There's a mildly interesting article on the BBC about speeding up this whole getting on the aeroplane rigmarole:
The most common way of boarding passenger planes is among the least efficient, tests have shown. The best method has been the subject of study for years but now various approaches have been put to the test. Boarding those in window seats first followed by middle and aisle seats results in a 40% gain in efficiency.
However, an approach called the Steffen method, alternating rows in the window-middle-aisle strategy, nearly doubles boarding speed... He suggested boarding in alternate rows, window seats first, progressing from the rear forward: seats 12A, for example, followed by 10A, 8A and so on, then returning for 9A, 7A, 5A and so on, and then filling the middle and aisle seats in the same way...
The pair tested five different scenarios: "block" boarding in groups of rows from back to front, one by one from back to front, the "Wilma method", the Steffen method, and completely random boarding... The block approach fared worst, with the strict back-to-front approach not much better.
Interestingly, a completely random boarding - as practised by several low-cost airlines that have unallocated seating - fared much better, presumably because it randomly avoids space conflicts. But the Wilma method and the Steffen method were clear winners; while the block approach required nearly seven minutes to seat the passengers, the Steffen method took just over half that time.
According to the BBC the time (minutes:seconds) taken to fill the aircraft using the different methods were as follows:
"Block" boarding - 6:54
Back-to-front - 6:11
Random - 4:44
Wilma method - 4:13
Steffen method - 3:36
To cut a long story, they might as well not bother with these fancy methods and just let people get on at random. Even with the Steffen method, I'm sure it only takes one dickhead to sneak in ahead of his turn or for a couple of idiots to waste the stewardesses' time by asking whether it's their turn yet to completely negate the potential time saving.
Also, the article doesn't say whether they've worked out a way of getting people off the aeroplane and more quickly, which seems to take as long again.
Wednesday, 31 August 2011
There's a mildly interesting article on the BBC about speeding up this whole getting on the aeroplane rigmarole:
Either that or her torso is abnormally long. Picture taken from here.
... unless we would rather be treated more favourably, of course."
PS, it's not your religion, it's a headscarf. The park was not expecting you to down a cocktail and eat a slice of salami before you got on the ride.
Tuesday, 30 August 2011
Here's a fun game for two or more players (one to ask the questions, the others to answer) while whiling away the time at Mickey D's. If you turn over the paper placemats, they have a list of every item on the menu, with columns showing how much energy (in kcals), protein, fat, carbohydrate, salt etc (in grams) is in each. Printed in grey six-point type, of course, so it's not a game for the
faint hearted short sighted.
For example, choosing "Energy" as the category, the questions might be which option has more kcal's:
A. A portion of Flora or a portion of strawberry jam?
B. Sausage and egg McMuffin or Double Bacon & Egg McMuffin?
C. Ice cream cone with Flake or strawberry sundae?
Click and highlight to reveal answers:
A. Flora - 55 kcals; strawberry jam - 50.
B. Sausage and egg McMuffin - 420; Double Bacon & Egg McMuffin - 395.
C. Ice cream cone with Flake - 195; strawberry sundae - 300.
Bonus points to the first person to find a menu item which contains nuts, according to the relevant column in the "Allergen Information" section.
I present Jay Brittain, who must be about ten foot tall:
Mollyxxx mackes a particularly cack-handed attempt at playing The Poor Widow Bogey over at The Telegraph:
The £1million property tax is another stupid and desperate idea and it's time governments stopped trying to take money from something which has already been taxed via stamp duty... Many people who bought their property years ago (1) simply wanted a family home.(2)
It's not their fault property values have increased. Neither is it their fault if their areas have become more "sought after". These people may have little cash.(3)
The Lib Dems will therefore force them to sell up and downsize (paying all the taxes like Stamp Duty on the way). (4) They will lose out by being forced to sell up at this time (5) so their "Pension Pot" (6) will be diminished (7) and they will have to rely on State Handouts (8) - thus joining the "ghetto". (9)
1. If they bought their house "years ago" then the chances are that they only paid 1% Stamp Duty on a very small amount, and as Stamp Duty depresses the price paid, they got their money back at the time. To be fair, the current potential selling price of such houses is now depressed by the 5% SDLT that would be due, but that's still a very favourable effective tax rate on a capital gain of £1 million or more. (It seems more than fair to me to scrap SDLT entirely as a quid pro quo for introducing the Mansion Tax, but hey).
2. Aha! Here she says "They only wanted a family home" but later on she refers to it as a "Pension Pot". Can she make up her tiny mind?
3. It is their fault that house prices went up - it's exactly these people who voted to get rid of Schedule A tax and Domestic Rates, it's exactly these people who constantly voted to restrict new construction to a trickle. It certainly is their fault if they have "little cash", it's called "not saving up while you are working". And if they wanted, they could be sitting on a huge great pile of cash, so this sort of poverty is entirely self-inflicted.
4. The only "force" involved here is market forces. What such a tax would do is encourage Poor Widows In Mansions to do the economically rational thing and down size a bit to somewhere costing "only" a few hundred thousand, freeing up huge great piles of cash for them to really enjoy their last few years!
5. Aha! The sentence "They will lose out by being forced to sell up at this time" suggests to me that these people don't look at their home as a home but as an investment, and our clairvoyant Mollyxxx appears to assume that prices will rise again the near future.
6. What is it? Home or Pension Pot?
7. If the value of their house is a Pension Pot, isn't the general idea that when they retire they cash in and start drawing an annuity? Or in housing terms, sell up and downsize? Or is this a special kind of Pension Pot which requires no contributions to be made but gets the tax breaks nonetheless and which is to be left to 'the next generation'?
8. That's an outright f-ing lie. As things stand, a Poor Widow in a £1m house with no savings is entitled to all sorts of extra benefits (Pensions Credit, Council Tax Benefit). If she did the economically rational thing and traded down, she'd have £100,000s in the bank and wouldn't be entitled to any of these extra benefits. (The welfare system is just as Home-Owner-Ist as anything else).
9. Ah yes, that special ghetto, where houses or flats sell for a few hundred thousand pounds and all the residents have hundreds of thousands more in the bank. Sounds like Hell On Earth.
From The Metro:
The deadly bird flu virus could be returning this winter after reports of a new mutation of the disease in Eastern European countries, the UN has warned.
The bird flu virus has reached as far as Bulgaria and Romania, raising fears that it may spread farther across the continent and infectious disease experts at the UN’s Food and Agriculture Organisation (FAO) are also warning of a new mutation of the H5N1 virus. The mutation is able to get around vaccines currently in use, making it much more difficult to stop.
Jan Slingenbergh, senior officer in animal health services at FAO, said the disease had re-emerged in several countries where it was thought to have been eradicated. He said it could spread further into Europe in coming weeks when birds begin to migrate from Siberia and other parts of Asia.
‘It would appear to be an issue of growing importance,’ he said. 'There is of course the possibility that there will be secondary spread to the UK, but I don’t think this is an area of particular concern for the moment.’
In order, I can see "could", "reports of", "UN has warned", "raising fears", "may", "experts... are warning", "vaccines currently in use", "thought to have been", another "could", "would appear to be", "growing importance", "the possibility". Strip all those out and what is actually left of the article?
German authorities have revoked their permission to shoot Yvonne, the world-famous runaway cow who chose not to be turned into steak. Her pursuers say they will leave her in peace, for the time being, to roam the forest she now calls home. Such a happy ending is rare for Germany's animal celebrities...
The full article is well worth a read, good summary of all the related issues.
* I wasn't sure which definitive article to use. The magazine is called "Der Spiegel" ("Spiegel" is a masculine noun meaning "mirror") but you can't write "From Der Spiegel" because "From" requires the dative form and this would imply that "Spiegel" is a feminine noun. The dative to be used with a masculine noun is "dem" but "From Dem Spiegel" looks wrong, and "From The Spiegel" looks completely wrong. So I decided not to bother.
Monday, 29 August 2011
The results to last week's Fun Online Polls were as follows:
The idea that 'rising house prices make us richer' fuels the 'something-for-nothing' culture:
Agree - 83%
Disagree - 13%
Other, please specify - 5%
I think surely it must, our children are bombarded with images of 'celebrities' who are famous merely for being famous and some teachers say that their pupils tell them they don't need to learn anything because this is how they intend to make a living; all the house price porn we are bombarded with makes us think (in some cases correctly) that we can make more money by speculating in land than by going out to work etc.
