Friday Night Gear Change

I haven't done one of these for ages, mainly because I haven't noticed any. They used this song in the closing credits of yesterday's Drifters.

Up a semi-tone after 1 min 33 and again at 2 min 21. Textbook.

Aptly Named Film Of The Week

IMDB's plot summary of The Imitation Game:

At Cambridge University, young Alan Turing quickly establishes himself as a groundbreaking thinker with his theories about the potential of computing machines. When war between Britain and Germany is declared, these theories are put into active practice.

Turing easily passes a test to become a member of a top-secret group assigned to decode critical German naval communications. Much to the surprise of the commanding officers, so does a woman, Joan Clarke, Turing and Clarke become fast friends, and are soon engaged to be married. But Turing is gay, struggling with his identity at a time when it is illegal and subject to terrible punishment.

Ho hum, that reminds me of a film that came out a decade ago...

IMDB's plot summary of Enigma:

During the heart of World War II, in March of 1943, cryptoanalysts at Britain's code-breaking center have discovered to their horror that Nazi U-boats have changed their Enigma Code. Authorities enlist the help of a brilliant young man named Tom Jericho to help them break the code again.

The possibility of a spy within the British code-breakers' ranks looms and Tom's love, Claire, has disappeared. To solve the mysteries, Tom recruits Claire's best friend, Hester Wallace. In investigating Claire's personal life, the pair discovers personal and international betrayals.

OK, The Imitation Game is a bit more true to life in that Turing really was gay but Jericho (the quasi-Turing character) is avowedly straight; however in Enigma it is sort of hinted that Hester is a lesbian but she and Jericho end up getting married anyway, depite having bickered with each other constantly for the first three-quarters of the film. So Enigma is the mirror image of The Imitation Game and vice versa.

Drinking driving statistics

Moneysupermarket compiled statistics on how prevalent drink driving is around the UK.

The results are reassuringly unsurprising. As you'd expect, the prevalence is much lower in large towns with good public transport and/or high muslim populations.

"Nigel Farage laughs off local Ukip branch mistaking Westminster cathedral for mosque"

Seriously!

A few notes about Champagne

From the Daily Mail

A Champagne price war has been triggered with Tesco slashing the price of one award winning brand to just £8.

Britain’s biggest grocer and drinks retailer has reduced its Louis Delaunay champagne by some 70per cent from the official list figure of £25.99.

The champagne is now cheaper than many supposedly inferior sparkling wines such as Prosecco from Italy and Cava from Spain.

Champagne is a sparkling wine. It's produced with something called the "Traditional Method", and used to be called the méthode champenoise. So is most sparkling wine that you can buy like Australian fizz and Cava. Prosecco isn't, it uses another approach.

The key difference between Champagne and Cava, or Australian fizz is that only wines from a specific area of France can stick that on the label. It's not necessarily any better than those wines, and is often worse because that wine producer is having to pay higher rent to have the piece of land in the region so that he can print "Champagne" on the bottle than someone just over the border who is selling a sparkling wine who isn't. Sure, there's certain soil properties of the region (in general), but Wairau Valley in New Zealand also has many of the same conditions.

If you've got serious money, top-end Champagne really doesn't have any rivals. I've not tasted anything as good as Krug Grande Cuvee (and only once). But if you're looking more in the under-£30 market, I wouldn't normally go for Champagne. I'd go for Lindaeur Special Reserve (at about £12) or Cloudy Bay Pelorus (about £16), both from New Zealand. And I know people talk about British sparkling wine, but having tasted it, there's better value elsewhere.

In this case, £8 for a bottle of Champagne that won an IWSC award seems like it's worth a try. But Champagne isn't intrinsically better than other sparkling wines.

"European Union should be broken up, says Google"

From the BBC:

The board of directors of Google has voted in favour of breaking up the European Union, as a solution to complaints that it favours its own services. Executives have no power to enforce a break-up, but the landmark vote sends a clear message to European regulators.

European Parliament politicians have voiced their dismay at the vote. The ultimate decision will rest with lobbyists for other large international corporations such as Apple and Fiat. They are currently being investigated for anti-competitive practices and sweetheart tax deals entered into with Luxembourg, the Netherlands and Ireland.

