Thursday, 29 October 2020

Killer Arguments Against LVT, Not (486)

"Unknown" submitted a couple of KLNs, you can tell his heart wasn't really in it:

1. The landlord owns the property and land it stands on because of homsesteading. Nobody has moral claim to it other than them.

Poor start. A landlord is clearly not "homesteading" and owns more land than he needs. There's no such thing as a moral claim to land, it's a legal and economic concept, so whether or not a landowner (or anyboyd else) has a "moral" claim to land is neither here nor there. But landowners do not have a moral claim on a large chunk of everybody else's output and labour, i.e. the taxes on output and earnings which are used to pay for those government services which give land its value in the first place.

2. Land is just one more scarce resource. There are many, many people who live fulfilling, economically productive lives never owning land.

If we put a 100% tax on chicken consumption, guess what? Everybody would eat turkey McNuggets.

Georgism is stupid because no scarce resource is unique. They're all scarce and thus not special. There's even plenty we're not making more of. The idea of one of them being the one thing we can tax is just ridiculous.

That's kitchen sink stuff.

I don't think that land is scarce at all, 99% of the UK population lives and works on less than 10% of UK surface area, the developed bit. Developed land = geographical areas where society in general and the government in particular make land valuable, that's where people want to live, some trade-off between good jobs, shops and leisure opportunities, good schools, low crime, good transport links, nice views, a bit of open nature - or not as the case may be. Developed land is 'scarce' because providing or organising all these services is very expensive and complicated (simply owning land is the easiest bit); it is the services which are in limited supply.

It is quite true that many people don't own land. Most of them are economically productive, but their lives are all the less fulfilling for having to fund land values out of their taxes AND pay rent for somewhere to live or do business. But if they can manage - and they can - why can't everybody? Is there a special class of people who can only lead "fulfilling, economically productive lives" if they own land? How is a landlord "economically productive" anyway? Any tenant who buys the place he was renting must know that they aren't.

The chicken-McNuggets analogy is fatuous. Land Value Tax is just landowners paying the government for the value of the services they receive, it's a user charge, like paying for the market price for chicken or turkey McNuggets. You wouldn't say that McDonalds charge a 100% tax on turkey McNuggets, they just charge market price. And the government can "tax" land rental value at 100% (for administrative reasons, call it 80-90%) and the land is still there, the same services/benefits are still being provided at that location, and demand for land is unchanged.

As mentioned, whether land is scarce or not is irrelevant. What makes it unique is the fact its "value" is actually the value of services and benefits being provided at that location. My car doesn't change in value if I buy it in Wales and park it in Kensington. If you could buy farmland in Wales and move it to Kensington, it would go up in value a million times over. That's why land is an ideal source of government revenues (there other equally ideal taxes, like fuel duty, but they are minor in comparison), and certainly far better than taking arbitrary percentages of business output (VAT), wages (National Insurance) or income generally (income and corporation tax).

Tuesday, 27 October 2020

Cow news

Both via @AmbushPredator.

From The Daily Mail:

A growing wellness trend out of the Netherlands has people cuddling cows for comfort.

Called 'koe knuffelen' in Dutch — which translates to 'hugging cow' — the practice typically involves visiting a farm and spending several hours in the company of cows. According to proponents of the trend, cow cuddling can be quite soothing thanks to the animal's warm temperature and size, and the oxytocin boost it leads to can even reduce stress.

Presumably you have to sign a lenghty disclaimer saying that the farm owner assumes no responsibility or liability if customers get kicked or trampled to death.

Also from The Daily Mail:

A teenager from Northern Ireland has died after the car he was driving collided with a cow. Josh Fletcher died in the early hours of Sunday morning after his car left the road when he collided with the animal...

Police have not confirmed the fate of the cow that was hit but is thought to have been killed as well.

Saturday, 24 October 2020

Killer Arguments Against Citizen's Income, Not (32)

With my Citizen's Basic Income Trust hat on, I had a Zoom call with somebody doing an MA on the topic yesterday.

He asked me about "political feasibility", given all the other (spurious) objections.