What's just as poisonous is the greed of the political class - MPs awarding themselves outrageous expenses claims and quangista being given half-million pound payoffs when they are made redundant, this is exactly the sort of behaviour which makes people resent paying so much tax, because they know that at least a third of it is wasted or stolen. It's a pity that the media appears to be entirely uninterested in the forty per cent of government spending that goes to 'private' businesses, I'm sure that there are some real horrors there, the PFI stuff is but the tip of the iceberg.
This week's Fun Online Poll: how was the weather for you over the Bank Holiday weekend?
As background, we were very lucky yesterday, we had decided to go rowing (that's when people pay money to sit in a boat and shout at each other). It started drizzling slightly when it was time to go, and I said, sod it, let's just drive there, if it chucks it down we'll just sit in the car and have an ice cream instead. By the time we got there (ten minutes later), it was quite sunny again and we had the usual lovely time arguing about whether to say "right" or "starboard" etc. We duly ate our ice creams while wandering back to the car and it started raining again as we drove home.
Vote here or use the widget in the sidebar.
Sunday, 28 August 2011
Roger Helmer stepped up to the oche at ConservativeHome:
I was encouraged to see Eric Pickles’ robust rejection of the Lib Dems’ Mansion Tax in Saturday’s Telegraph, but rather surprised to see our own Tim Montgomerie, usually the soundest Conservative around, appearing to support the idea of such a tax... his big idea is a wealth tax, in the form of a mansion tax on homes over £1 million, and there I suspect that many Conservatives, and not just Eric Pickles, will disagree. Let me list just of the few reasons that led me to think “over my dead body”.
First, as a Conservative, the phrase “No new taxes” is burned into my DNA...
Correct. So let's take the opportunity to dump a load of stupid taxes - like Council Tax, SDLT, Inheritance Tax, Insurance Premium Tax and the TV licence fee - and replace them with the oldest tax there is, a tax on land values, or just harmonise the taxation of residential land and buildings with the taxation of commercial land and buildings (Business Rates).
Second, any attempt to soak the rich and to punish success cuts across Osborne’s laudable objective of making Britain an attractive place to invest and to do business. There is an excellent economic case for a flat tax, and part of the philosophy of the flat tax is to avoid itsy-bitsy targeted hits on small segments of society, in favour of a single, clear, simple tax rate that we can all understand -- with zero exceptions and allowances...
I completely agree that all taxes on income or profits or output - income tax, National Insurance, VAT and corporation tax - could and should be merged into a single flat tax on incomes with zero exceptions and allowances (with tax breaks for pension savings being the most expensive and damaging), at least that way people would realise what the real rate of tax is (somewhere in the region of 50%). Can he now explain how such a tax on incomes does not "soak the rich and punish success"?
But how about a flat tax on residential land values as well to replace the mish-mash of "itsy-bisty targeted hits" listed above? That's clear and simple and we can all understand it. That doesn't discourage people from making money in the slightest, it just directs spending from land values to more productive stuff.
Third, an impost on wealth and property comes very close to breaching the right to property, enshrined in various charters of rights. OK, we have Council Tax, but that is (at least in theory) a payment for services, not plain confiscation...
This is the nub of the matter, isn't it?
i. As things stand, most taxes are on wealth creation. i.e. incomes. 'Wealth' is just a by-product of wealth-creation, it's what is left over after taxes have been taken away. And notwithstanding that land or rental values might be a measure of the wealth of an economy as a whole, they are not in themselves 'wealth', they are just a measure of how much money is transferred from wealth-creators to land 'owners' . It's no different to a welfare saying that as he is entitled to £X,000 in benefits every year, the capitalised value of that is £[20 x X],000 and that he is therefore wealthy.
ii. People in their capacity as land 'owners' play little or no part in wealth creation. The fact that most people who consider themselves land 'owners' also happen to have a job, run a business etc is a separate issue, they'd still be doing those jobs or running those businesses if they were tenants.
iii. The eternal conflation of 'land values' with 'property' is infuriating as well. Why is somebody's income not considered his 'property'? Sure, the politicians get away with justifying income tax using the 'ability to pay' argument, but your income is your property nonetheless.
iv. Worse than that, each £1 tax raised from wealth creation has dead weight costs; however efficiently the government spends or redistributes it (and they don't), society as a whole ends up £2 poorer, and the potential income of land 'owners' falls by £2. If they collected that £1 from land rental values instead, there'd be no dead weight costs and land 'owners' (collectively) would end up £1 better off (it's that a slightly different group of people would be occupying the land, i.e. those willing and able to pay for the nicest bits).
v. The final insult is that the Home-Owner-Ists decry Land Value Tax (or Mansion Tax, or Domestic Rates or Council Tax or whatever you want to call it) as "an attack on wealth" while simultaneously wailing about "ability to pay". The fact that some people don't have enough money to pay the Council Tax (or whatever) is surely a sign that these people do not have any true 'wealth' at all, isn't it?
vi. Think about it: who is wealthier, a Poor Widow In A Mansion or a high-earning household in the mansion next door? If the proverbial Poor Widow In A Mansion were asked to pay the same amount in tax as the high-earning household, who is more able to pay it - the PWIAM or the truly wealthy household? So it's not really a tax on wealth at all is it, or else the "ability to pay" argument falls flat on its face.
vii. His comment about Council Tax being payment for services is laughable, Council Tax raises far less than the cost of all the services people receive, most of which are local, and certainly a lot less than the value of services which a home-owner receives, or else land values would be negligible. And income tax etc. is a 'payment for services' as well, isn't it? It's just that it is used to pay for services which benefit just about everybody but the payer.
I updated my currency basket this weekend, it's seems pretty clear to me that CHF is well into 'silly' territory. Yes, Switzerland may have a relatively well-run banking system and so on, but it has a population of only 7.6 million, why do all these international investors who've done the "flight to safety" imagine that the whole world can use a currency with such a small base? It's like all the passengers from a sinking ship jumping into the same lifeboat and hoping that it will stay afloat.
The first chart shows from 1990 onwards, the second chart shows from 2008 onwards, as you can see, there was quite pull back a week or two ago:
Saturday, 27 August 2011
The three-bed semi detached houses advertised for sale in Yorkshire shown below are phsyically very similar, the rebuild cost of the most expensive one advertised is probably only about £50,000 more than the rebuild cost of the cheapest one. I've linked them through to the actual advert at Rightmove, in case any of them takes your fancy.
So I think it's safe to say - whether you're a Home-Owner-Ist or a Georgist - that the huge differences in price are dictated by location (mainly the local jobs market; but also whether it's a 'nice neighbourhood' and how nice the views are); the size of the plot; and an element of scarcity value (which is to a large extent proportional to plot-size). Absolute prices are all influenced by the availability of credit so we can ignore that as a factor for the purposes of this exercise.
Three-bed semi, Doncaster, £87,000:Three-bed semi, Leeds, £150,000: Three-bed semi, York, £200,000: Three-bed semi, Harrogate, £250,000:Three-bed semi, Leeds, £285,000:Three-bed semi, Guisborough nr. Middlesbrough, £325,000: Three-bed semi, Horsforth nr. Leeds, £410,000:
At The Guardian's series How to talk to a climate sceptic they have an 'interactive' bit which allows you to click though to this:
The greenhouse effect is one of the main factors determining the temperature of a planet. It's the phenomenon by which certain gases – so-called greenhouse gases – in the atmosphere trap heat that would otherwise escape to space, thereby keeping the planet warm.
The greenhouse effect is not a man-made phenomenon. The Earth's atmosphere has always contained greenhouse gases, such as CO2, and they have always caused warming. If there was no greenhouse effect, the planet would be uninhabitably cold – more than 30C colder than the hospitable current average of 15C.
I like the use of the expression "one of the main factors". I refer once again to the fine article by Pa Annoyed at Counting Cats which explains it all properly, to summarise:
1. Greenhouses themselves do not work by 'trapping infra red', they just prevent warm air inside the greenhouse being blown away.