Homeys in a panic

H/t MBK, a series of increasingly panic stricken Homey propaganda pieces:

Sunday Times, 23 November 2014: Early 50s is ‘too old’ to switch mortgage.

The Times, 25 November 2014: Strict mortgage rules shut out over-40s

Telegraph, 24 November 2014: In your 30s? Why you could be too old to get a mortgage

No doubt by next week they'll be writing that people in their late 20s are "shut out of the mortgage market" or some such nonsense.

"London university bans lecturer who calls Islam a 'filthy' disease"

From the Evening Standard:

A lecturer has been banned from a London university after likening being a Muslim to having a “disease” and dismissed the entire religion as "an inferiority complex".

Prof. Dave Smith, 34, also known as the self-styled Knowledge Man who helps people be academic “superheroes”, was today banned from appearing at the University of East London.

He has blamed “wannabe Arabs” for impulses which should be “suppressed”, such as claiming that homosexuality comes “under the category of obscene and shameless” and their irritating habit of blowing things up and killing and mutilating people.

The university also banned his lecture this week, advertised on Facebook by the faculty, over fears — denied by organisers — that religious segregation could be enforced, after “sane people” and “Arabs” were given separate contact points for tickets.

Economic Myths: "VAT is a tax on luxuries"

You have to remember that VAT is not a tax on "consumption" (whatever that means). It is a tax on gross profits-plus-wages, the clue is in the name "Value Added Tax". There is then also a tax on net profits, known as corporation tax (which is not a tax on "capital", whatever that means, it is a tax on income). So if this myth were true, then producers of more basic goods would pay a lower tax rate than producers of luxuries.

(VAT's fig-leaf is that taxes on "necessities" like food and rent are exempt. Is it a coincidence that both of those are land-based sources of income? Interest payments are not liable to VAT either. But that is just a fig-leaf.)

Remember also that "luxuries" are status goods, people will pay extra to have such-and-such a label on their car, clothing, musical instrument, whatever, so producers who have attained this reputation can charge larger mark-ups*. So let's put VAT and corporation tax together and do some numbers.

1. A luxury/status item costs £500 to make and retails for £1,000. The overall profit before any taxes is £500.

The VAT is £167, leaving £333 liable to 20% corporation tax = £67. Total tax = £233.

£233 out of the original £500 = 47% overall tax rate.

2. A more basic item costs £50 to make and retails for £75. The overall profit is £25.

The VAT is £12, leaving £13 liable to 20% corporation tax = £3. Total tax = £15.

£15 out of the overall profit of £25 = 60% overall tax rate.

Here endeth.

* From Robert Benchley's "Jaws":

The young man was tall and slim. He wore sandals and a bathing suit and a short-sleeved shirt with an alligator emblem stitched to the left breast, which caused Brody to take an instant dislike to the man.

In his adolescence Brody had thought of those shirts as badges of wealth and position. All the summer people wore them. Brody badgered his mother until she bought him one - 'a two-dollar shirt with a six-dollar lizard on it', she said - and when he didn't find himself suddenly wooed by a gaggle of summer people, he was humiliated.

Short lists.

Here's a list of celebrities who are well past their sell by date:

Bill Oddie
Michael Caine
Griff Rhys Jones
Myleene Klass
Sol Campbell

Here's a list of celebrities who are still at the top of their game:

Angelina Jolie

You must remember this...

From the New York Times

The letters of transit — “signed by General de Gaulle, cannot be rescinded, not even questioned” — were hidden under its unusual hinged lid. It is golden yellow with touches of green and gold, a surprise to people who know it only from its black-and-white adolescence. It has a wad of chewing gum in a place where a wad of chewing gum really should not be.

It is the stuff that dreams are made of.

It is one of the most famous pianos in the world, the piano Ingrid Bergman was close to when she delivered one of Hollywood’s unforgettable lines: “Play it, Sam. Play ‘As Time Goes By.’ ” It is the short little upright from Rick’s Café Américain in the movie “Casablanca.”

Signed by General de Gaulle? A Vichy France official would let someone through with papers signed by the leader of Free French Forces?

