aitkes’s column rescues the paer one dayperweek
The Sun gives us a fair crack and its individual columnists appear to be allowed to carry a wide range of political and constituional views. Aamer Anwar’s contributions to the Sun are first class.
Now,here’s the surprise. The Newspaper that is giving us the fairest coverage is the Daily Record. Yes. That’s what I said. It has a whole page from Joan McAlpine on a Tuesday. It gave John Swinney a generous half page on Thursday. It prints fuller SNP official responses to contentious issues than any other paper and it regularly prints a good selection of independence friendly letters in the letters page.
And it carries just about as much sensible news as the Herald now does. I think we should support it and write to it.
But what is important is that the two papers with by far the largest circulations in Scotland are giving us a fair crack
The world has been in recession ( not China and perhaps not Brazil ) since 2008. In the same period oil has gone from about $ 40/barrel to $ 110/barrel in other words almost tripled in a period of severe economic recession in the west.
Recently on newsnight the Chinese ambassador to the UK said that China intends to double GDP in the next 10 years. With China’s radical increasing demand for oil and a return to slow growth in the west there is no way the price of oil cannot steadily increase over the next years.
Consider also that the only significant new oil reserves coming on stream in the world in recent years are the Canadian oil sands and according to a July 2012 report by Merryl Lynch an average $ 113/barrel is required to break even; this indicates there are no new cheap sources of oil available ( otherwise why even bother with the environmental and other problems with oil sands). The Treasury experts ( oxymoron) say oil price might go down. I am no expert – but a bit rational thought says $ 150 – $ 200 is more likely by 2014 or soon thereafter
Not so long ago unionist politicians in Scotland were telling the public that independence would turn us into another Bangladesh or Albania.
Now they are telling us that independence would only make us £1 a year worse off.
In a few years time they might finally have figured out what Gavin McCrone knew in 1974 – that independence would make us significantly better off, at least in financial terms.
Kurt Cobb is a regular contributor to Scitizen magazine and to his own Resource Insights blog. Here’s The one chart about oil’s future everyone should see:
“””””
The chart shows that by 2030 world output of oil and other liquid fuels from current fields is expected to drop to 43 million barrels per day (mbpd), some 62 million barrels below projected demand of 105 mbpd. (Though prepared in 2009, the chart takes into account known projects expected to be producing by 2012.) This drop is consistent with the observed decline in the worldwide rate of production from existing fields of about 4 percent per year. Certainly, there will be more projects identified in the 18 years ahead. And, many people will say that we already have a large new resource of tight oil (often mistakenly referred to as shale oil) which can be extracted through hydraulic fracturing or fracking. But even if the optimists are correct–and there can be no guarantee that they will be–this source of oil will only add 3 to 4 million barrels of daily production. What Sweetnam’s chart tells us is that we must find and bring into production the equivalent of five new Saudi Arabias between now and 2030 in order to meet expected demand even if the volume of tight oil reaches its maximum projected output. (The Saudis currently produce about 11.7 mbpd of oil and other liquids.)
“””””
Oil price is dependent on the artificial cap of supply in the middle east. Unless you have a crystal ball I’d be wary of your prediction that oil prices will only rise.
Willie,
Why would ME producers want to flood the market and reduce the value of their only major resource?
Willie
Why is oil so valuable to the UK but worth SFA to Scotland?
I have never got my daft wee heid around that one.
Please advise.
I can’t believe NONE of you noticed that I said “Michael Moore” all the way though that piece instead of Danny Alexander…
😀
Seasick Dave, of course it’s valuable, doesn’t mean you shouldn’t be prudent in forecasting the future value.
Douglas Clark, who knows, like I said I don’t have a crystal ball, what I do know is that assuming that whoever controls the middle east oil will always act in a rational manner for the next few generations goes against past experience.
This is why rational investors diversify their portfolios.
Is there any difference Stu? It’s all just unionist noise.
I am thinking of switching to a No vote, due to concern over my continued ability to buy multiple pairs of sports socks in an independent Scotland.
