Monday, 17 June 2019

Doc Marten boots - real life confirms blog comment

Barman, in the comments here:

Many years ago my daughter had a thing for Dr. Marten boots, she had about five pairs in various colours (all paid for by herself to be fair)...

I used to take the piss out of her for wasting her money for such a stupid fashion statement but she insisted that she only bought them because they were 'so comfortable'... Her blistered, bandaged and plastered feet told a different story!

On the Northern Line on Saturday, I noticed that the young woman standing next to me was earning a bright orange Doc Marten with a blue lace on one foot and a pale blue Doc Marten with an orange lace on the other.

I asked her whether she bought a pair of each. As a die hard Doc Marten fan, she had her stock speech ready and imparted the following information:

1. She owns seven pairs in different colours and she mixes and matches.

2. They look old and battered (seemed fine to me, but she's the expert), but they've just reached peak comfort levels; and by implication, that they are pretty uncomfortable when new.

She alighted at the next station, so I did not have time to ask her about her system for matching shoe laces with the opposite boot. I did wonder whether this was Barman's daughter or whether there is a whole sub-culture with many adherents.

Sunday, 16 June 2019

Overlapping random cycles

There are lots of people like Piers Corbyn who reckon that the weather/climate is influenced by lots of things that go in cycles (he reckons that the main influence is changes in the sun's output) and repeat themselves if you look hard enough. Corbyn's forecasts are apparently very good, but the Alarmists dismiss him because he's only forecasting weather and not climate.

Some of these cycles are widely accepted, such as solar 11 year cycles, which possibly form double-cycles of 22 years, ocean oscillations, Milanković cycles (which are actually four quite distinct cycles with wildly different periods).

Some of them are more conjecture, such as Zharkova's longer solar cycles and sixty year cycles.

Some of these will turn out to be misunderstandings, and there will be others which we don't know about yet.
If you look at the temperature chart from The Conversation, which purports to show that CO2 levels dictate temperatures, what you see is that:

a) there are clear 100,000-year cycles (Milanković cycles, I believe) and everything else is just noise and apparently random variations,

b) temperatures in the current inter-glacial period are very similar to the previous seven, and

c) if CO2 levels dictated temperatures in the way the chart implies, it would be about 10C hotter than it is, which it clearly isn't. So we can rule out minor changes in CO2 levels (a change  of one per cent  of one per cent of the atmosphere by volume) as being relevant.

The article itself agrees that in pre-industrial times, temperature drove CO2 levels and not the other way round, and goes to some contortions to explain why that relationship has now flipped.

For more contorted explanations, go to the article at Skeptical Science. This site is reliably Alarmist but infuriatingly enjoyable - it's like reading an editorial in The Sun newspaper, you know it's propaganda but it's so expertly done, that on a first read it seems quite convincing and you have to look quite hard to spot the false logical steps.
I imagine it is fiendishly difficult to disaggregate overlapping but independent cycles. So well done Milanković, who did all this by hand and doesn't appear to have got credit until after he died (see also Kondratiev).

Just for fun, I set up and Excel spreadsheet with sine waves cycling between +1 and -1 with periods 2, 3, 5, 7, 11 and 13. A chart of the totals looks pretty random, those occasional outliers of +4 or -4 look like extreme or random events, but they are not, they are entirely predictable if you know the inputs:

Friday, 14 June 2019

Just dig a canal across the UAE, problem solved.

According to the Americans, the Iranians are carrying out sporadic random attacks on oil tankers passing through the Straits of Hormuz. The Iranians are decrying this as a false flag operation etcetera.

As a proper arm chair internet warrior, with zero knowledge about civil engineering, local politics, shipping or the oil industry, my brilliant solution, that can't possibly not work and will definitely defuse the whole situation, is for the UAE to quickly dig a new canal so that oil tankers can bypass the Straits entirely.

They can do short route A (30 miles or so) across the top bit, or the UAE and Oman can co-operate and do longer route B (100 miles or so) from Dubai to Sohar.