The answer is, do it softly-softly behind the scenes. For example (ignoring the fact that they are trying to lump a lot of this into Universal Credits), to get down to the tedious details:

1. There is a significant couples penalty in the welfare system. A single adult gets £74/week Income Support (in its various guises) and a couple gets £117/week. So just hold the single person rate fixed and gradually bump up the couple's rate to £148 and allow them to put in two separate claims. Then get rid of the tick box that asks whether you have a 'partner' or not.

2. Gradually align Working Tax Credits (basic amount £3,040 a year for a single adult working more than 16 hours/week or £3,865 for a single adult working more than 30 hours/week) with Income Support Rates and reduce the 16 hours/week threshold down to 1 hour.

3. So Working Tax Credits would end up at £74 x 52 weeks a year = £3,848, even if you are only working 1 hour a week.

4. Gradually reduce the earning threshold for Working Tax Credits withdrawal down to £nil, while at the same time gradually reducing the total withdrawal rates for Working Tax Credits, Income Support and Universal Credit down to 32% for every £1 of income (from their current overall rates of about 60% to 100%).

5. 32% is of course the current real basic tax rate (income tax + Employee's NIC). At this stage, you no longer need a parallel means-testing system - claimants are just given a PAYE code with no personal allowance (a BR code) with a tick in the box for "Income Support/WTC claimant - no NIC threshold". They do this with the extra 9% tax for people with student loans, it's perfectly realistic . So they get full amount of benefits and these are "means tested" or "clawed back" via normal PAYE.

6. Gradually reduce Statutory Maternity/Paternity Pay (£151/week for 39 weeks) to the same as Income Support or Working Tax Credits, while extending the eligibility period from 39 weeks to "until you decide to stop claiming or are old enough to get the old age pension". Claimants get the same adjusted PAYE code as above.

7. Married people who earn less than the Personal Allowance can transfer part of the notional tax saving to their working spouse, it's a tax saving of a laughable £250 a year. This one will keep the Daily Mail readers happy. Allow the lower earner to transfer the entire unused part of their personal allowance, and/or allow the lower earner the claim the lost tax saving on the unused part as a cash payment (to the extent they are not getting Statutory Maternity/Paternity Pay, see above) and gradually bump up the cash payment to the same as Income Support - WTC - SM/PP rates.

8. Gradually phase out all the "looking for work" conditions, do interviews every three months instead of every week, reduce the number of hours people have to pretend to be looking for work down to 1 hour a week.

9. Gradually increase the normal NIC thresholds to £12,500, so that the value of the NIC and income tax allowances for somebody in full-time work - not receiving IS, WTC, SM/PP etc - is £4,000 (£12,500 x 32%) and then get rid of the allowances and deduct tax and NIC from the full amount of earnings with a monthly "tax credit" of one-twelfth of £4,000 (mathematically exactly the same thing - they used to do this in Ireland), then increase the IS, WTC and SM/PP rates to £4,000 a year as well so that people are heartily indifferent which system they're on.

And so on - in five or ten years, we'd have a UBI system (or Negative Income Tax system) and nobody would have noticed. Most people wouldn't have a clue what all these things mean, so won't have a strong opinion if some obscure sections in some obscure social security acts are amended a bit every year.

Friday, 23 October 2020

Neal Hudson's one-to-ten ratio

Somebody asked me recently whether this ratio still holds.

The answer appears to be, yes, there is still a ratio but since 2005, it is closer to one-to-eight than one-to-ten. Maybe he was using different data sources? Maybe it's do with Help-to-Sell and all the similar subsidies that Labour introduced post-2008? See *UPDATE*. I used numbers from here and here. If anybody finds transaction numbers for a longer period, please send me the link.

The reason for this is simple. House builders know that if they build more homes, their selling prices would drop and costs would increase. They work on marginal revenue and marginal costs, which are much lower (or higher) than overall average revenue (or costs) and they stay at the narrow sweet spot which maximises marginal profit per unit i.e. by drip-feeding one new home for every seven existing homes that are bought and sold. So anybody who believes that handing out planning permissions like confetti would lead to more construction and lower prices is living in cloud cuckoo land, home builders will always stick to the one-to-eight profit maximising level.

