Sunday, 7 February 2016

Flowchart: Free early education, Working Tax Credits/Childcare element, Employer Supported Childcare or Tax Free Childcare?

In my capacity as number-cruncher for the Citizen's Income Trust, I have spent this weekend trying to get the bottom of all the overlapping schemes which various government bodies administer. To simplify things in my mind I had to create a flowchart.

The joke is that whichever of the three boxes at the bottom you land in, you end with with about £30/week for every child at a registered nursery or child minder, on top of the £60/week for every 3 or 4 year old at a registered nursery or childminder. Why do they bother - it would cost the same to pay the first £90/week for every child aged 2, 3 or 4 at a registered nursery/childminder? Don't answer that.

Private banks and credit creation: if you make it seem complicated, you just create loopholes.

By Prof. Steve Keen at Forbes:

The great tragedy of the global economic malaise is that it is caused by a shortage of something that is essentially costless to produce: money.

Both banks and governments can produce money at physically trivial costs. Banks create money by creating a loan, and the establishment costs of a loan are miniscule compared to the value of the money created by it—of the order of $3 for every $100 created.

Governments create money by running a deficit—by spending more on the public than they get back from the public in taxes. As inefficient as government might be, that process too costs a tiny amount, compared to the amount of money generated by the deficit itself.

But despite how easy the money creation process is, in the aftermath to the 2008 crisis, both banks and governments are doing a lousy job of producing the money the public needs, for two very different reasons.


Nope. Let's split this up into two separate cycles.

1. His description of how governments create money is broadly correct, but government spending should be judged on its own merits, not on how much 'money' it 'creates'. Government debt is a necessary evil, but it can be put to good use as a) a handy unit of currency and b) somewhere for people to put their savings/surplus => full reserve banking.

2. And there are private banks. Strictly speaking, they hardly create any new money. Most of so-called bank lending is nothing of the sort, they are just glorified debt collectors - they collect debts from buyers of land on behalf of sellers of land.

Simple scenario: Mr B agrees to buy land and buildings from Mr S for £100, which Mr A does not have in ready cash.

If Mr B takes out a mortgage of £100, Mr S gets credited with a deposit of £100. These pop up on opposite sides of the banks' balance sheet. Mr B has to pay that off in instalments over twenty years and Mr S can withdraw up to £100. But all depositors taken together cannot withdraw all their money at once and spend it. Collectively, they cannot withdraw their money any faster than all the mortgage borrowers are paying it in.

But there is no need for a bank. They could agree that Mr B will simply Mr S in instalments over the next twenty years. If Mr B defaults, then Mr S would take him to court, repossess the land and buildings, or employ a debt collection agency/firm of solicitors to enforce payment, by fair means or foul. Pretty much the same as what a mortgage bank would do.

So ultimately, what is the difference between banks and debt collection agencies? Not much. The added extra which banks provide is a risk-pooling exercise/insurance, so if Mr B's loan goes bad, Mr S only has to bear a tiny percentage of it; similarly, Mr S has to bear the same tiny percentage loss if other buyers' loans go bad. No doubt a debt collection agency could offer the same service.

Interesting Problem

From Yahoo

MILWAUKEE (Reuters) - Seven Muslim workers at an eastern Wisconsin manufacturer have been fired after disregarding a break policy that did not allow them to pray at the times dictated by their faith, the company said on Wednesday.

The terminated workers were among 53 Somali Muslims who walked off the job on Jan. 14 after Ariens Company, a tools and equipment maker in Brillion, Wisconsin, began requiring them to pray only during the two 10-minute breaks provided to them during the day, the company said in a statement.

...

"It came out of nowhere and the company did not want to listen to some suggestions and options to make the current breaks more flexible to align with the prayer schedule," he said.

Ariens, which has 1,500 employees worldwide, has set up designated prayer rooms for Muslim workers in Brillion, the company said. Brillion is about 25 miles south of Green Bay.

The company said letting the workers pray during unscheduled breaks disrupted production schedules. In certain circumstances, workers can be prohibited from praying during unscheduled breaks if it causes an "undue hardship" for the business, according to the U.S. Equal Employment Opportunity Commission.

