Wednesday, 16 October 2019

Killer Arguments Against LVT, Not (470)

I've seen this one a couple of times and it has been bugging me for years. I can't be bothered finding an example, so I'll paraphrase:

My wife and I are childless, semi-retired but still healthy and live alone in a nice house. There is a family across the road from us in an identical house. They have two kids at school and an older child who is sometimes in trouble with the police. A granny lives with them who constantly needs NHS care.

My wife and I place no pressure on 'local services' and cost the government next to nothing. With LVT, we would be paying the same as the family across the road. They place far more pressure on 'local services' and cost the government a lot of money. So they should be paying far more in tax than we do.

Such people have got the whole tax-spend cycle the wrong way round.

For good reasons (which I won't go into now), governments, on the whole and in general, just do certain things: police and law'n'order; roads; refuse collection; fire brigade; they provide universal education, free-at-point-of use or subsidised and regulated healthcare; welfare systems etc.

Every citizen has an equal entitlement to those things, so they have to be provided 'free-at-point-of-use'. For example, if the government tried to force parents who can't afford private school to send their kids to a state school and pay the full cost for each child, things would rapidly descend into chaos.

No government of a civilised country does this AFAIAA. And trying to make offenders pay for the cost of the criminal justice system is clearly insane. The police are there for the benefit of the law abiding, not for the benefit of criminals.

If the Tooth Fairy paid for all those things (or you had a small population and endless oil reserves), you wouldn't need to collect taxes, and I don't think governments particularly enjoy doing it.

But without a Tooth Fairy or oil reserves, spending without taxation would lead to hyper-inflation and regular collapse, so the money printed by spending has to be un-printed somehow, i.e. by taxation.

Having established that every citizen has an equal entitlement, it makes sense to collect taxes from those who benefit disproportionately. This leaves us with taxes on:

1. Those on really high incomes (annual income over £50,000 or £100,000 or whatever figure, there's no right or wrong answer). Higher earners need a pyramid of reasonably well educated employees under them; higher earners might have been to private school, but they benefit from the fact that their employees had a state education. (So basic rate tax, National Insurance and VAT are straight on the scrap heap of history).

2. Those who own land. In the absence of governments and civilised society (the two go in tandem, one is a symptom of the other), land would be worth precisely nothing.
- There wouldn't be anybody to say who owns which bit, and nobody to protect those rights;
- Some things benefit land values directly (near a good school, in a low crime areas, good transport links); and
- There are also secondary effects. If people only spend 6% of GDP on healthcare (as in the UK) rather than 18% (as in the US) for a similar level of coverage/quality of outcome, they have 12% more money to spend on everything else - goods and services or housing. And higher earners from category 1 bid up land prices.

So a tax on land values seems perfectly reasonable to me.

If our semi-retired complainant thinks he and his wife are being over-charged, he is perfectly entitled to sell up and move somewhere cheaper.

He and his wife will still be getting the same level of services from the government; they will of course be getting a lot less in spillover benefits from society in general, private enterprise etc in a cheaper area, which is why they don't (or wouldn't) move, and it is those spillover benefits that they will be paying for. And if they don't want to, somebody else will.

Tuesday, 15 October 2019

Sun spots




Why are we expected to believe that the correlation between "B" and "C" is causality, but the much closer correlation between "A" and "B" is merely coincidence?

Ireland 1: England 0

My heart soared with pride when our PM Mrs T May donned her highest high heels and towered over that French bloke:

In last week's round, Ireland fielded the winning candidate. Is Varadkar surprisingly tall or is Johnson a short-arse? Either way, well played Ireland, a well deserved victory!

Sunday, 13 October 2019

Another piece of the Thomas Cook puzzle

As I mentioned a couple of weeks ago, there were/are lots of groups with an interest in seeing Thomas Cook's operations keeping going. What tourists are paying £1,000 for is to  be somewhere nice and hot for a week, the flying there and back - which is what Thomas Cook was in charge of - is a pain in the bum. The marginal/average cost of flying a plane full of UK tourists to their destination in Europe and back is about £100 per passenger, the value/cost to everybody concerned (of the actual holiday, using up limited days' leave from work) is far in excess of that.

The BBC report a good example of such a group, which hadn't occurred to me before:

The sudden collapse last month of one of Europe's biggest travel groups, Thomas Cook, ruined the holidays of 600,000 stranded tourists. Hundreds of thousands more had trips booked when the news was announced.