The line is "signed by General Weygand", who was a collaborator in the Vichy government, Took me about 1 minute on Google to find the clip of Peter Lorre saying it.

[Mansion Tax Fun] Smoking gun. Or possibly smoking crack.

H/t Ben Jamin, a keen Mark Field watcher.

London MP Mark Field, two years ago:

... property investment does not just generate profits for property owners. In central London, half of the properties in the private sector are bought for rental investment rather than owner occupation. Known as the “private rented sector”, this not only stimulates significant tax revenues, it actively fuels economic growth. It has been estimated that, for every central London property bought for rental, a further 20 per cent of its value is spent on other services. This brings employment to lawyers, accountants, architects, builders, and so on...

The [Mansion Tax] will result in higher rents, making London less attractive to multinationals. Corporate headquarters have global choices – many can, and will, relocate. Corporate tenants, and privately-educated foreign students in central London, contribute a large amount to the £10bn spent on shopping, education, the night time economy and tourism in the heart of the capital. International investment also makes many developments viable. It can support cash flow, and underpin the provision of public amenities and affordable housing.

So he says, hooray for wealthy foreigners, they bring money into the country. And the Mansion Tax will frighten them away (it wouldn't of course, because a tax on land values does not increase rents, if anything it would bring them down a notch). And hooray for buy-to-let investors (it would appear).

London MP Mark Field, two months ago:

For a start, let’s debunk the idea that those living in pricey properties are rich. There are many people in London who happen to reside in homes whose value has inflated to a level that bears no relation to a household’s ability to stump up large cash sums. An annual charge on properties valued at over £2 million would be ruinously expensive for many of these so-called ‘super rich’.

It would also most likely drive greater numbers of traditional Londoners from their homes, vacating even more prime property for foreign buyers and heightening the sense of injustice that a mansion tax is designed in part to salve.

So he says, boo to wealthy foreigners, coming over here, taking our homes, paying our taxes etc. And boo to buy-to-leave investors (it would appear).

U- and Z-Turns Of The Day

U-Turn

From the BBC:

Telecoms giant BT is in talks with Telefonica about buying the O2 mobile network from the Spanish firm...

The irony is...

In 2002, BT spun off O2, then called BT Cellnet. In 2005 it was acquired by Spain's Telefonica for £17.7bn.

Taking irony to the next level...

[O2's] value is around half that paid by Telefonica. Deutsche Bank values O2 UK at £9bn, while UBS values it at £9.6bn.

Z-Turn

From the FT:

Germany has made a dramatic appeal to Sweden to help it out of an energy dilemma that threatens Europe’s biggest economy as it shifts away from nuclear power and fossil fuels to renewable energy.

Oops, caught with their trousers down after they overreacted to the Fukushima meltdown.

And what does the German government want 'Sweden' to do..?

Sigmar Gabriel, Germany’s vice-chancellor, warned Sweden’s new prime minister Stefan Löfven last month that there would be “serious consequences” for electricity supplies and jobs if Sweden’s state-owned utility Vattenfall ditched plans to expand two coal mines in the northeast of Germany.

I'm not sure what level of irony we're on here. Waving the Greenie flag, the Germans want to go from nuclear to renewables... but first they're taking the retrograde step back to coal, and the coal which they want to use was theirs anyway before they sold it off to foreigners.

Squaring the circle, we get this...

Angela Merkel’s cabinet is due to meet next week to discuss mothballing some coal-fired power stations as a means of helping the country reach its carbon goals.

But Berlin’s lobbying of Stockholm underlines a view held by some in the German government that coal-fired generation is vital to the security of the country’s power supply.

"Private schools Business Rates relief warning"

From the BBC:

Independent schools could lose millions in business rate relief under a Labour government unless they worked more closely with state schools. Shadow education secretary Tristram Hunt says many private schools are not doing enough… "The only possible answer to whether they earn their £700m subsidy [over the course of the next Parliament] is a resounding and unequivocal 'no'."

Ho hum. £700 million divided by five years divided by 700,000 pupils is a princely £200 per pupil per year*. The value per pupil of the corporation tax exemption appears to be another £200 per pupil per year. So peanuts in the grander scheme of things.