I'm personally of the "your religion, sort it out" and it's clear here that the company were not exactly being difficult here.

The problem is that manufacturing depends on the line. I once interviewed at Honda and mid-interview, the interviewers had a tea break. I was like "wait, what" and off we went to the tea room for 15 minutes, before then returning for the interview. Despite being an office job, the rules were no drinks at workspaces, and fixed tea times. You weren't allowed to get a tea at other times. Silly for the office jobs, but they like this whole "everyone's equal" culture, so there you have it.

Tea breaks exist in manufacturing, like they don't in most offices, for this reason. It's about the synchronisation of work. You need the line running smoothly. If a bunch of people aren't there, it doesn't. That's why there's this window for tea breaks - the whole line might stop for that period, but that's the only stop it'll get. A call centre doesn't have this. The "switch" gives calls to people signed in - if you're not there, it goes to another advisor. Everyone goes when they want to (and this actually works better, because it means there's always people handling calls).

This company probably couldn't care less about a small number of people taking 10 minutes off for a prayer. The problem is that it screws up the line. The guy who fixes on the wheels is stood around waiting for you, with nothing to do.

Saturday, 6 February 2016

Economies of Scale: The most valuable Land there is.

Here (part 1 of 3) Prof Geoffrey West explains that all biological entities from DNA to cities have evolved from the exploitation of economies of scale (agglomeration effects).

This scaling effect is a Universal Law, hence Land. It gives us aggregate demand, the ability to produce capital, and gives natural resources their value.

Under a system whereby the State gets the majority of its revenue directly from land rents, they would have two explicit priorities. To increase the efficient exploitation of agglomeration effects,  and to compete against privately produced goods and services by providing(regulating) high locational amenity.

Another reason why LVT is as hardcore as Capitalism gets.

That ban on taxpayer-funded charities lobbying the government...

… is not so much loopholes as a gate without a fence.

From the BBC:

Organisations given UK government grants will be banned from using the money to try to persuade ministers to change the law or increase spending.

A new clause will be added into all new and renewed grant agreements to ensure funds are spent on good causes, rather than on political campaigns. Cabinet Office minister Matthew Hancock said "the farce of government lobbying government" had to stop.

Voluntary groups said the rules could threaten their freedom to speak out. Critics also said the restrictions, which come into effect in May and will only apply to grants from central UK government departments, could be hard to enforce.


Many people, including lawyers, somehow believe that money can be earmarked, streamed and traced. It can't*.

For example, 'charities' which are ninety per cent taxpayer funded can still use the other ten per cent of their income to pay for lobbying and spend the ninety per cent on whatever the government asks them to spend it on. So this measure achieves nothing, apart from perhaps restricting the amount that such charities can spend on lobbying slightly - the question is, as usual, was the measure supposed to achieve anything or is the loophole intentional?

And how do you define lobbying? If a 'charity' pays for advertising to sway public opinion, knowing that politicians will bow with the wind, is that still 'lobbying' in the narrow sense?

The only solution is to prevent charities in receipt of a single penny of public money whatsoever from doing any 'awareness raising' or advertising whatsoever. Unless of course 'raising awareness' is the whole point, like for example road safety campaigns (reminding kids to look left and right, warning against the dangers of drink driving etc). But these things are so basic, the government can do it themselves without resorting to an overpriced quango.

* It riles me for example when somebody wins a few quid on the lottery or something, and people ask them "What are you going to spend it on?". That lottery money just goes into the pot. Instead of giving the usual answer "Buy a house/buy a car/go on holiday" it would be just as correct to answer "I will spend it on normal household expenditure and then save up my normal salary to buy a house/buy a car/go on holiday"

Taking 'bansturbation' to its logical conclusion.

From The Daily Mail:

PORN SHOULD BE TREATED LIKE DRINK DRIVING, EXPERTS ARGUE

America is in the grip of a pornography pandemic that has become so serious it should be treated the same way as teenage smoking or drink driving, activists have warned.