I did put some thought into this - my first bright idea was build a pipeline along those routes, but it turns out it would take days to empty an oil tanker at the western end and days to fill another oil tanker at the eastern end, so I shelved that one.

The answer's obvious if you look at the map:

Thursday, 13 June 2019

Killer Arguments Against LVT, Not (461)

Via Labour Land Campaign, an article in Prospect from last year, which, despite the sub-heading, only touches briefly on LVT.

True to form, a drone at Conservative Central Office - who presumably have a member of staff on their online response team tasked with responding to the day's Google search results for 'Land Value Tax' - leaves the following sob story:

I [bought] my house for £100,000. I live in it for 20 years. It is big enough for my family, the transport links are OK for work, schools for the kids are accessible.

Because of things like 'Help To Buy' and ultra low interest rates, house values in my area mean my house is now worth £1m. In the meantime my pay has doubled, but because of inflation I am actually no better off than when I bought the house. A land value tax at say 1% would mean I would have to find an additional £10,000 a year, despite being no richer.

Yes, my house may be 'worth' £1m, but that doesn't mean I actually have £1m, or even an extra £10,000. I would have to sell. I might well not be able to afford anything else local, and have to move jobs, the kids move schools, and all as a distressed seller. This is politically unlikely, and economically crass.

If you want to tax houses on value, start whittling away at the exemption from CGT - but gradually.

A proposal to get rid of the capital gains tax exemption for main residences would meet with the same vitriolic response; and taxing long terms gains rather than imposing an annual service charge is a terrible idea anyway, so let's skip that last bit.

Why do I have zero sympathies with this person? Because that's basically my life story (and typical for millions of Londoners who bought more than 20 years ago, we're nothing special). Just replace '£1 million' with £800,000 (based on recent selling prices of larger and smaller homes on my street). I know how bloody lucky I am.

Both of our kids changed primary schools halfway through because of moving, it was no biggie, at that age, they adjust. They both always went to secondary school using public transport by themselves; if we moved, they wouldn't change schools, they'd just take a different route. Plenty of Londoners spend an hour commuting, you don't change jobs just because you move within London. We moved outwards (white flight) and we took the extra twenty minutes each way each day on the chin.

Like this person, I don't have actually have £800,000, nobody said I did. That is not, and never was, the point.

This person makes clear, that house prices/rental values are a trade-off for convenience (von Thünen's Law of Rent). They don't want to move to a cheaper area, which in London terms means 'further out on the Tube or rail network' because of the extra time/cost spent commuting, sure, why would they? But they claim they don't want to pay the extra £10,000 a year either.

So what will they choose? The inconvenience or paying the £10,000?

We know for a fact that this person is happy to be £10,000 a year worse off as a trade-off for the convenience. How? Because they could sell their 'big enough family home' in Islington (or wherever it is) and buy something that for half that in Barking, or Harlow, or Croydon or somewhere cheaper/less convenient, banking £400,000 tax free cash after SDLT, moving costs and new carpets, which would give them an extra £10,000 a year cash to spend for the rest of their lives.

So the chances are, they'd pay the additional £10,000 (even assuming there weren't corresponding reductions in other taxes which would make most working couples better off). I know that I would, because the alternative is me and Mrs W and both of our kids spending more on travel and wasting an extra X minutes a day each sitting on public transport. We might pay our £8,000 a year through gritted teeth, but we'd pay it.
Seriously though, what planet are these people on? There are plenty of people outside London/south east who bought homes for £50,000 - £100,000 twenty years ago which only have kept pace with inflation or less.

How much sympathy are they supposed to feel for those with an unearned windfall gain - made at the taxpayers' expense, as the drone admits - equivalent to an average lifetime's earnings who are asked to pay a little bit of extra tax?

Wednesday, 12 June 2019

Value Added Tax is quite literally a tax on "value added". Why do people not think about what "value added" means?

The Tory wannabes are trotting out their tax plans, and a couple have mentioned looking at VAT (Michael Gove, article by Sam Dumitriu, and Rory Stewart, via @Sam_Dumitriu).