But what possesses the man to refer to these very modest tax breaks as a subsidy?

Even if the government actually paid £400 cash per pupil per year, that's still only one-twentieth of the overall average cost of one state pupil for one year.

It looks to me as if private school pupils are subsidising state school pupils and not the other way round.

Disclaimer: Her Indoors decided that our kids would go to private schools, it costs an arm and a leg and I'm not entirely convinced it's worth it. So if anybody wants to ban private education outright, I wouldn't actually be averse to that idea. It would 'level the playing field' a bit, save a lot of parents a lot of money and in principle, there'd be more 'pushy parents' thus hopefully driving up standards in state schools. Or this is how it works in Finland and Germany**.

What sort of a stupid name is Tristram anyway? Twat.

UPDATE: DBC Reed presents this in Hunt's defence.

* Business Rates is the least bad tax and not a cost to 'businesses' anyway, as Tim Worstall came out and explained recently in Forbes, although it is probably still a real cost to these schools as I guess nearly all of them own their own premises.

** UPDATE: Re Rich Tee's comment, I do have first hand experience of the German school system in Bavaria (the rules differ slightly from state to state). Basically, at age 11 kids get tested/ranked; the top half go to a Gymnasium (Grammar school up to age 19 or so), the bottom half are divided between Realschule (secondary modern up to 16 or so) and Gesamtschule or Hauptschule (sink schools for no hopers). It is possible to be promoted up or demoted down a school, or move from Realschule to Gymnasium at 16/17 if you're bright enough, so the 11-plus is not the absolute end of the matter.

It seems to work fine to me. On the whole, Germans are well educated. There are some private schools, but these are for kids who can't hack it in a state school but whose parents have a few bob to spare. There is no snob value attached; you are marked as 'somebody who couldn't hack it in a state school'.

People who live in glass houses...

Here

"Tower Bridge business manager Chris Earlie told ITV: "We are gutted it's happened in the first couple of weeks when it's been open to the public but it's completely safe.

"We should have said no glass on the glass section of the floor. It was a bit shortsighted of us."

!!

When the shit hits the fan...

House is obliterated and 15 people are taken to hospital after huge excrement pit explodes in China

"Don't tell them, Pike!"

From the BBC:

A supermarket price war is being blamed for a sharp rise in the number of food producers going bust... The company said supermarkets are squeezing producers in order to cut check-out prices and boost profits.

This phenomenon does not just apply to supermarkets, it is of general application.

Thirty-odd years ago, my Mum was a secretary at probably the last surviving textile manufacturer in West Yorkshire, and she attended the meeting with a buyer from one of their largest customers, Marks & Spencer.

The buyer asked my Mum's boss what sort of percentage of the manufacturer's total output went to M&S, so after the meeting, the boss asked my Mum to provide the figures.

UPDATE: As TTG says in the comments, nowadays M&S would probably be able to work this out from the company's published accounts etc, so wouldn't even bother asking.

My Mum then patiently explained to him that he would be absolutely stupid to even consider any such thing (hence the post title, although her boss was not called "Pike"), once one large customer is buying more than a certain fraction of your total output (whether that is a quarter or a third or whatever), they have got you by the short and curlies and can start squeezing your margins, and they will keep squeezing them until you go out of business.

The gimmick being, she explained to us kids, in the long term, a manufacturer needs to cover his fixed costs as well as his direct costs, but in the short term, any new order which at least covers direct costs is worth taking on, even if the resulting profit is not really enough to a share of the fixed costs.

I have seen this time and again, it's one thing they drummed into us on cost accounting on the printing diploma I did. Another example currently in the news is the question of tied pubs, whereby the brewery-cum-landlord persuades a succession of would-be landlords to hand over a large entry fee and bleeds them dry, rinse and repeat (that's a case of one large supplier, not one large customer but apart from that the same rules apply).

It's also prevalent in the motor industry, where most of the large manufacturers just assemble thousands of individual components supplied by relatively small businesses. Once you have tooled up everything to produce one million rear axle widgets for Large Motors Inc you can't just drop everything and tell them to get stuffed when they start knocking the price down and down.