OK, we can argue over cause and effect, but it's clear from the chart that the blue completions line lags (i.e. responds to) the red sales line by about a year. Homebuilders make their decision on how many units to start when sales are high, and this year's completions depend on last year's starts, in extreme situations (like 2008) they just leave things half-finished (or something like that).

This is quite unlike mass-produced goods where average costs go down by much more than selling prices if output is increased, so as far as a manufacturer is concerned, the more the merrier. In 2008, house prices fell by about a fifth and supply fell buy a half to maintain or at least maximise margins.

UPDATE I contacted him on Twitter @resi-analyst and he posted this chart showing a one-to-ten ratio and the impact of HTB:

Things that have irritated me this week

From The Conversation:

Soot, otherwise known as black carbon, is also made when burning dirty fuels, and emitted in large quantities from older cars.

Why use an actual word that everybody understands when a made-up phrase will do, eh?
You need three devices to activate an iPod Touch once you have wiped it and reset it to factory settings. The iPod Touch itself, a PC to log on to the website and requesting one-time codes, a mobile phone for receiving texts with the one-time code. You then enter these codes either back onto the website or onto the iPod Touch. This process is highly circular and took me nearly an hour.
From the BBC:

"They were swimming against the tide - but their whole lives were about swimming against the tide so they ploughed on.
From The Evening Standard:

John Leslie remembers vividly the moment his showbiz career ended and the life that he knew it changed forever; when he instantly went from lovable TV host to suspected rapist.

He and Fern Britton had spent the morning of October 23, 2002, treating ITV viewers to their usual blend of cookery, lifestyle features, and the tribulations of the celebrities of the day. But over on Channel 5, the host of The Wright Stuff Matthew Wright had blurted out Leslie’s name when discussing Ulrika Jonsson’s claim in her autobiography "Honest" that she had been raped.

What I can't find out one way or another is, did Ulrika confirm or deny that it was him or did she remain silent (which sort of implicates him)? Assuming she denied it, did Matthew Wright ever apologise? Did Matthew Wright ever explain why he thought she meant John Leslie? It's all well and good passing on unfounded rumours and tittle-tattle in a small group of colleagues or friends, but surely there's a rule against doing it on daytime TV? That's like hitting "reply all".

I know that this is not relevant to the recent case, but it was Matthew Wright's comment that sparked it all off, and I'd really like to know.

Tuesday, 20 October 2020

"A Saturated Gassy Argument"

I've been delving ever deeper into MMGW theories. Most of the common-or-garden ones are easily demolished*, their next line of argument is far more subtle and goes like this:

In the layers so high and thin that much of the heat radiation from lower down slips through, adding more greenhouse gas molecules means the layer will absorb more of the rays. So the place from which most of the heat energy finally leaves the Earth will shift to higher layers.

Those are colder layers, so they do not radiate heat as well. The planet as a whole is now taking in more energy than it radiates (which is in fact our current situation). As the higher levels radiate some of the excess downwards, all the lower levels down to the surface warm up. The imbalance must continue until the high levels get hot enough to radiate as much energy back out as the planet is receiving.

Fair enough, like most MMGW arguments it seems to stand up in isolation if you ignore the equal and opposite counter-arguments and evidence. But that claim does not square with the following statement:

In any event, modern measurements show that there is not nearly enough CO2 in the atmosphere to block most of the infrared radiation in the bands of the spectrum where the gas absorbs (1). That’s even the case for water vapor in places where the air is very dry. When night falls in a desert, the temperature can quickly drop from warm to freezing. Radiation from the surface escapes directly into space unless there are clouds to block it (2).

1) Either CO2 blocks a lot of infrared or it doesn't. You can't have it both ways. The clever diagrams show that CO2 blocks nearly all the outgoing infrared at 14 - 16 microns (terrestrial infrared goes from 4 to 100 microns). If that's not "most", I don't know what is. Then they cheerfully admit that "Radiation from the surface escapes directly to space unless there are clouds to block it".

2) Water vapour behaves in a similar fashion to CO2 as regards absorbing and re-emitting infrared (just at many more wavelengths). You cannot compare this with the effect of clouds i.e. actual water and ice droplets, which do indeed have a very strong blanket effect (cooling by day; warming by night; the overall effect is slight cooling). The acid test for all this would be to compare the rate of night time cooling where/when it's dry without clouds and times where/when it's moist without clouds.