But for parts of Spain's tourist sector, Thomas Cook's demise is also an existential threat... The Spanish Confederation of Hotels and Tourist Accommodation has said that 1.3 million autumn and winter visitors will be unable to fly into Spanish destinations.

This will result, it says, in the shutting down of at least 500 hotels, generating losses to the tourism sector running into the hundreds of millions of euros.

Spain's government has announced a package of measures worth €300m (£260m; $330m), including emergency credit lines and a reduction in airport fees, particularly for hubs in the Balearic and Canary islands, plus plans to spend €500m in improving tourism infrastructure.

Surely, that €300m (or €800m, or whatever) would have been more than enough to take over Thomas Cook's airline business (plus whatever other bits they need) and keep it going, maybe even turn it round? Stuff like the leases on the planes; staff wages (it's a lot cheaper keeping a team going than assembling a new one); the take-off and landing slots; all the information about who's going where and when.

Thomas Cook's 2018 accounts show that it (they?) had a decent operating profit/positive cash flow from operating activities. What tipped it (them?) into big losses were interest costs and the usual 'cost of intangible assets' nonsense. The new owners of the business don't need to take on the ghastly debts, that's Thomas Cook's old creditors' problem (many of whom will be entirely innocent in the whole mess; some of whom will be complicit and it serves them right).
To cut a long story short, the Spanish government could simply run the airline which takes UK tourists to Spain. Everybody wins.

Thursday, 10 October 2019

Sorry, Could you say that again?

“There is also a fourth French objection to the Johnson plan — one that France stresses more than other EU countries. Theresa May’s agreement with the EU promised a level playing field in employment, industrial and other regulations between the UK and the EU. Johnson has abandoned that pledge.

France fears that, combined with a back-door into the EU market through Ireland, this would give Britain an unfair competitive advantage.”

The text highlighted tells you all you need to know about the EU, T May and the French.

The EU is a rules based regime. Rules enforced by bureaucrats (not Courts of Law) enabled to apply sanctions as they see fit.   Which does not mean that the rules are ‘lawful’ in Common Law terms.

It also shows the absolute disconnect between the ambitions of Brexiteers (like me) and the EU.  And this obviously means that there is No Deal that will suit both parties.  There can be no consensus.  Why?  A major part of Leaving the EU was precisely to enable differences. To not have a ‘level playing field’.   And to be fair to the EU why would they want to make a special arrangement for the UK?

In any event the EU – and the UK (post Brexit) – will be entirely entitled to require importers to demonstrate that the goods and services being supplied by overseas organisations were made in accordance with EU (or UK) regulations and rules.  That has always been the case.  

However how far can these rules be insisted upon? Suppose the UK prefers a more looser labour market. That people and employers freely decide their contracts?  Suppose for reasons of flexibility it is better for a business firm to use contract of self employed labour?  How can governance of such arrangements be in the remit of what will be a foreign power? On the other hand it is quite reasonable to insist on husbandry standards for say beef production.  That is not actually anything to do with ‘production’ as such but mostly to do with how we think that animals should be treated.

As to industrial production, lots of rules inhibit innovation.  This is probably deliberate as it is obviously protectionist; and protectionism is hardwired into the EU, and France.  But as long as the product itself complies with EU rules – if it is being exported to the EU – then that is an end of it. 

Lastly, ‘unfair competitive advantage’. Eh?  Everyone is looking for one of those all the time.  And in a sense the EU is doing just that by trying to insist that the UK keeps to all of its, the EU’s, rules post Brexit.  In any event there is only one case when such an ‘unfair’ advantage truly exists and that is when special interests are provided with subsidies or other special privileges.  And again the EU is a past master at such shenanigans – look at Airbus.

Personally I am of the view that each side (post T May) are talking entirely different languages and really cannot compute what the other is saying.  Neither us nor them gets it.  This writer excepted and, I would hazard, a lot of you, the reader.

Tuesday, 8 October 2019

"Overview of Northern Ireland Trade"

From the BBC:

A No 10 source says a Brexit deal is "essentially impossible" after a call between the PM and Angela Merkel... They also claimed she said a deal would never be possible unless Northern Ireland stayed in a customs union.

I'm all in favour of a (re)united Ireland and NI remaining in the EU customs union is a step in that direction. I'm not sure why the EU is so adamant, but it's not necessarily A Bad Thing.