2. The main influence on global temperatures is the Sun (the other is good old fashioned clouds made of water droplets). If the Earth had no atmosphere at all, we would indeed expect the average surface temperature to be -24C.
3. The main reason why surface temperatures are much higher that this is because we have an atmosphere and gravity, which produce pressure. Gravity pulls down all the atoms and molecules in the atmosphere on top of each other and so pressure at sea level is much higher than at the top of a mountain.
4. Remember Charles' Law, if you put a gas under pressure, it will warm up. So surface temperatures are thirty-to-forty degrees warmer than expected, and up at ten kilometres altitude, the temperature is thirty-to-forty degrees cooler than expected because that air is de-pressurised (so to speak) and this cools it.
5. Overall, the average temperature of the atmosphere averages out to the expected average surface temperature of -24C. The true 'surface' of the Earth is not ground level, it's somewhere 4 km up.
6. The author reckons that massively increasing the amount of CO2 in the atmosphere will increase surface temperatures a bit (doubling CO2 -> increase of 1C) because CO2 is heavier than oxygen or nitrogen and so increases pressure at ground level, but it won't increase the average temperature of the atmosphere, hence there won't be any runaway anything.
Friday, 26 August 2011
Compiled by General Congreve:
Denis Cooper has summarised something rather complicated. It's still rather long but worth a read, the sting is in the tail:
On March 25th EU leaders agreed on a radical amendment to the EU treaties through European Council Decision 2011/199/EU. Over the past five months the UK media have hardly even mentioned that this treaty change has already been agreed, let alone discussed its potential implications. The nature of the amendment is that of a licence which the 27 EU member states as a whole would grant to a class of EU member states, the (now) 17 EU member states in the eurozone.
The fact that it is considered necessary to change the EU treaties so that henceforth the "The Member States whose currency is the euro may establish a stability mechanism ..." confirms that the stability mechanism they have already established, the European Financial Stability Facility or EFSF lacks any legal base in the present EU treaties.
And bearing in mind that Christine Lagarde, then French Finance Minister and now head of the IMF, described the actions of EU political leaders on May 9th 2010 as "major transgressions" of the present EU treaties, which are "very straightforward - no bailing out", clearly a treaty change to legitimise similar actions in the future must be seen as a major treaty change which should be the subject of significant public debate across the EU, including in the UK. The eurozone states are already proceeding to make use of their new licence, even before it has come into force, through a Treaty establishing the European Stability Mechanism which they signed on July 11th.
While few people in the UK have noticed this development it has attracted the critical attention of the economist and commentator Dr Oliver Marc Hartwich, a German and a former Londoner now resident in Australia. In a Business Spectator article entitled A poisoned chalice of EU power he writes scathingly:
“The ongoing assault on the basic rules of liberal democracy has been the defining feature of the euro crisis. The treaty to establish the new European Stability Mechanism is the best example of this fundamentally undemocratic approach … it may be European but legally it stands outside the EU. This means that the EU can formally keep its commitment to the Lisbon Treaty’s ‘no bail-out clause’ though the ESM will provide just that …
"If the ESM has thus turned parliaments into mere cash machines, will it at least be transparent and accountable? Provisions about legal privileges granted to the ESM suggest otherwise … European governments do not have the slightest interest in a thorough debate about the introduction of the ESM. They cannot risk the public understanding what this ESM treaty really is: an enabling act that undermines budget rights of parliaments; a coup d’état of the continent’s political leadership against their peoples; and the most costly piece of legislation ever put before European lawmakers. It would be crazy to explain to ordinary Europeans what their political leaders have conspired to introduce. And so they don’t."
From a British point of view, it is crucial to understand that because intra-eurozone treaties such as this would be allowed by the EU treaties as amended by Decision 2011/199/EU, but would legally stand outside the EU, it should not be assumed that integrationist measures such as "eurobonds" or a "fiscal union" or a "transfer union" would require any further changes to the EU treaties, provided that such measures were confined to the eurozone and ostensibly at least would not apply to the rest of the EU.
Therefore if anybody is fondly hoping that the need for further EU treaty changes would give the UK government a splendid opportunity to extract concessions and repatriate powers in exchange for its agreement, they would be sorely disappointed. Just as the UK is not a party to this first intra-eurozone treaty so it would not be a party to subsequent intra-eurozone treaties – unless and until the UK joined the euro - and therefore the UK government would have no veto to exercise over changes to those intra-eurozone treaties, and so no leverage for extracting concessions from the EU, even if it was disposed to do so.
All this depends on the eurozone states being granted their licence by the final ratification of the EU treaty amendment embodied in European Council Decision 2011/199/EU, and in the case of the UK that will require parliamentary approval through an Act. Is it too much to ask that our MPs will stop and think hard about the long term implications of giving their approval of that Decision, rather than just nodding it through?
From an article in yesterday's Evening Standard about flat-sharing in London:
Oliver Nice, 26, who works in film as a director of photography, has been looking for a five-person flatshare for almost two months. He said: "It has been ridiculously difficult. Properties would go off the market before you had a chance to look round. A couple of times we were shown round different properties. I'm going to be living with my girlfriend and three friends in a four-bed house in Stoke Newington. I own a one-bed flat in Ealing but I can't afford to live there because of the mortgage.
The article appears to be based on a press release by easyroommate, who have their own spin to put on it; they claim that "London has a flat sharing population of of nearly 653,000" which is nearly a tenth of the population of London (which might or might not be true).
From This Is Money (the Daily Mail's finance spin-off):
A quarter of all mortgaged homeowners find it almost impossible to move house or take out a new deal. Figures from trade body the Council of Mortgage Lenders (CML) show that more than one in twelve borrowers — some 827,000 — are in negative equity, i.e. meaning they owe more on their mortgage than their house is worth. Yet a further 1.7 million, roughly 17 pc of mortgage holders, have less than 10 pc equity in their properties, according to Money Mail research.
Many of these people took out mortgages with just a small deposit before the credit crunch, and are now trapped because their house price has fallen. Henry Pryor, an independent estate agent, says: ‘These people are prisoners in their own home and may be stuck on an expensive mortgage deal.’
Why do they insist on referring to such people as 'homeowners'? These people don't own homes at all, do they? They are more or less
slaves indentured servants of the banks, who own them and their houses. So much for social mobility.
Thursday, 25 August 2011
Responding to the rhetorical question Why isn't land reform up for debate?...
Becky: Because idiots like you (1) would lead the debate who clearly have no idea about modern agriculture (2) - you just like quoting from some book you have read which is mostly about aristocratic land owners. (3)
There is no indication that you understand that the world is not simple and the context of land ownership differs massively from place to place in the country. (4) Any taxation would likely not be of income possible from the land (5) but from amount of square feet owned.(6) So someone owning 50 houses in Chelsea would probably be punished equally harshly as a sheep farmer owning 200 acres in the Scottish Highlands. (7)
There is no real way of differentiating land value (8) and treating people fairly.(9)
1) Starting off with an insult is a risky strategy; it's usually far better to show that you know what you are talking about and the other person doesn't, then allow readers to draw their own conclusions. As Becky illustrates, trying the second approach can backfire badly as well.
2) I know little about the practicalities of farming, but looking up rental values for farmland is quite simple, and farming is subject to the same laws of economics as everything else. And I don't see the relevance anyway - is detailed knowledge of every single different industry or job a pre-requisite for the design of the corporation tax or income tax systems?
3) Which book? Have all land value taxers only ever read one book between them? In any event I haven't read that particular one.
4) This whole sentence is meaningless.
5) Well, that's exactly what proper LVT is, it's a tax on the achievable rental income from that land...
6) ... expressed as a tax/sq yard or tax/acre and multiplied by the size of each plot, obviously.
7) A bit of quick Googling tells us that the rental value of the cheapest houses in Chelsea is about £3,000 a month (don't ask what the most expensive ones cost!) and the rental value of one acre of agricultural land in the Scottish Highlands is about £25. So the rental value of 50 houses in Chelsea is at least £1.8 million a year and of 200 acres of Scottish Highlands is about £5,000. So she's out by a factor of hundreds, there is just no comparison.*
8) It's easy working out what the rental value of each particular bit of land is, you just compile statistics of rents and selling prices for different types of land in each area (i.e. with or without planning permission), knock off a bit for the improvements element, do a bit of interpolating and Bob's your uncle.