That's the problem - that the only people who can succeed in "business" are those collecting "rent" in the wider sense* - what the solution is, if anything, I don't really know. And for avoidance of doubt, it's not Resale Price Maintenance.

* So if our rear axle widget manufacturer owns a valuable patent, he has shut out his competition for the next twenty years or so and can overcharge Large Motors Co, but even then, the really big companies can always do the little guy over.

Glorious bit of circular logic

Spotted by MBK in The Sunday Times:

Problem 1: SOARING numbers of middle-aged homeowners are being turned down for mortgages because they are “too old”, even though some are in their early 50s, exclusive figures reveal today... Complaints include people told they cannot “port” a mortgage — move an existing loan to a new home with no fines or charges.

Problem 2: Adrian Anderson of broker Anderson Harris said...: “Guarantor mortgages are likely to become extinct, leaving parents and grandparents unable to guarantee a loan...

“Discriminating against someone because of their age is just that — discrimination. Those who were relying on using the equity in their home to help children or grandchildren get on the housing ladder may well find their plans derailed.

“Many of these homeowners won’t have the cash available to help but won’t be able to release it from their homes either, leaving a generation of would-be first-time buyers out in the cold.”

Talk about elephants and rooms. This is the rotten underbelly of Home-Owner-Ism in spades. And that's a mixed metaphor.

While anybody who did not have the opportunity to buy their first home until some time in the last 15 years has my every sympathy, those who bought before then have no excuse for not having paid off their mortgage by now. If they haven't, it's because they overstretched themselves to start with (land price speculation), went for an interest only loan or have remortgaged recently (unless that was to fund legit home improvements, in which case, fair enough). Their fault, their problem.

Q: Those who did the sensible thing will have paid off the mortgage by now, so will have plenty of "equity", on paper at least, but why do they want to remortgage to "help their children onto the property ladder"?

A: Because of ridiculously high prices.

And if house prices weren't so ridiculously high, then there would be no Bank of Mum and Dad and/but the next generation wouldn't need it anyway. What the Homeys want to achieve is to solve a 'problem' by exacerbating it with more of the same problem.

Now, bear with me on this...

From Janet Daley in the DT here

"Then, on top of that, those who have worked and strived hard enough to haul themselves out of poverty are taxed, by a Conservative Chancellor, as if they were officially “rich” in order to pay for it all. Not to be outdone, Labour threatens a “mansion tax”, which would have devastating, life‑changing consequences for many people who are certainly not rich but simply have the misfortune to have lived in a house that has increased in value wildly due to forces that are completely outside of their control. Where is the “fairness” – in any recognisable meaning of the word – in any of this?"

Now, all of us LVT Jihadists on here would likely take issue with this sentiment, as regards house prices.  But, working as I do at the coal face of personal finance, I am increasingly meeting people who are not at all happy with the massive house price (aka land price) increases since the 1980's, but really going stratospheric from 1997. They can see full well that not only are such increases bad for their children but they also freely admit that they have not 'earned' this wealth and by implication that that is a Bad Thing. They instinctively know that not 'earning' wealth is not good. They know that if they move up they are no better off as they will have to pay more for what they are buying in direct proportion to what they are selling.  BTW this includes many PWIM, who would be happy to see lower prices for their grandchildren even if it meant lower prices for themselves. I have carried out a straw poll and most would be happy with LVT (assuming it dealt with silly house prices) as long as it replaced pretty well all other taxes.  When you add in the Citizens Income idea to square the circle they really start to go for it.

Clearly there are exceptions, those that are cashing out, usually to downsize and retire and - I'll give you one guess as to the other exception - yes, you go it, BtL 'investors'.

In the former case I reckon most would still be happy, as long as what they were buying also reduced in proportion, which it would.

So the real problem is with BtL 'investors'.  And just why should anyone worry about them?

I reckon that properly 'marketed' the LVT/CI argument is easily winable.

More BtL Joy from the Telegraph

The whole pensions / BtL / annuity dynamic is getting truly ludicrous.