It depends largely on whether NI trades more with RoI or more with GB? It makes sense to be in a customs union with your largest trading partner.

NISRA says that NI-GB trade is about four times as much as NI-RoI trade (or twice as much as combined NI-RoI and NI-rEU trade). GB is further away, but fifteen times as big as RoI, so that looks about right. Which means that NI would be better off (or less worse off) in the UK customs union and not in the EU customs union (which is not the answer I wanted).

Ho hum.

Well, duh.

From The Guardian:

The drought and water resources minister, David Littleproud, has acknowledged he “totally” accepts that worsening droughts are linked to climate change, as he signalled more taxpayer support for regional communities was coming as Australia’s big dry “escalates”.

Littleproud, who stumbled last month by first telling Guardian Australia he did not know if climate change was manmade, then later clarifying he had always accepted the science on the role humans play in the climate changing, told the ABC on Sunday he understood the link between global warming and drought because “I live it”.

The Guardinistas don't do subtlety or nuance.

Australia as a whole doesn't get much rain, and it appears to have had even less rain in recent years. Which is indisputably a "significant change in weather patterns which might or might not be long-term" or "climate change" for short.

But the article equates "climate change" with "man-made climate change" and so assumes that "minister accepts that climate change exists" to automatically mean "minister accepts that climate change is man-made" (which he was bullied into saying recently, but that's a separate topic), which is one heck of a leap of logic.

Monday, 7 October 2019

Well there's a surprise!

SpareRoom’s Rental Index Q3 2019

Data Summary

- Rents remain steady across the UK, up just 1% over the last year. This indicates that the recent tenancy fees ban hasn’t resulted in rental increases
- Northern Ireland is the cheapest place to rent in the UK, with average rents of £352
- The UK’s cheapest town is Galashiels in Scotland, with average rents coming in at £303 – followed by Northern Ireland’s Bangor (£318) and Craigavon (£320)
- Guernsey continues to outrank London as the most expensive place to live in the UK with rents of £796, compared to London’s average of £782

from here

The surprise is, of course, the last point. All the others are exactly what we would expect, despite all the wailing from letting agents.

Nobody move or [something extremely yucky] will happen!

From iNews:

Officials preparing Britain for a no-deal Brexit have encountered a new roadblock: a rise in dogging.

A cabinet minister confessed at the Conservative Party conference last week that long tailbacks near the port of Dover could mean lorry drivers visiting voyeuristic sex sites, according to The Sunday Times.

“One of the things we talk about in these no-deal meetings concerns hauliers and their activities,” the minister said. “The main thing is whether they will turn up at the Channel ports with the right paperwork. But there are also dogging hotspots all over the place.”

Good luck to them, consenting adults and all that. As long as local councils clearly sign-post dogging sites (to save embarrassment and misunderstandings) it isn't a problem.

Slightly more concerning is that all those involved will be spreading super-gonorrhoea, a disease which is widespread in non-EU countries such as Norway or Switzerland.

Sunday, 6 October 2019

Brexit negotiations. Questions, questions...

1. In the pub on Friday, BenJamin' reminded us that the Benn Act is borderline insane. If somebody has no choice but to agree a deal, any deal, then that more or less negates that person's ability to haggle. The almost inevitable outcome of this would be, by default, for the UK to remain in the EU for another few months. Suitably heartened, MPs can then keep doing the same thing over an over forever. He asked, rhetorically, whether he had understood that properly and we all concurred.

2. My follow-up point was, our PM has made a compromise offer re Northern Ireland, which is some sort of fudge whereby Northern Ireland remains part of the EU for regulatory purposes (food and product safety standards etc) but remains part of the UK for customs purposes. I'm not sure if this is even workable, but you do get weird things like this, like the German enclave in Switzerland and they seem to manage somehow.

But never mind, superficially this is a compromise between:

a) the EU demanding that the whole of the UK remain in the EU for regulatory purposes and/or that the regulatory and customs border would be 'in the Irish Sea'.

b) the extreme (on both sides) idea that there should be a 'hard' border between Ireland and Northern Ireland (the EU appear to be pushing for this more than the UK or Ireland itself).

My question is, from the UK negotiators' point of view, this is a compromise (however insincerely meant) - so what compromise did they demand from the EU in return? Nobody talks about that, maybe they didn't ask for anything. Or is the counter-compromise that the EU no longer insists on 'the backstop' (which is too gruesome to even describe)?