“Two fer a poun’! Two fer a poun’!”
I can’t believe NONE of you noticed that I said “Michael Moore” all the way though that piece instead of Danny Alexander…
Didn’t read the Herald article, only the first page of comments – which were quite encouraging!
Crap, should never have subscribed to WoS. I can’t afford independence now.
Or you could cancel your WoS subscription and get two Independent Scotlands for the price of one!
We could re-name an independent Scotland as Poundland!
I sent this comment to the Herald 3 times, but it has obviously not met with the approval of the Herald mods. Maybe the truth is something they dont want to hear. At the end of the day, we should not respond at all, as it only adds to the number of ‘clicks’.
Here is the post I sent.
“Where have we heard all this before?
There is incontrovertible evidence the independence movement was spied on by British secret service agents as early as the ‘50s, as part of a campaign to undermine support for Scottish independence. (UK National Archives in Kew)
The dozens of documents also contain remarkable documents detailing secret government plans in the 1970s to prevent Scotland laying claim to North Sea oil. They show the extraordinary lengths to which civil servants were prepared to go to head off devolution, which was seen then as inevitably leading to independence.
Treasury officials also advised that the boundaries of Scotland’s coastal waters should be redrawn and a new sector created to “neutralise” Scotland’s claim to North Sea oil – a step that was taken in 2006 when 6000 square miles of Scottish waters were annexed by England.
The documents – letters, memorandums and briefing papers from the Public Record Offices at Kew and in Edinburgh – show that some civil servants were alarmed by the threat that devolution posed to North Sea oil revenues, which were servicing Britain’s external debt.
IT’S GROUNDHOG DAY FOLKS!!”
David
The Herald is now so dire it is printing rubbish that wont even make it into the Daily Record or the Daily Express.
Neither the editor or its poitical editor appear to have any idea about what is apropriate in what was Scotland’s flagship paper. Nor do they appear to understand Scotland. This is a metroplitan failing which will greatly help us
I think we should deal with thgis paper by with public derision. I don’t suppose with your background you could mock up a “Not the Herald” title
David McCann
I saw your post there – I was busy there today (ha! I’m pre-moderated, posts go straight up). Getting a bit ratty, unusual for me. It takes time to show up sometimes though, maybe the mods are watching football. You suddenly see an extra 20 comments appearing.
It’s possible by the way that putting in the odd post on other topics – especially very quiet ones – help to get you “known” and therefore pre-moderated. Or post-moderated whichever way around it is (scratches head).
I’m planning to do less posts there though, so persist – I think it’s worth it.
By the way, I think it was 1999 not 2006 the boudary line was skewed north – made equidistant not perpendicular.
Peak Oil maybe, the important point would be it is the end of cheap oil. It is impossible for oil to be what is was in 2000,there is a base cost which is rising as the deeper they have to drill to get the oil. So how treasury forecasters are saying oil allowing for inflation will keep about the same and drop in some periods is wishful thinking. These are the same bods who did not see the crash coming, so I know which info to trust and it’s not the UK Govs.
We are 25 percent to worse off since 2009 when they devalued the pound sterling, you don’t hear them shouting about that do you.
Westminster wants Scotland as a piggy bank and as security to backstop their agenda, this is why the cost of bonds are so low in the UK , investors know it’s a big pile of doo doo, but they know one way or another they will get something be it assets, or OIL revenue, so jog on Osbourne.
Scots currency, Scots central bank, Scots treasury and done the right way without being corrupted like other countries it will be a haven for investment business sound money and predictable market unlike the fear and illogical patterns that infect us from the rigged casino that is the city of London.
Their attitude is, yeah the city of London financial business,it’s a cesspit, but it’s our cesspit and if we didn’t do it someone else would. Makes you proud
Dave Hill.
McCart and I will think of something!
Dadsarmy.
I waited so long I missed it! Only two days late! I have it on good authority that the Herald love the controversy their editorials provoke. Its good for advertising. We shouldnt fall for it.