9) As to 'fair', most people's view is that the only fair tax is one which everybody else is paying, so by reverse logic, the fairest tax is one where everybody has to pay something.
* In any event, there's another way of guesstimating how much tax owners of agricultural land in any area would pay, and that is to tot up all the council tax, income tax (on farming or rental income), PAYE, irrecoverable VAT etc they pay under current rules, minus off agricultural subsidies and that's your net target figure, assuming we scrap all the existing taxes and subsidies (it's probably not a very big net amount) which you divide by the number of acres in each area.
So the tax would be between £5 and £40 per acre (depending where and what type the land is). Or even better, the tax would be levied on the higher of:
a) The rental value of the dwelling house(s) (ignoring the land completely), and
b) a lower rate per acre applied to total acreage (ignoring the house(s) completely)
That way we don't need to worry about distinguishing between people with big gardens; hobby farmers; self-sufficient people; proper commercial farmers etc.
From the BBC 14 February 2011:
The number of admissions to hospital in the UK because of problem drinking could rise to 1.5 million a year by 2015, a charity says. Alcohol Concern estimates that it will cost the NHS £3.7bn annually if nothing is done to stop the increase... The charity says the number of people being treated in hospital for alcohol misuse has gone from 500,000 in 2002-3 to 1.1 million in 2009-10.
From The Metro 25 August 2011
The number of people treated in hospital every day for drink-related illnesses has risen by nearly half in just five years. In total, there were 1.1million admissions in England in 2009/10 – a rise of 879 a day, new research reveals... Prof Ian Gilmore, chairman of Alcohol Health Alliance UK, told Metro the figures showed the softly-softly policy of working with the drinks industry to combat alcohol abuse was not working.
So all we can glean from all this is that Alcohol Concern have been relegated and the Lib-Cons favoured fakecharity seems to be Alcohol Health Alliance UK* with PIG in charge. You'll note that the first article ends with a quote agreeing that 'something must be done' from an unnamed 'spokesperson for the Department of Health' but the second article ends with such a quote from an actual named 'Health Minister'.
* AHAUK is a super-fakecharity, the full list of its member fakecharities is here
UPDATE: Via Velvet Glove, how they manipulate and exaggerate the number of 'alcohol-related admissions' is explained here.
Wednesday, 24 August 2011
Ah... the eternal joys of dyslexia.
From The Evening Standard:
In spring Chancellor George Osborne announced the £500 million rescue package giving buyers a loan to cover 20 per cent of their property.
The buyers - who must have a joint household income of no more than £72,000 - then have to find a minimum four per cent deposit, and can fund the remaining 76 per cent of the cost with a conventional mortgage. Deposit loans are interest free for five years and can be repaid when the property is sold.
Lucian Cook, director of research at Savills, said that lenders are punishing First Steps buyers with interest rates of about five per cent because of the initial loan they are taking out to help pay their deposits. A typical rate at the moment is 3.75 per cent but most lenders will have regard to the fact that there is some sort of equity loan in place and ask for a higher rate," he explained.
With all this economics stuff, you have to know what the starting figure is for a calculation. In the case of housing, The Maypole around which prices dance is rental values (which are very stable in the short or medium term), and we know from observation that there is an equilibrium between rents and monthly mortgage repayments (if one is much cheaper than the other, people will choose the cheaper option, and so the two will come back into line).
Therefore, initial monthly mortgage repayments can also be assumed to be very stable in the short term; if the rent for a home is £1,000 a month, then the initial mortgage repayments will also be in the region of £1,000 a month; but what happens if the lender knows that the purchaser is not paying interest on 21% of the loan (20/96)?
On the face of it, the purchaser's mortgage repayments for that flat would drop to £790 a month. Two things can happen: the vendor hikes the selling price to soak up the £210 x 12 months x 5 years interest saving; or the lender hikes the interest rate on the non-interest free part of the loan, which is what is being observed here. In other words, the buyer is indifferent between
a) a £96,000 mortgage @ 3.75% = £3,600 interest every year (there's no way they'd get such a low interest rate on such a high LTV mortgage, of course, they'd more likely be paying 5% or 6%)) and
b) a combination of £20,000 interest free and a £76,000 mortgage @ 4.74% = £3,600 interest every year.
Just sayin', is all.
Ross sticks his head above the parapet and suggests that Poor Widows In Mansions would be doing themselves a huge favour if they traded down, as this would free up a lot of cash for cat food, and suggests that the Mansion Tax might be just the thing to nudge them into doing themselves such a favour.
The first Poor Widow Bogey is played within minutes, "But it's her house, where she and her husband raised their family. She's lived there 40-odd years. She's paid for it. Why should she move?", which Ross parries rather deftly.
Tolkein then ups the ante: "There's also the likelihood that the move will kill her. Uprooting at 75 will be traumatic in a way it won't be for someone in their 30s." Wow, that settles the matter then, doesn't it: "We can't have a Mansion Tax because it would be a death sentence for tens of thousands of Poor Widows In Mansions."
Crikey, nobody is suggesting that little old ladies be forced to schlepp all their heavy furniture themselves, there is such a thing as "removal companies", you know, and to minimise stress, maybe the rest of the family can put her up for a week while the actual move takes place, then all they have to do is drop her off at her new place, which need be no more than a few hundred yards from her old one, or a lot closer to whichever of her adult children cares most about her, eh? That sounds a lot less stressful than e.g. going into hospital, doesn't it?
Finally, we get this: "Why should she have to move? Her quality of life could go down, as well as up!" Let's try reverse logic, using Ross' own figures:
a) If your Elderly Relative owned a house worth £300,000 and had £500,000 in the bank, would you advise them to use every penny to trade up to an £800,000 house?
b) If you really feared that a move would kill your Elderly Relative, or that no amount of hundreds of thousands in the bank would enable them to improve their quality of life, is it too much to ask the potential heirs to pay the tax for her?
From The Telegraph:
For all the Government’s talk of austerity, something seems to be going slightly wrong. On Monday, The Daily Telegraph revealed that two thirds of council executives received pay rises last year, and yesterday, it was reported that the Coalition is generally failing to gain control of public sector pay, with automatic pay rises still the norm.
Aside from the envy such news provokes in the private sector, this news is hugely important – and hugely dispiriting. With salaries making up almost 80 per cent of budgets, the cuts that the Government needs to make to reduce the deficit will simply not be possible without radical pay reform.
The article is well worth a read, but the author makes the usual deliberate Tory schoolboy error: "with salaries making up almost 80 per cent of budgets".
I'm not sure what budgets he's talking about but public sector salaries and pensions add up to less than a third of all government spending, i.e. total spending = about £700 billion; there are 7 million people officially on the public sector payroll x average salary £25,000 = £175 billion plus a bit for pensions. So if they think they can eliminate the deficit of about £140 billion by reducing spending on public sector salaries, they would have to reduce it by eighty per cent.
They'd save a lot of time if they had a closer peek at the £280 billion a year which the government pays to private businesses for the provision of this, that and the other. But that doesn't fit in with the Tory class warfare narrative, does it, whereby all public sector employees are leeches (no more than half of them are leeches) and privately owned businesses are the holy of holies (even though most of those with their snouts in the public trough are the most corrupt and wasteful of all)?
Tuesday, 23 August 2011
The highlight of an excellent article about Yvonne the runaway cow in today's Metro is this:
The latest sighting of the 700kg beast seems to confirm reports she now thinks of herself not as a dairy cow but instead as a deer. An expert from the Aiderbichl animal sanctuary in Yvonne’s native Austria laid eyes on the creature in the dead of night as he staked out his prey in a heavily camouflaged observation post dug deep into the undergrowth.
‘She stared at me – it was the look of a wild animal and not a dairy cow,’ he said.
I'm happy to accept that she has reverted to her natural way of life, which is pretty similar to that of a deer, but isn't that expert indulging in anthropomorphism of the very worst sort?
PS The e-reader version of the article has more pictures including one of Yvonne herself. I'm a bit miffed though that the Metro relegated this from the main 'news' section of the physical/e-reader version of the newspaper to their 'weird' section on their website.