Exhibit 1. The DT indulging in some sensationalist pandering to its 'readers' with this ridiculous claim about 'annuity mis-selling'. Here. I work in this business and the biggest problems with annuities are

1) pension savers not shopping around when all the pre-retirement packs issued by all insurers tell people to shop around and
2) epic government and regulatory failure and especially the lunatic interest rates and financial repression generally.

Then there's these two dillies.

Exhibit 2. Gazumping is back.  Oh great.  So is something sensible being done to make this less likely?

Exhibit 3 Well, not really.

You just wait and see what people will spend their pension funds on when they can get at them next year.

It's not going to end well, is it?

Car vs building

Poor Widows In Mansions In Northern Ireland

Northern Ireland never had Council Tax, they stuck with Domestic Rates, the last revaluation was in 2005 and the rates are about 0.8% of each homes 2005 value (or probably more than 1% of its current value). Sadly, the 2005 value is capped at £400,000, rather than having a higher or no cap and a correspondingly lower rate, but there you go.

They sensibly introduced a deferment option for Poor Widows In Mansions to shut up the Mylene Klasses of this world.

A few years later they did a review of the scheme, Andy Wightman uncovered this fine document:

Analysis carried out by NISRA for the Department in 2008 found there were 132,343 pensioner owner-occupying households.

Since its introduction, there have been 116 applications to the scheme – a take-up of 0.09%.

64 of these did not proceed beyond the initial stages. Of those that proceeded further in the application process, 21 were successful (in terms of a deferment agreement being entered into) and 18 were refused.

At last, a bit of sensible advice from the Beeb.

Franklin considers snow shovelling to be so dangerous that he advises anyone over the age of 55 not to do it.

Let's factor in a margin of safety and reduce that age limit to 25 or something, you never know. Better safe than sorry.

Sorted.

"Sorry I couldn't make it into work, but the car was snowed in and I didn't want to risk a heart attack."

With a bit of luck, that'll get you out of some forced Xmas shopping trips/picking up relatives trips as well.

Fun with numbers: Outstanding residential mortgages x Standard Variable Rate

We know that total lending has gone up a lot over the last fifteen years (Chart A), but also that interest rates have come down (Chart B). Both of these figures are pretty meaningless; increases in total lending are cancelled out by reductions in interest rates.

The "real" £££ number is the two multiplied together:

Chart C) how much interest the banks can earn, and

Chart D) how much households have to pay in mortgage repayments.

You can draw whichever conclusions you like, but here goes.

Using data downloaded from the Bank of England's Interactive Data page…



The concept of "Standard Variable Rate" is becoming less relevant because of all the introductory teaser fixed rates, but at least there is a consistent series:


If we assume that three-quarters of bank lending to households and businesses is residential mortgages and multiply up by the SVR from Chart B, the total interest charges which banks collect are as follows, apart from the 2007-2008 'blip' just prior to the 'credit crunch':


More relevant is the overall cash flow, i.e. repayments of principal + interest. Assuming a constant remaining term of 20 years, the total annual payments booked by UK banks are as follows; this is the figure which has doubled over the last 15 years:

Royal Mail Rent-Seekers

From the BBC

Royal Mail boss Moya Greene told the BBC that increased competition was threatening the company's ability to deliver letters to all parts of the UK - a service mandated by law.

She added that the "cherry-picking" of urban mail routes by competitors "undermines the economics" of its nationwide delivery service.

Royal Mail has long called for the regulator, Ofcom, to consider expanding the Universal Service mandate - which ensures mail is delivered across the UK, six days a week, at one fixed price - so that it includes rivals such as Whistl.
...
In response, a spokesman for Ofcom said the regulator's own evidence "clearly shows that the service is not currently under threat".

"We would assess any emerging threat to the service quickly, in the interests of postal users," he added.

The "economics" of their service is that they had this requirement as part of floatation and are still doing it. That's all we care about, not feathering the nests of Royal Mail shareholders. Good to see Ofcom are of the same mind.

BTW If I was a single bloke, I wouldn't bother with home delivery of parcels. I'd send everything to a pick-up point where I can pop in on the way home from work. I suspect it's the future of parcels.