(Wow, Rory Stewart has "land value tax, at least for business and agricultural land" in his 'good' column and "business rates and no land value tax" in his 'current taxes' column. That's his leadership chances flushed down the toilet).

Gove and Stewart are politicians and don't know or care about economics. Dimutriu ought to know better and is the bigger fool for it. He goes along with the Big Fat Lie that VAT is some sort of harmless tax on 'consumption' or 'indirect tax' which does not affect production.

Let's take a step back and agree that income tax/NIC are taxes on wages or earnings and corporation tax is a tax on corporate profits. Their effect is pretty much the same, the percentage rates and administration is just different.

I trust we can also agree that workers and businesses 'add value', and the more value they add, the more tax they pay. So income tax, NIC and corporation tax are literally taxes on added value.

Value Added Tax  is just more of the same!

We reach an equilibrium point between gross selling prices, net wages after tax and net profits after tax, that point is fixed by the overall tax wedge. Shuffling between these four taxes makes no difference to VAT-registered businesses.

It would make no difference to gross selling prices, output, net wages or net profits (of VAT registered businesses) if we:

a) went to one extreme and scrapped VAT and increased taxes on wages and profits; or

b) went to the other extreme and scrapped income tax, NIC and corporation tax and increased VAT to a very high rate.

Here's a worked example for a typical sort of VAT registered company, which sells output for £120 gross; pays £36 to VAT registered suppliers, pays gross wages (incl. employer's NIC) of £50; employees receive net wages of £30; and has profits before corporation tax of £20.

Current system, with VAT

Gross sales.......................£120
Paid to HMRC as VAT.....(£14)
Net sales............................£106
Paid to suppliers, net.....(£30)
VAT paid to suppliers
and passed on to HMRC...(£6)
Gross wages......................(£50)
Net profit before tax..........£20
Corporation tax @ 19%.....(£4)
Profit after tax.....................£16

No VAT, 17% extra Employer's NIC and 38% corporation tax

Gross sales.........................£120
Paid to suppliers...............(£36)
Gross wages.......................(£50)
Extra Employer's NIC
£50 @ 17%...........................(£8).
Net profit before tax.........£26
Corporation tax @ 38%...(£10)
Profit after tax....................£16

No income tax, NIC or corporation tax, VAT at 46%

For the non-mathematically minded, net sales £82 x 46% = £38; £82 + £38 = £120, so gross sales £120 as before.

Gross sales........................£120
Paid to HMRC as VAT......(£38)
Net sales..............................£82
Paid to suppliers..............(£36)
Tax-free wages.................(£30)
Tax-free profit....................£16
The idiots out there think that because sellers can split the total selling price up into 'net' and 'VAT' that magically, consumers pay it.

If that were true, businesses could simply split the selling price into 'net', 'corporation tax' and 'VAT'. Would the idiots then believe that businesses don't pay corporation tax?

Lock 'em up and throw away the key...

From the BBC:

The NHS fraud squad is investigating GPs in England amid suspicions they are claiming for non-existent patients.

Doctors get an average of £150 a year for each patient on their list, but records show there were 3.6 million more patients in the system last year than there were people in England.

The discrepancy prompted NHS England to employ [Crapita] to start chasing up these so-called ghost patients.

The NHS Counter Fraud Authority is now launching its own investigation.

... in the following order

1. Whoever thought it was a good idea to pay each GP a quarter of a million quid a year in the first place. From the article:

The average GP has around 1,700 patients on their list so the payments make up a significant chunk of their income.

1,700 x £150 = £255,000, and that's just a 'significant chunk'. How much more do the buggers get?

2. Whoever thought it was a good idea to pay GP's on this basis (rather than work actually done).

3. Whoever let things slide for so long rather than crunching the numbers every year as a matter of routine.

4. Whoever thought it was a good idea to throw money at Crapita for doing something which the NHS Fraud Authority is (or should) be doing.

5. A few GPs and their chief receptionists who must have been complicit in the whole scam, pour encourager les autres.

Tuesday, 11 June 2019

The last civilised climate discussion about climate science

From Don Aitken's blog, a 2014 article on The Relationship between CO2 and temperature.