Monday, 22 August 2011
From the comments at Behind Blue Eyes:
Radders: You’ve heard of the phenomenon by which when, say, one group of apes discovers how to use a tool in a novel way, populations of apes quite distant and disconnected also start to use tools in this way; it’s got a name I can’t recall. Anyhow, the Interweb’s a bit like that – it’s articulating the thought that matters, not how many people read it. The effect an internet post has is not directly correlated with the number of readers. Keep posting.
Have other people heard of this phenomenon?* Is there actually a name for it? Whether it can plausibly exist or not is a separate topic (just because it can't be proven that something does or doesn't exist doesn't mean there isn't a word for it).
* Or, do other people think they've heard of this idea, even if they haven't.
Number One out of four million.
From The Daily Mail:
Prince Charles has used charities he set up to lobby Ministers to get them to change their policies, it was revealed today...
Documents reveal the Prince's charity Business in the Community asked Vince Cable to reverse his decision to get rid of the Northwest Regional Development Agency. The quango has funded Business in the Community's work with disadvantaged secondary schools.
Grant Shapps, the Local Government Minister, received a letter from the Prince's Regeneration Trust calling for a cut in VAT on restoring historic buildings... Just three months later the department awarded the group an £800,000 grant. They deny that the two were linked.
On a very good turnout of 132 votes, thanks to everybody who took part, we conclude that:
Does "rap culture" glorify crime and violence?
Yes - 84%
Yes, but this doesn't affect people's behaviour - 12%
No - 2%
Other, please specify - 2%
So that's one of the 'right wing' explanations for the recent looting sprees dealt with, IMHO it does do so and did contribute, in however small a way.
Let's now look a bit closer to home (sic) and ask what other factors might create the 'something-for-nothing' culture. The way the welfare system is designed also has a corrosive effect, which I have covered many a time, so let's skip that one. This is not to say that welfare payments are inherently 'bad'; a system of universal welfare payments, like Child Benefit (not Child Tax Credits!), the basic state pension and something similar for working age people would almost certainly be 'good'.
But what about the Home-Owner-Ist propaganda, that we can all become rich merely by 'buying' a house (with a crippling mortgage, in many cases) and watching house prices rise? This is one-sided economics at its worst, because it ignores the fact that the real value of those houses hasn't increased by one penny, and that this generation's higher selling prices is the next generation's additional debt burden, but hey.
So that's this week's Fun Online Poll: does this fuel the 'something-for-nothing' culture?
Vote here or use the widget in the side bar.
There's the usual outpouring of gibberish (both left- and right-wing) in the comments to the Daily Mail article about the Mansion Tax, but this one (currently fifth-worst rated, unsurprisingly enough) makes perfect sense to me:
By my calculations, from speaking to work mates we all pay approximately 1% of our property values annually in council tax ie £2,000 on a £200,000 house, this formula obviously only works until you reach the top band of council tax and from then on you no longer pay the proportional 1% rate and the percentage decreases as the house value increases.
My view is the 1% rate should extend to all properties as the wealthy can't use accountants to hide houses and everyone gets to pay the same rate (don't want to hear any nonsense about widowed poor old ladies living in ten million pound houses). Dan, Petersfield, 20/8/2011 11:57
And that extra 1% on higher values homes would raise enough money to get rid of the stupid taxes on land & buildings (Stamp Duty Land Tax, Inheritance Tax, capital gains tax, all of which happen to be Jealousy Surcharges) as well as a stupid Poll Tax (the TV licence fee). I really, genuinely don't understand why people have a problem with the idea.
From Investments & Pensions Europe:
UK banks are reporting pension liabilities that in some cases exceed the institutions' total market capitalisation, with three of Britain's largest banks significantly worse off than mainland European rivals, a study by Citibank has found.
Examining FTSE 100 companies at the end of last December, the study noted that former public companies reported the highest pension liabilities when viewed as a percentage of the market cap, with British Airways and telecommunications provider BT cited as examples.
These businesses have a large positive value. From this value we deduct the amount of their liabilities to arrive at their market capitalisation (plus/minus the usual fluctuations in share prices). There is no need to compare this net value of the shares in a business with any specific category of liabilities, such as pension fund liablities, because those liabilities are already taken into account when working out the value of the shares.
To use a crude analogy: husband has take-home pay of £1,000 and his wife makes him hand over £600 of it for housekeeping. It would be misleading to say that her income exceeds his and hence that it is impossible for him to pay her £600 out of his £400 take home pay - they have a joint income of £1,000 and how they split it is up to them.
So instead of saying that BT has a market cap of £1 and net pension liabilities of £2, it is more accurate to say that BT has an 'enterprise value' of £3; £1 of which belongs to shareholders and £2 of which belongs to its pension funds.
It's almost reassuring to see the same old idiots plough on with the same old lies, despite these having been debunked countless times. I bet Alcohol Concern and "researchers from Sheffield University" must be feeling a bit left out, as they weren't invited to provide rent-a-quotes.
From The Daily Mail:
The cost of treating people with liver disease, usually caused by excessive drinking, is expected to soar by 50 per cent in four years. A leaked Government report says the bill will reach £2.1billion – 2 per cent of the entire NHS budget. (1) Yet the stunning figure is only the tip of the iceberg, as it does not include alcohol-related cancer, accidents and injuries from violence...
The final bit of the article is textbook fakecharity:
Alcohol consumption in this country has soared over the past 30 years, (2) and more than 10million people regularly drink beyond safe levels. Last night a Department of Health spokesman said: "We have been working with partners to develop a Liver Strategy which we aim to publish later this year. The Government is also taking action to encourage responsible drinking and responsible alcohol sales, and will publish a new alcohol strategy soon." (3)
1) As against alcohol duty revenues which are forecast to reach £11.7 bn by 2015-16, to which you can add about £6 bn VAT.
2) That's a complete and utter f-ing lie, of course.
3) Who are these 'partners'? Would that be the people whom the government paid to ask the government to do what it intended to do in the first place? Like I say, this is textbook stuff.
Sunday, 21 August 2011
Apologies for being so slow with the July round-up, I thought I'd better get it done before it's time for the August round-up!
Switzerland 1 July 2011: Pech für eine Kuh, die nichtsahnend an einem Strassenrand bei Appenzell graste. Weil ein freiwilliger Militärfahrer niesen musste, verlor er die Kontrolle über seinen Geländewagen und krachte in das unglückliche Tier.
The volunteer driver of a military vehicle had to sneeze, temporarily lost control and ran over a cow at the road. The cow was so badly injured that it had to be put down.
Switzerland 5 July 2011: Ein acht Monate alter Muni hat am Montag im bündnerischen Thusis die Polizei, die Wildhut und Passanten in Atem gehalten. Das Stierkalb spürte auf dem Weg zum Schlachthof wohl den baldigen Tod und büxte aus. Überlebt hat es die Flucht nicht.
An eight month old bull managed to escape on the way to the slaughterhouse and wreaked a trail of havoc, attacking several people along the way and playing hide and seek with the police for hours before a huntsman could shoot him. His owner was charged with negligence. This article has a splendid picture of what a door looks like after a young bull has used it as an escape route:--------------------------------
Switzerland 7 July 2011: Auf dem Weg zum Metzger ist am Donnerstagmorgen in Toffen ein Stier ausgerissen. Das Tier flüchtete durch das Dorf und musste schliesslich von einer Patrouille der Kantonspolizei Bern erschossen werden.
Another bull escaped while being taken to the slaughterhouse. He ran through a nearby china shop, which was unoccupied and so he only caused damage to property (it was a 'workshop' actually, but china shop would have been funnier). The police were called out and when they managed to track him down they decided to shoot him for safety reasons.
Upper Austria 9 July 2011: Ein Altbauer wurde am Samstag in Steyregg (Bezirk Urfahr Umgebung) im Stall seiner Nachbarin von einem Stier attackiert und verletzt. Mit Verletzungen im Brust- und Kopfbereich musste der 63-Jährige ins UKH Linz gebracht werden.
A 63-year old retired farmer was helping out a neighbour catch a bull which had broken out. The bull crushed him against a wall and he had to be taken to hospital with chest and head injuries. The bull was finally caught again after several other people came to assist.