Their maths is wrong as well:

In reality, that mere percent increase, when combined properly with the "thinning and cooling" argument, adds 4 Watts per square meter to the planets radiation balance for doubled CO2. That’s only about a percent of the solar energy absorbed by the Earth, but it’s a highly important percent to us! After all, a mere one percent change in the 280 Kelvin surface temperature of the Earth is 2.8 Kelvin (which is also 2.8 Celsius).

Nope. The "4 Watts" (often given at 3.7 Watts) was reverse engineered by assuming that the entire increase in temperature was down to increased CO2 levels over the same period, so can't be presented as evidence in support of the underlying assumption. Even if true, a one per cent increase in incoming radiation would lead to a one-quarter per cent increase in surface temperature = 0.7C.

* Such as:
(i) the IPCC energy budget diagram which does not add up or explain why the 'greenhouse effect' is negative during the day time;
(ii) claiming that the greenhouse effect adds 33C of warmth, ignoring the fact that this only applies at sea level and is entirely due to the gravito-thermal effect;
(iii) using Venus as an example of runaway global warming when its high surface temperature is also due to the extra gravito-thermal effect because its atmosphere is one-hundred times as massive as Earths;
(iv) glossing over Mars which has forty times as much CO2 per m2 but no greenhouse effect;
(v) pointing to experiments which show that CO2 warms up more than normal air under a bright light and saying it's because it traps infrared. Nope. This is because of its lower specific heat capacity - if you do the experiment with argon, it warms as much as the CO2; etc.

Monday, 19 October 2020

Daily Mash out-pedants itself

From The Daily Mash:

3am in the morning

‘AM’ means ‘in the morning’, cockwad. Saying them both is like asking ‘would you like some gravy meat sauce on that chop’ or ‘are you seriously smoking a cannabis drugs spliff before work?’ For f**k’s sake just choose one.

Agreed. But they overlook the next iteration:

Could you pop in your pin number for me?

Who else would I be doing it for? I’m the only person in the shop, my card is in the machine, I’m talking to you and only you. Save your breath.

It's not "PIN number". It's "PIN". The "N" in "PIN" stands for "number". That's the crime here, the rest of the sentence, while largely superfluous, is just general politeness and friendliness. In some places, they just point vaguely in the direction of the card reader.

Ah well, it is what it is, just saying etc.

"Money" again

From the comments to the previous post:

Graeme: I knew this from A level economics in the 1980s. Money is a medium of exchange (1), a unit of account (2) and a store of value (3). Depending on the transaction, one of these things is more important than the others. But the other functions still exist.

(1) and (2) are clearly true. That would apply to things with intrinsic value as well, gold in historic times or cigarettes in prison. "Money" has no intrinsic value (numbers on your bank statement or bank notes or shopping vouchers) but is still (3) a store of value, because it is a claim on something else. The fact that you can swap these for goods and services gives them value. If a shop sells vouchers, it has cash in the bank and an equal and opposite liability to provide goods in future. It does not make a profit by selling the vouchers (unless they lapse, in which case it's a win for the shop and a loss to whoever let them lapse) and the existence of those vouchers does not change the total amounts of goods available to consume now or in future.

Ralph Musgrave: But government/central bank created money (with which the above article started is very different). That is, what exactly does the BoE owe you in respect of your £10 notes? Nothing much!

The BoE is part of the government. When it's time to pay your tax, you could pay it in bank notes which the self-same government printed in the first place. Once you've paid your tax, they could throw all those bank notes on a bonfire. Basic Modern Monetary Theory. The same logic applies to numbers on bank statements, they appear out of nowhere (printing) and disappear into nothing (incinerating).

What's in it for the government and what gives those bank notes value?

You can see them as permission slips to earn money. If you want to earn £100,000 real money in the private economy, you need to acquire £40,000's worth of those permits by the end of the year to hand back as income tax. Even if you invoice only in foreign currencies and earn €110,000 or $120,000 or whatever, you will still need to get your hands on £40,000's worth of permits.