Although the author of the article would clearly be decried as a Science Denier (TM, The Guardian) by today's standards, and some of the replies are by what Science Deniers decry as Warmenists or Alarmists nowadays, it is all professional and friendly. You don't see that any more, it's all completely polar (or bi-polar) nowadays. Or are New Zealanders just naturally polite?

(The Science Deniers in that thread seem to be more credible and thorough than the Warmenists, but I would say that wouldn't I?)
For example, none of the Science Deniers advances the silly argument that The Second Law of Thermodynamics - that heat doesn't flow spontaneously from cool things to warm things - means that gases in the atmosphere can't possibly reflect infra red back to the surface of the and hence warm it, because the atmosphere is, on average, cooler than the surface of the earth. That claim is just embarrassing and undermines the Science Deniers' credibility.

No more fear of flying

Emailed in by Benj, from, the Q&A box:

How are slot allocations made?

Slots are handed out twice a year, for summer and winter schedules. “Grandfather” rights entitle incumbent airlines to continue using the slot if it has been used for at least 80 per cent of the previous period. In the UK, slots are traded in the secondary market

What about new slots?

New slots are put into a pool. Half are supposed to go to new airlines

What’s being proposed?

The government wants to promote competition, including auctioning slots to the highest bidder. The existing system provides incentives for “slot hoarding”, when airlines retain as many slots as possible and sell them to make a profit.

From the article itself:

Existing slots are held by airlines using so-called “grandfather rights”. In Britain, they can be traded in a “secondary market”, often commanding huge sums. A record $75 million was paid by Oman Air for a set of rights at Heathrow. 

The government said in its Brexit planning guidance that slot allocations would remain unchanged in the event of no deal. It insisted that the rights would be allocated in a “transparent and non-discriminatory way”.

However, the transport department is understood to be seriously considering the adoption of an auction system. The department’s aviation strategy, published before Christmas, confirmed that the government was considering market-based mechanisms for release of additional capacity”, and added: “This could include auctioning all slots or a limited number that would be most sought-after.” 

A House of Commons library paper from 2017 admitted that auctions “may be more difficult for small carriers with lower purchasing power”.

Lara Maughan, the IATA head of worldwide airport slots, said: “Making airlines pay for entering or growing at an airport means consumers will be the losers. At a time when Britain is looking to improve its competitiveness and to build more connections to the world, these proposed changes will do the exact opposite. 

"Extracting even more cash from airlines and their passengers will mean higher costs, less choice and less investment. The government’s stated objective to improve regional access to Heathrow would be irreparably damaged by an auction system that would force airlines to prioritise the most lucrative long-haul routes.”

IAG said: “We support IATA’s view that slot auctions would negatively impact consumers and undermine Britain’s aviation industry.”

Do these people not proof-read their own propaganda?

1. The easiest way to make money from aviation under current rules is to set up a small airline, be allocated some freebie-slots and then sell the slots. The article says as much. Small new airlines tend to go out of business fairly quickly, and when the majors are buying them, they value them mainly on the slots they own. It's a bit like buying land, getting planning permission and then selling the land again. It's the most profitable part of 'property developing'.

2. If airlines are happy to pay for second-hand slots, how is this any different to paying the government for them? No different. And paying one year in advance in an auction is a lot less risky than paying a lump sum in the hope it will be grandfathered for ever. If their claim that auctions lead to higher ticket prices were correct, then there would be a sudden increase in ticket prices after a slot has been bought by a successor airline. No such evidence.

3. We know that ticket prices are largely 'rent' and have little to do with costs. A flight from Stansted to Gdansk is a longer distance, but cheaper than a flight from London Heathrow to Berlin Tegel. An early morning or late night flight is cheaper than a midday flight etc. Flights to holiday destinations during the school holidays are more expensive than out-of-season. Airlines like to fill planes, so do a weird auction process with rising or falling prices; different passengers on the same flight will have paid different amounts. If costs exceed (potential) ticket price, the route is not used.