Lower Austria 14 July 2011: 78 Blitze haben sich in der Nacht entladen, einer mit verheerenden Folgen: In Hofstetten-Grünau (Bezirk St. Pölten) schlug ein Blitz in einen Bauernhof ein. Der Stall stand in Vollbrand. Zahlreiche Tiere verendeten.
Just to remind us whose side He is on, a barn was struck by lightning and twelve bulls, two cows and three calves were burned to death.
Lower Austria 15 July 2011: In der Nacht auf Freitag sind bei einem Bauernhofbrand in Gföhl (Bezirk Krems) sechs Schweine und acht Rinder verbrannt, die Besitzer wurden verletzt. Glimpflicher endete ein Stallbrand in St. Christophen (Bezirk St. Pölten).
Another barn struck by lightning. Eight head of cattle died.
Burgenland 19 July 2011: Ein 40-jähriger Landwirt ist am Montag in Deutsch Ehrensdorf (Bezirk Güssing) von einer störrischen Kuh gegen einen Pflegestand gedrückt worden. Der Mann wurde schwer verletzt.
A 40-year old farmer wanted to tie up a cow in the stall to be able to clean her hooves. The cow was in a bad mood and crushed him against a 'Pflegestand' (whatever that is). He suffered heavy head and eye injuries and was taken to hospital by helicopter.
Carinthia 22 July 2011: Eine 69-jährige Pensionistin aus Eberndorf wurde Freitagvormittag von einer Kuh zu Boden gestoßen. Die Frau erlitt bei der Attacke ein Schädel-Hirn-Trauma, eine Platzwunde und einen Schock.
A semi-retired farmer's wife was knocked over by a cow and suffered head injuries and shock. One of the commentrs points out that this is hardly headline news. Maybe it ain't, but you have to see the bigger picture...
Upper Austria 29 July 2011: Rabiat wurde eine Kuh nach der Klauenpflege auf einem Bauernhof in Feldkirchen bei Mattighofen. Das Tier drückte einen Landwirt (61) an die Wand des Stalls und verletzte ihn an der Wirbelsäule.
A 61-year old farmer was tending to a cow's hooves when it crushed him against the wall and injured his back. The retired farmer was taken to hospital by helicopter.
Lower Austria 26 July 2011: Von einem Jungrind ist am Sonntag eine 49-jährige Waldviertler Bäuerin schwer verletzt worden. Die Frau aus Raabs an der Thaya war gemeinsam mit ihrem Mann im Stall, um Reinigungsarbeiten durchzuführen.
A 49-year old farmer's wife was cleaning out the stall with her husband. A calf kicked her against the wall. She suffered head injuries and was taken to hospital by helicopter.
Salzburg 29 July 2011: Eine aggressive Kuh ging am Freitag in Filzmoos (Pongau) auf drei Urlauber los. Alle drei wurden verletzt ins Krankenhaus eingeliefert...
A taxi-driver picked up a German tourist couple, aged 79 and 80 who were sitting badly injured on a bench and took them to the nearest doctor. Because of their heavy injuries, the doctor arranged for them to be taken to hospital by ambulance. Later that day, a 53-year old German also had to be taken to hospital. The cow involved in both attacks was identified and taken away from the common grazing land.
Baden-Württemberg 29 July 2011: Ein Landwirt wollte am Mittwoch um 17.35 Uhr eine Kuh vom Stall in einen Freilaufbereich treiben und verletzte sich dabei. Da die Kuh dem Landwirt entgegenkam, wollte dieser ausweichen. Er stürzte und kam zwischen dem Stall und Freilaufbereich an einem Geländer zu Fall.
This one's weird. Somehow or other a farmer managed to fall off a walkway of sorts, the cow promptly jumped on top of him and injured his legs. The fire brigade had to cut away part of the walkway to free them.
Hesse 30 July 2011: Ein Autofahrer war auf die beiden frei laufenden Rotbunten auf der Bundesstraße 252 bei Gashol aufmerksam geworden und hatte gleich darauf die Polizei informiert. Die Beamten ermittelten zwar schnell den Halter der Tiere, diesem gelang es aber bis zum Abend nicht, die Kühe einzufangen.
Inspired by Yvonne, two further cows have done a bunk. Car drivers reported seeing them and their owner was informed but they have not yet been caught.
Salzburg 31 July 2011: In Hinterglemm im Salzburger Pinzgau ist eine 51-jährige Frau von einer Kuh angegriffen und schwer verletzt worden. Die Einheimische war durch ein Weidegebiet gegangen, als sie plötzlich von dem Muttertier attackiert wurde.
A 51-year old rambler was attacked by a mother cow on a mountain path and suffered heavy chest and back injuries. She was taken to hospital by helicopter.
SJ emailed me a link to an article in The Economist. The author outlines some of the advantages of collecting taxes from land rental values rather than incomes, and muses on the respective advantages of the 50p top tax rate and a Mansion Tax but then can't resist playing The Poor Widow Bogey:
... to be convinced by a mansion tax, I confess I would like to see fairness taken into account, as well as efficiency. And for that matter, not just fairness but humanity, which is not the same thing... Britain is home to a fair number of people sitting on a million quid's worth of wealth simply because they were adults in, say, 1965, and bought a house for, say, £15,000. It is also quite possible to make the case that such paper riches amount to a massive transfer of wealth from younger generations to their parents... (1)
But leaving aside dry numbers, I confess to worrying about a mansion tax of that sort. First, it might as well be re-named a "London tax", or at the least a "south-east of England tax", because that is where the estimated 250,000 homes worth more than £1m are found. You may say that is fair enough, and that England is due an extra dose of redistribution from south to north, alongside a redistribution from old to young. (2)
But here is my other worry. You could also name such a tax a "force Home Counties widows to sell their homes and downsize tax". This is a blog posting, not a finished print article, so I do not have hard and fast numbers for this, but a fair number of the people living in "mansions" are certain to be pensioners on relatively low incomes. Charge them several thousand pounds a year to stay in their homes, and many would simply have to move out. (3)
The truly plutocratic, meanwhile, would set about finding clever lawyers and accountants to turn their mansions into business assets owned by companies owned by trusts in the Channel Islands, and so on, minimising their tax bills... (4) An interesting news story in the Financial Times this week floated the idea of a "son of mansion tax" that would scrap the current rules exempting first homes from capital gains tax when such houses were sold. (5) This rule would apply to homes over a certain value, such as £2m (of which there are about 50,000 nationwide). That sounds more practical to me. as it avoids the nightmare of establishing the market value of homes across the country. (6)
It also sounds humane. (7) Because yes, there are reasons to pity today's young people, who had the ill-luck to be born after their elders had enjoyed the fruits of the post-war boom. And yes, there are older people in Britain sitting on lots of wealth because they bought their houses years ago. But that windfall was not a conscious act of wickedness, or even of greed (8) (unlike, arguably, Baby Boomer schemes to award each other early retirement at 55 on vast pensions, which were a form of stealing from future generations). (9)
1) The whole article is about how older generations are holding younger generations hostage. Is that fair? Is that humane?
2) Yup, but I'm also quite sure that most people paying the 50p top tax rate are also in London and the South East, so we'd be swapping one "London and South East" tax for another; it's redistribution from "London and South East" to, er, "London and South East". And who says that the Mansion Tax is distribution from "old to young"? In theory you could earmark the tax for a higher basic state pension.
3) Right. So his starting point for the design of an efficient and equitable tax system is the 50,000 pensioners who have made unearned capital gains of millions of pounds at everybody else's expense? And as I've said before, how about giving people a £ for £ credit against income tax for every £1 they pay in Mansion Tax? If The Poor Widow In A Mansion can't pay it, she can put the house in the names of her children and grandchildren and they can pay it for her, which costs them effectively nothing.
And what is so terrible about downsizing? Doesn't it make good sense to sell your £1m house, buy somewhere nice for £200,000 and have £800,000 sloshing about in the bank? If a retired person owns a £200,000 flat or house and has £800,000 in the bank, they can hardly plead poverty and ask for special treatment, can they?
4) Complete bollocks, I'm afraid. You can't reduce your Business Rates or Council Tax bills by putting the land and buildings in somebody else's name, so why would a Mansion Tax be any different?