Dawn Hawkins, executive director of Morality in Media said porn must be tackled no differently than any major public health crisis. Speaking ahead of a two-day conference on sexual exploitation earlier this month, she said, if left untreated, addiction to pornography can leave users with psychological damage.

"There's a lot of science now proving that pornography is harmful," Hawkins said at the National Press Club in Washington. Porn sites get more visitors per month than Netflix, Amazon and Twitter combined, a third of all downloads contain porn and the Internet now hosts 4.2 million porn websites.


I love the way that religious fundamentalists are basing their claims on 'science'.

Saturday Afternoon Gearchange

Just to remind us of how shit pop music was in the 1983 - 1988 cycle, "Rhythm of the night" by DeBarge. The middle eight, starting about 2 minutes in is a tone higher and the rest of the song stays in the higher key:

Bus Wankers

From the BBC

In Witney, Oxfordshire, represented in Parliament by David Cameron, the 213 and 214 services are among those under threat as part of county-wide cuts to bus subsidies.
Martin Hallam, a retired former senior probation officer who lives in the village of Milton-under-Wychwood, a few miles from Witney, is fearful there will soon be "no service worth the name", adding that provision has declined in recent years.
"The way the bus runs, if we want to get to the dentist, we have to leave our house before 10:00 and be on the bus back by 11:30, or it simply won't happen by public transport," he says.
"We don't have any buses on two days of the week, so on those days we aren't even allowed to get toothache."

Move to fucking Swindon, then. You choose to live in a pretty, expensive, remote village where almost no-one uses a bus, where you don't have the population density using it, you don't get it. Why the fuck should poorer people subsidise you having a bus?

(the best place for people to retire to is small towns in Dorset, Wiltshire and Somerset like Salisbury, Sherborne and Taunton, which now have agglomeration effects of old people, like they have butchers and bakers)

Friday, 5 February 2016

The endless riddles of Home-Owner-ist logic...

From The Telegraph, two days ago:

Landlords will sell 500,000 properties in the next 12 months, according to new research from buy-to-let investor trade body the National Landlords Association (NLA)...

The sudden pessimism follows George Osborne’s double-whammy tax attack on the sector. In his July Budget he announced the removal of landlords' mortgage interest tax relief which, when fully implemented in 2020-21, will mean some landlords pay tax on zero income or even on losses. And in November he announced that landlords would pay a 3pc stamp duty surcharge, coming in from this April...

Many also predict that rents will rise as landlords seek to pass on the costs.


Fair enough, that was the whole point (allegedly) - to try and get owner-occupation levels going up again which of necessity means landlords leaving the market i.e. selling (as we saw between 1945 and the 1980s). Of course rents won't rise one penny, firstly landlords can't pass on costs, and secondly if there really were a sell-off of any magnitude, it would be higher earning tenants who buy them and become owner-ocupiers, pushing down the average incomes of remaining tenants and hence average rents.

So how bad is that sudden pessimism..?

From The Telegraph, today:

House price growth has hit a 17 month-high, as the supply of new properties being put up for sale tightens. UK house prices rose 9.7pc in the year to January, up from 9.5pc a month earlier, according to the Halifax. This is the biggest jump since in July 2014, when prices rose by more than 10pc...

Some experts believe the housing market is being lifted in the short term by buy-to-let investors looking to make a purchase before the sector is hit with a rise in stamp duty in April.


Not that terrible then, if they are still piling in, eh?

Or do the Homeys genuinely believe that landlords who are piling in now will sell them off again after 6 April 2016? Why would they do that?

Thursday, 4 February 2016

Sneaky!

From the BBC:

Although Chancellor George Osborne abandoned cuts to tax credits in the Autumn, cuts to UC announced last summer will still go ahead.

From this April the amount that anyone on UC can earn before their benefits are cut will be reduced. This so-called Work Allowance will be £4,764 for those not claiming for housing costs, or £2,304 for those who do.

Once claimants earn above that amount, they lose 65p for every pound they are paid.