4. The balance of ticket prices minus actual costs is the rental element. A slot in itself has no cost of production, they are created - or destroyed - at the stroke of a bureaucrat's pen. Some have huge value (unrelated to cost of production), so they are 'land' in economic terms. Therefore, what you pay for the slot does not influence ticket prices - ticket prices influence slot values!

5. The small airlines are the Poor Widows or the Small Shopkeepers of the aviation business, "They'll go out of business because the majors have deeper pockets." That's easily dealt with, keep giving them free slots, on the condition that if they go out of business or are taken over by a major, the slots are forfeited. or just make them free for the first two or three years until they are up and running.

6. If an auction system "forces airlines to 'prioritise the most lucrative long-haul routes", then that is great news. I note that the IATA lady also claims that auctions would prevent airlines from "build[ing] connections to the world". So which is it? It can't be both.

7. It's the take-off and landing that incur the highest costs (fuel used; risks/risk mitigation and noise pollution), so it is more efficient to fly long haul. If that means fewer, less lucrative domestic flights, so be it. Take the train or drive. All things considered, this is better for the economy.

8. Whatever the merits of auctions, they are infinitely better than Air Passenger Duty. We don't know whether auctions would raise more or less money than APD; of whether this would lead to more or less flying, but that is irrelevant. It would be the 'right' amount of money and the 'right' amount of flying.

Monday, 10 June 2019

Killer Arguments Against LVT, Not (460)

Sobers trotted out the time honoured classic: "Many people wouldn't be able to afford to buy their own homes at today's prices". The conclusion is, they wouldn't be able to afford to pay an annual tax on the value thereof either.

The factual statement is quite true - and a sign that something is very, very wrong - but the conclusion does not follow from the fact, and both are completely and totally irrelevant to the topic in hand.

1. It's only since Georgism Lite was abandoned (although the Tories are reintroducing some minor elements of Georgism Lite, on the basis that more owner-occupiers = more potential Tory voters) that we've had this bizarre state of affairs, that people who bought more than X years ago wouldn't be able to buy today. Once LVT is in place and bedded in, most people will be able to afford to buy their own homes, by definition.

2. The argument is trotted out whether you propose full-on LVT and massive cuts in taxes on earnings and output, or just a really modest LVT that merely replaces Council Tax and SDLT. Numbers and maths are not the Homeys' strong points.

3. LVT is not based on selling prices, but on rental values. Even a full-on LVT, by definition, would be a certain proportion of the (full) rental value, anywhere between 0% in the really low value areas and about 80% in the poshest bits of super-expensive areas. For most people, that extra tax will be less than all the other taxes they will no longer be paying (again, by definition). For some it won't. Tough.

4. Mysteriously, tenants can afford to rent, but most could not afford to buy the home they are renting, or one similar to it (or else they would not be renting in most cases). So in the topsy-turvy Home-Owner-Ist non-logic, if you can't afford to buy the home you live in, you can't afford to rent it either, or even pay a fraction of the rent. But clearly tenants can. Hmmm.

5. The Homey view is that tenants can afford to rent, and are expected to pay a load of extra tax to subsidise owner-occupiers and landlords.

6. What does 'afford' even mean? As long as a household has enough left over for the basics, it can afford it. After paying rent/LVT, anybody with more than £10,000 or so a year to spend on everything else can survive at least. You want nicer stuff? Work longer hours or get a better job. Many tenants don't have much money left over after paying rent (partly because of the extra taxes they are paying) and get zero sympathies from the Homeys.
The KLN then segues nicely into another classic: "Low income people will be 'forced' to live in slums and high income people will get all the nice houses." How is that any different to the situation without LVT?

In any event, under LVT, there would be far fewer slums; whether something is a slum or not depends largely on how many people in the area are working and how much they earn. Fewer unemployed and higher wages => fewer slums.

Overall, it would still be a huge win for low income people (and high income people), because that big slice of GDP that disappears into land values (landlords, banks and down-sizers) for nothing in return stays in the pockets of aforementioned low and high income people.

Georgists do not take sides between low and high earners any more than between employees and employers, that's a largely false dichotomy invented by Communists and Homeys alike to distract from the real issues.