The government puts the permits into circulation by printing them (out of nowhere) and using them to pay public sector salaries, old age pensions, welfare etc (and increasingly, giving money to their mates for nothing in return). Businesses and workers have to get hold of those permits to pay their tax and they do this by providing a certain fraction of their output to public sector workers, pensioners etc in exchange for the permits. Those salaries and pensions transfer output from private businesses to public sector workers and pensioners, which is the whole idea.

If you yourself have more permits than you need to pay tax, you use them to buy goods and services from a business which needs more. The logic applies just as well to rationing vouchers. A non-smoker who wants to bake a cake swaps his tobacco vouchers with a smoker who doesn't need his full quota of eggs or flour. Or the non-smoker can sell them to a smoker and use the cash to buy something else that isn't rationed. The rationing vouchers have no intrinsic value and cost very little to create, but they still have value. Once used, they go on a bonfire.

Sunday, 18 October 2020

"Money and Cryptocurrencies"

From J W Mason's blog:

In the quantity view, “money” is something special. The legal monopoly of governments on printing currency is very important, because that is money in a way that other assets aren’t. Credit created by banks is something different. Digital currencies are a threat or opportunity, as the case may be, because they seem to also go in this exclusive “outside money” box.

But from the Minsky-Mehrling-Graeber point of view, there’s nothing special about outside money. It’s just another set of tokens for recording changes in the social ledger. What matters isn’t the way that changes are recorded, but the accounts themselves. From this perspective, “money” isn’t an asset, a thing, it is simply the arbitrary units in which ledgers are kept and contracts denominated.

The starting point, from this point of view, is a network of money payments and commitments. Some of these commitments structure real activity (I show up for work because I expect to receive a wage). Others are free-standing. (I pay you interest because I owe you a debt.) In either case money is simply a unit of account. I have made a promise to you, you have a made a promise to someone else; these promises are in some cases commitments to specific concrete activities (to show up for work and do what you’re told), but in other cases they are quantitative, measured as a certain quantity of “money.”

Good summary. It's what I've always said. Things like gold or the metal in coins have an intrinsic value, but they aren't "money" in the true sense. True "money" is just a measure of indebtedness. I go to work, my employer owes me my wages. For every hour I work, he owes me a bit more. This accrued debt is formally settled at the end of each month when the balance in his account goes down and the balance in mine goes up. If - coincidentally - I use the same bank as they do, then as regards the outside world, absolutely nothing has happened. It's just a ledger entry.

Thought experiment #1. I am free to agree with my employer that he will pay part of my salary in Tesco vouchers. In which case Tesco's bank balance goes up by the amount he paid for the vouchers. Those vouchers are "money" in the narrow sense (no intrinsic value). I can take them to Tesco and exchange them for food.

Tesco is now indebted to me - they owe me some food. The outstanding vouchers which I haven't used yet show up as liabilities on Tesco's balance sheet and are assets from my point of view, I tuck them into my wallet alongside a few fivers or tenners. Tesco and I are both heartily indifferent whether I pay for my shopping with their own vouchers or with fivers and tenners. If I don't use them this week, I'll use them next week instead.

Or instead of giving me vouchers, my employer could pay Tesco to deliver me certain staple food items each week (and cut the salary payment into my bank account). My employer's bank balance goes down and Tesco's goes up - they now owe me some food, exactly the same as if my employer gave me Tesco vouchers. Once delivered, that debt has been paid (in kind rather than in "money") and we are back to where we would have been.

Thought experiment #2. All bank balances and debts (including govermnent bonds) are simply cancelled, bank notes in circulation are declared invalid. Every adult is given a small amount of the new notes in cash and we all start again. A modified version of this actually happened in Germany in 1948, and it did them their economy the world of good. As unfair as it might seem, did the total real wealth of that country plummet or even change in 1948 (ignoring balances held or owed by foreigners)? Clearly not. One man's loss is another man's debt relief and it cancels out to zero.

It would be quite a different thing if the German government had confiscated all gold in the country and dumped it in the Marianas Trench. Gold has intrinsic value and Germany as a whole would have clearly been a lot poorer afterwards.

Friday, 16 October 2020

Well I thought it was funny

Timing wise, I think her left hand pigtail should have come up a fraction of a second earlier, at the same moment as her right hand pigtail, but hey.

"Hot!!" is the new "Skorchio!".