5) Conversely, capital gains tax on the sale of land and buildings (or indeed Stamp Duty Land Tax) is exactly the kind of tax you can avoid by using offshore companies. He doesn't know much about the practicalities of tax planning, does he?
6) Nonsense. Even the Morbidly Obese One admitted yesterday that it would cost on average £5 per home to value every home in the whole country.
7) Why? What is the big difference between a) a small, annual tax which you can roll up and pay when you die or sell, or b) a swingeing transaction tax (like capital gains tax, inheritance tax, stamp duty land tax), assuming they both raise the same amount in tax revenues? Apart from the fact that (a) is much more practical to implement, does not distort decisions so much and is more difficult to avoid, of course. For example, the TV licence fee raises slightly more than Inheritance Tax, which is the better way of raising money (notwithstanding that the TV licence fee is regressive)?
8) Oh yes it was quite deliberate, it's called Home-Owner-Ism, as manifested by the cowardice of politicians who caved in to these special interests and restricted new construction; replaced in-your-face taxes like Domestic Rates with all the stealth taxes (especially VAT and NIC); kept interest rates much lower than they would have been; turned a blind eye to the credit-house price bubble and so on.
9) Pointing at somebody else who is just as bad is not a defence. For sure, as a matter of private law, those pensions are due and payable, but as a matter of public law, the government is free at any time to levy a super-tax on all civil service pensions of over (say) £20,000 a year, that's that fixed.
From The Daily Mail:
Labour has been accused of nepotism after handing a plum job to the son of former Downing Street spin doctor Alastair Campbell.
Calum Campbell, 22, has been a member of the party’s fundraising team since December and his role involves working closely with Labour’s deputy leader Harriet Harman. He was appointed to the post just five months after his father made a donation of £10,000 to the party...
Not much to add, I'm just posting it here so that I can add it to The List (click 'Nepotism' label).
Saturday, 20 August 2011
What's the difference between the "fractional reserve banking" ratio and the "Basel capital adequacy " ratio?
The answer is, they are a mirror image of each other (but lead to much the same outcome).
* The FRB ratio restricts the ratio of liabilities (deposits) to a specific category of assets (gold coins in the safe) to a certain maximum (let's say ten) and
* Basel ratios restrict the ratio of assets (loans made to customers) to a specific category of liabilities (paid up share capital and retained profits - the bank, as an entity is under no obligation to repay them except as dividends or on a winding up) to a certain maximum (again, let's say ten). Remember also that "share capital and retained profits" are nothing in themselves - the assets are real, the liabilities are real and this is just a balancing figure (in the same way as "equity" in a house is nothing tangible, the house is real, the mortgage is real and your "equity" is just a mathematical or legal concept).
Which is why it is best to avoid the word "reserve" completely, as it can mean two completely opposite things. The FRB banker keeps ten gold coins "in reserve" and the Basel banker has "capital reserves"; the former is an asset and the latter is a liability.
In either case, the banker starts off with "ten" (call it gold coins, millions of pounds, cockle shells, sickles, galleons, whatever) and lends them out. The borrower spends them and the recipient deposits them back in the bank, so they can be lent out again and will be re-deposited and so on until the upper limit is reached.
The idea that banks lend out ten for every one taken as a deposit is a nonsense. Once the dust has settled, under FRB the bank has lent out ninety pence for every one pound taken as a deposit, and under Basel rules, the bank has lent out £1.11 for every one pound taken as a deposit, as the diagram shows (click to enlarge):
Spotted by DNAse in The Telegraph:
Higher property taxes will not be introduced because middle-class families are already paying enough to Treasury, a Cabinet minister has said (1). Eric Pickles, the Communities Secretary, states that hard-working home owners “put a lot into this country and don’t take a lot out" (2). Mr Pickles, whose department oversees council tax, says a mansion tax would require the revaluation of houses across Britain, at a cost of £250 million to the taxpayer. (3)
1) So, what the current government does is increase bad taxes when they come into power (VAT up by 2.5%, NIC up by 2%) and be too cowardly to scrap the 50p top income tax rate, and then use this as an excuse not to increase good taxes (mansion tax, council tax, land value tax, whatever you call it)?
2) Apart from ever rising land values, of course.
3) So he admits it would cost £5 per home? Cheap at half the price, and even that is probably overstated - HM Land Registry have all the information they need to calculate a reasonably accurate tax rate for land in every single postcode sector - it's only relative values that matter, not absolute ones. All they need to do is push a couple of buttons and press "print".
But fair enough, many people (in fact most) are paying far too much in income tax, NIC etc, so why not use my new Secret Weapon of choice, i.e. send everybody their Land Value Tax bill but give them a £ for £ credit against other tax liabilities?
If we stick to artificial distinction (all taxes are ultimately borne by households) and just look at taxes legally borne by private households (i.e. where private individuals have to sign the cheque or see it deducted from their wages etc.) we are looking at about £250 billion* (from the PSFD).
So let's assume that we decided to raise, nominally, £50 billion per annum from Domestic Rates calculated as approx. 1.5% tax of the current values of housing, then households would get a fifth of their other taxes refunded (they can use it to frank their Council Tax, TV licence fee, PAYE deductions, whatever they like), and it would only lead to a very small increase in revenues to the extent that some people have a very high house-price-to-income ratio (more than about twenty).
These people are by definition "taking just as much out" as their neighbours, who live in a similar house but have a higher income (and so have a lower house-price-to-income ratio) and therefore pay much more in tax, so that deals with item (2) most admirably - those who are already contributing enough/too much wouldn't pay a penny more - and we can use this modest surplus to reduce the deficit, cut other taxes, whatever.
* Forecast for 2011-12:
Income tax less tax credits £142.9 billion
Employee's NIC £50 billion
Council Tax £26.1 billion
Capital Gains Tax £3.4 billion
Inheritance Tax £2.7 billion
Stamp Duty Land tax £4 billion
Stamp Duty on share purchases £2 billion
Road tax £4 billion
TV licence fee £3.1 billion.
Friday, 19 August 2011
From today's Evening Standard:
Pod homes for teachers and firefighters are being put on the roofs of buildings to help solve London's housing crisis. Forty-four prefabricated pods are being lifted into position on a Seventies estate opposite Hammersmith Hospital primarily for key workers. Heat pumps will be used to circulate hot air around the pods, giving the owners an estimated weekly energy bill of only £2.20.
It is hoped the one and two-bedroom homes, constructed by Ducane Housing Association, will ease pressure on Hammersmith & Fulham's waiting list of about 10,000 people. Most of them will sit atop existing three and four-storey housing blocks. Units will have a fitted kitchen, bathroom, storage room and balcony.
They are prefabricated in lightweight steel and have "excellent sound and thermal insulation", the housing association said. A 47sqm, one-bedroom flat will be let for £794 a month, including service charge, and two-bedrooms cost £961. Andrew Johnson, Hammersmith & Fulham's cabinet member for housing, said: "This is a brilliant way of providing much-needed low-cost homes for vital key workers such as teachers, nurses and prison officers. Ducane Housing has come up with a great idea and I hope many other organisations will follow its lead."
Peter Redman, chairman of Ducane Housing Association, said: "The scheme has sparked a lot of interest among other London councils and housing associations and could be repeated across the capital, generating at a modest cost new homes for below- market rents."
Such a "pod home" (a glorified container or stackable mobile home) costs about £20,000 to buy and install, and the "below market rent" of which they speak is still £10,000 a year, a 50% return on investment.
Draw your own conclusions from that.
Last week's sort of fizzled out in the end, despite all your fine suggestions, and it's still not quite clear to me what's on the final Short List and what isn't.
So just for fun (one of my favourite parlour games): who can name all the Ministers called "Norman" in Maggie Thatcher's and John Major's governments?
Thursday, 18 August 2011
I'd agree with the prevailing view that the Tobin Tax on financial transactions is a very bad idea indeed, and not just for the reasons given by the usual cheer leaders such as City AM, but because the results of such a tax are so wildly unpredictable. It's simply not clear whether the tax would actually raise any new net revenues (i.e. you have to deduct all the other taxes we would lose if financial activity moves abroad).