Sunday, 9 June 2019

Tory top-job contender tax plans

Please tell me the ones who have suggested anything not covered here!

1. Sajid Javid:

"My priority will always be to cut the basic rate of tax. But if cutting top rate means more revenue, like what happened last time it was cut, that means more nurses, police, I would cut it if it gives us brings in more revenue and bigger public services."

It comes after he told the Sunday Telegraph he would be willing to cut the top rate of tax from 45p for the highest earners to inject more "dynamism" into the economy.

Nice bit of double think there, cutting the basic rate is his 'priority', but first he's going to reduce the 45% additional rate to the normal 40% higher rate. Half a mark, I guess.

2. Jeremy Hunt:

Jeremy Hunt has praised Donald Trump's economic record and suggested he could introduce similar tax cuts for business if he becomes prime minister.

The foreign secretary, who is one of 12 candidates standing to succeed Theresa May, said the US president had delivered "double the GDP growth that we have" and said we would want to "look at" the Republican's policy of "big business cuts in tax".

Epic fail, the Trump tax cuts were super-regressive and will simply lead to higher deficits to bugger up the next Democrat president. Let's also contrast this with what he was saying a year ago when he was still Health Secretary:

People are willing to pay higher taxes to fund the NHS, Jeremy Hunt has said, amid an ongoing row among senior ministers over how to secure the future of the health service.

The health secretary said the public was open to the idea of tax hikes to pay for healthcare "provided they can see that it is not being wasted", after a major report said the NHS would need £2,000 from every household to stay afloat.

3. Michael Gove:

"My economic plan is driven by the need to increase investment, productivity and wages across the country, with a special focus on helping those areas and regions where productivity is lower," he wrote.

"It would mean reducing the regulations which hold business back, cutting and reforming taxes - such as business rates - which put pressure on small businesses and undermine our high streets, using the opportunity of life outside the EU to look to replace VAT with a lower, simpler, sales tax," he added.

So the usual special pleading for owners of high street premises, boo, but at least he's mentioned the possibility of scrapping VAT. A sales tax would have pretty much the same damaging economic effects as VAT, but if handled correctly, could at least be neutral (or a bit more neutral than VAT) and a lot simpler to calculate and pay. Basically, all business-to-business supplies might as well be exempt, only the retailer/final seller needs to pay it over.

4. Sam Gyimah:

That’s why today I am pledging to abolish Britain’s five worst taxes – the taxes that do the most damage for the money they raise, and whose abolition will get us the most bang for our buck. I would:

* Make the Annual Investment Allowance unlimited.
* Index the tax thresholds to inflation – permanently.
* Replace business rates with a commercial land tax.
* Eliminate the personal allowance withdrawal for higher earners.
* Move towards abolishing stamp duty for homes under £1 million.

Clearly the best of the bunch.

'Commercial Land Tax' sounds a lot like LVT, there is so much we could sweep up into this besides Business Rates (SDLT on commercial premises, planning fees etc).

Before we think about reducing the 45% additional rate to 40% (Javid's suggestion), the really stupid thing that Brown/Darling introduced is the effective 60% rate for incomes between £100,000 and £125,000 (or £100,000 + twice the annual personal allowance), so well spotted Mr Gyimah!

If we could nudge him towards rejigging Council Tax in exchange for getting rid of SDLT (get rid of it entirely, stupid tax), then so much the better.

5. Andrea Leadsom:

The first cuts we need to make are to swearing.

F*** off.

6. Rory Stewart:

The international development secretary -- an outsider in the race to succeed Theresa May -- said he won’t make spending promises the U.K. can’t afford. Candidates who do so would put the country’s reputation for economic stability and competence at risk, Stewart said in a statement to Bloomberg on Wednesday.

“Candidates cannot on the one hand attack Jeremy Corbyn for fiscal irresponsibility and at the same time make unfunded promises,” Stewart said, referring to the opposition Labour Party leader. Some rivals’ plans are incompatible with the economic fallout from leaving the European Union without an agreement on Oct. 31, which they are also advocating, he said.

Fair point, but not very specific about what his plans are, if any.