FWIW, my opinion on the City of London is much the same as my opinion on British pirates of old - as long as they are plundering foreigners and bringing the spoils back home, that's all good stuff, but what they seem to have spent the last ten or fifteen years doing is bleeding the UK dry, but hey, I digress. And of course, Merkel and Sarkozy are fighting a desperate rearguard action to 'save the Eurozone' (for reasons which escape me) and couldn't care less about the City of London or UK tax revenues, if they seriously imagine that they can trick the City of London into bailing out the Eurozone, then they are seriously deluded. According to this fag packet (via Tim Worstall), UK-based banks would end up paying about three-quarters of all revenues. Yeah right.
Then again, it's safe to assume that while the Eurozone itself might have been dreamed up by Eurocrats, the likes of Goldman Sachs were goading them along, because something that artificial is going to require constant tinkering to keep it spluttering along, and Goldman Sachs are the only people who can provide that specialised kind of tinkering in return for billions and billions of dollars in 'advisory fees' and all the money they can make taking and placing bets on the inevitable wild fluctuations where they have inside knowledge.
So quite who is robbing from whom here is unclear, to say the least.
Nonetheless, we know that a tax on transactions is the worst kind of tax, and this goes for a Tobin Tax as much as any other transaction tax. The whole idea behind free-market capitalism is that people specialise a bit and trade with other people, and each of these trades generates a small producer/consumer surplus and signals information to others as to where to direct their efforts or how best to spend their money and so on.
The effort that goes into making all these little trades then cascades 'downstream' to generate profits and ultimately rents. It's easier and more reliable collecting water (tax) from the river (the profits or rents) just before it flows into the sea that it is to try and collect it from lots of little streams (individual transactions).
To give some examples:
Air Passenger Duty is the worst kind of tax on air travel; a per plane tax would be better; but best of all would be for the government to auction off landing slots at airports.
VAT on mobile phone bills is the worst kind of tax on telecomm companies; corporation tax isn't quite so bad because it's levied on the net result of a vast number of individual decisions; and best of all was raising money by auctioning off the 3G licences.
Stamp Duty and Capital Gains Tax on buying and selling shares are worse than income tax on dividends; but this in turn can be avoided by the company by simply not declaring dividends; so even less bad is corporation tax on the profits.
Stamp Duty Land Tax and Capital Gains Tax on buying and selling land and buildings are the worst way of taxing land rental values (they discourage efficient allocation); Council Tax is OK; and Business Rates is even better (but could be improved if the rental value of the buildings were exempted and only the site value taxed).
So, if you want to get more tax money out of banks, a Tobin Tax on financial transactions is the worst kind of tax. Banks will simply route a lot of their transactions abroad and/or put up the charges for customers a bit. It won't raise much money and it won't be the banks who bear the cost. Corporation tax on underlying profits is sort of OK, even though the whole aim of the UK government is to reduces taxes on banks and increase them on everybody else.
The best kind of tax on banks must be a bank asset tax, which we already have in the UK, albeit at a very modest rate of 0.05%.
For sure, if you tax something that's not in fixed supply (like land) you'll get less of it, but that's a good thing in this context - we wouldn't have had a credit bubble, and to the extent that banks really do have surplus deposits, they'd have lent them to businesses rather than using them to try and drive up house prices.
Remember also that loans create deposits and not the other way round, and the house price bubble got going at a time when banks were lending out on wafer thin margins, or even at a loss to try and 'grab market share'. That's exactly the sort of lending that wouldn't take place if the rate of the bank asset tax were increased to a proper figure, like 1% or 2% per annum - banks would have to stick to higher margin lending like lending to businesses or indeed on credit cards, both of which are much better for the economy.
At the other end of the scale, we something we might call "Priority poker" or "Privilege Poker".
The rules appear to be:
A. In a divorce, the wife gets half of the husband's hard-earned, plus a proportion of his income for the foreseeable future (so overall she gets more than half).
B. Land 'wealth' ranks above earned wealth; and inherited land wealth ranks above land which you have bought out of your own earned income.
So what happens in a divorce case where the bulk of the husband's assets consist of inherited land wealth (which the husband's father bought out of his hard-earned)? Who gets priority - wife qua woman (Rule A) or husband qua landed gentry (Rule B)?
Find out here.
Spotter's Badge: Physiocrat.
A-Level Totty pictures are being collated at sexyalevels.
They're very, very modern so they don't have an email address which you can use to report your sightings, you have to Tweet your sighting and use the appropriate 'hashtag'.
Wednesday, 17 August 2011
From The Metro:
Children killed in Jersey stabbings were 'little angels'
Spotted by Sue at the BBC:
An animal charity has rescued a cow in South Ayrshire which got its head stuck in a ladder...
"The farmer had no idea how the ladder ended up in his field as he only recently took on the lease for the land. It may have been used to patch up a hole in the fence or it could have fallen off a passing van or lorry. Either way, it's a rescue I won't forget in a while."
I think it's safe to assume that fugitive underground cows lobbed the ladder over the wall to enable the less agile members of the herd to escape. That's that little mystery solved.
* See the full article for some top-notch alliteration: "bewildered beast... Belgian Blue bullock"
Flom M&C News:
Beijing - Chinese autholities censoled postings on sociar media and lepoltedry intellupted some mobire terephone selvices duling Sunday's plotests against a chemicar prant in the nolth-easteln city of Darian.
Few peopre wele sulplised by the leaction flom a govelnment that loutinery censols the intelnet, brocks access to Twittel, Facebook and othel intelnationar sociar media selvices, and deretes cliticar posts flom popural Chinese miclo-brogging websites...
The officiar Xinhua news agency wercomed Blitish Plime Ministel David Camelon's statement rast week, forrowing lioting in Rondon and othel cities, that his govelnment wourd tly to ensule that peopre suspected of inciting viorence wele banned flom sociar netwolks.
Camelon arso said that the companies opelating majol sociar netwolks shourd take gleatel lesponsibirity fol poricing onrine content, a simiral carr to one often made by the Chinese govelnment.
"The Blitish govelnment, once an aldent advocate of absorute intelnet fleedom, has thus made a U-tuln ovel its stance towalds web-monitoling," a Xinhua commentaly said. It noted that in Feblualy, Camelon had ulged Egypt and othel Nolth Aflican nations to arrow fleedom of explession aftel they tlied to lestlict the opelation of sociar media, which prayed a key lore in olganizing and lepolting anti-govelnment plotests.
"We may wondel why Westeln readels, on the one hand, tend to indiscliminatery accuse othel nations of monitoling, but on the othel take fol glanted theil steps to monitol and contlor the intelnet," the commentaly said.
From the BBC:
The government has announced locations for new "enterprise zones" in England to try to boost economic growth. Ministers said 30,000 new jobs would be created by 2015 by giving cheaper business rates, superfast broadband and lower levels of planning control...
Prime Minister David Cameron said: "We are determined to do everything we can to make Britain the best place in the world to start and grow a business. Enterprise Zones are a major step towards delivering this - cutting business taxes, easing planning restrictions and giving business the tools they need to invest and expand.
Successive UK governments have mucked about with Enterprise Zones with lower Business Rates (which are tax on land ownership, and not a tax on business), and all that happens is that rents go up to soak up the Business Rates cut. Simple, observable facts. Ditto with SDLT-free zones.
There's another variant on these, whereby the buildings qualify for capital allowances - all that happens is that the builders bump up their prices accordingly so that the net cost of the building ends up at a fair price.
"How can builders do this?" you may ask "Wouldn't other builders bid the price down to market value?"
Well no, because the owner of the land, who has the whip hand, appoints the builder and they split the difference somehow. And if you bought the land with the intention of trading there, no doubt your accountant will tell you that the most profitable use of that land is to build and sell an overpriced building.
I suppose the good news is that the Tories have come up with something that will prevent riots and looting in future:
"David Cameron is being urged to accelerate tax breaks for married couples as part of his moral clean-up of Britain following last week’s riots."
You can just see it, can't you? If ever the riots and looting kicks off again, the police won't need truncheons and shields, they'll need megaphones. They can march line abreast up to the rioters and solemnly announce that if their mothers can find somebody to marry them, while they might admittedly lose up to £200 a week in extra benefits, their new husband will get £10 a week knocked off his PAYE. That'll have the little scrotes scurrying right back to their council estates to pass on the glad tidings, eh?