Location, location, location

From The Evening Standard:

One of the world’s most famous advertising hoardings is up for sale for the first time in 24 years.

The prime slot on the Piccadilly Lights, the electronic display at Piccadilly Circus, is on the market after Japanese firm TDK’s contract ended.

Insiders suggested Land Securities, the owner of the celebrated London landmark opposite the Eros statue, could get in the region of £4 million a year for the spot, which measures 21.1 metres by 4.8 metres.

That's a lot of money - and that's only one out of six spaces. And why is the site so valuable..?

Outdoor advertising consultancy Wildstone is advising Land Securities. An estimated 2 million people a week pass the site.

And how do 99% of those people get to Piccadilly Circus? Using public transport is how.

So why shouldn't Transport for London send Land Securities an invoice every year, and charge them (say) 10p for every person passing the six spaces each year, £10 million all in?

Presumably, somebody intended this outcome but who and why?

From The Evening Standard:

The Freight Transport Association estimates that as many as 20,000 delivery drivers have taken early retirement or moved to different jobs since the Certificate of Professional Competence became mandatory in September.

The qualification, a new European requirement, involves 35 hours of training and costs up to £300. Drivers who do not hold it risk a £1,000 fine.

James Hookham, managing director of the FTA, said: “This is the first Christmas when we have had this requirement and many drivers are saying ‘I didn’t take up truck-driving to go back to school’ and just voting with their feet.”

I don't think this is special pleading by the hauliers, the government has been piling stupid regulations on them for years, overall, their complaints are justified.

So what's the point? Who stands to gain from this? The people doing the stupid courses?

Fun With Numbers: Pupil-teacher ratio in English state schools

There are about 7.5 million pupils in state schools in England.

"There are 922 thousand full-time equivalent people working in state-funded schools, this includes 451 thousand full-time equivalent teachers."

Further, "over 1.3 million people work in state-funded schools", which means, for example, that about 40% of the 1.3 million work full-time and the other 60% do half a working week (1,300 x 70% = 910).

So…

a) Slightly fewer than half the people on the schools payrolls are actually teachers. And there is an unknown number of people working in "education" in the wider sense (i.e. all the quangos) who don't actually "work in a state-funded school".

b) The pupil-teacher ratio of 16.7 doesn't seem too terrible to me. In other words, if a full-time teacher spend two-thirds of the day teaching, class sizes would be about 25, which is no different to most private schools.

c) For a given number of employees/expenditure, if they could could get the proportion of teachers up from 50% to 75% and reduce the number of pen-pushers down to 25% (which is normal for private schools), then we'd have 692 thousand full-time equivalent teachers and a teacher-pupil ratio of 10.8, which I think is pretty good (i.e. low) by any sort of standards. If a full-time teacher then only spends half the day teaching, that gives us a class size of just under 22 and reasonably well-rested teachers.

Splendid!

From the BBC

The government has been defeated in a Commons vote on the control that parent companies can exercise over pubs.

MPs voted 284 to 259 in favour of an amendment allowing landlords an independent rent review and to buy their beer on the open market.

So-called "tied pubs" are required to buy supplies - often at high prices - from the companies that own the pubs.

Campaigners said the "historic" vote would help "secure the future of the Great British pub".

Of course it won't. We had beer ties for longer than I can remember, in a time when pubs were thriving. You can argue against beer ties on other grounds, like public choice, but it didn't historically close pubs.

But it's splendid news because at least it's a way of proving that high rents made sod all difference to pub closures, and maybe some of those CAMRA numpties might start supporting a reversal of the smoking ban.

More Fun To Be Had... (Part 2)

At The Daily Mash.

Killer Arguments Against LVT, Not (349)

From Conservative Home.

First the author agrees with this from a pro-LVT article in The Economist:

All that changes is the price, which falls until it exactly offsets the discounted cost of paying the tax forever.

Correct, LVT is a one-off thing and does not affect people in the future. It's the opposite of deficit spending.

Then we get this:

However... a fundamental objection still remains. A land value tax, however modified, applies to the whole value of the land not just the capital gain – and therefore amounts to the gradual confiscation of an asset purchased out of taxed income.

(On the facts, most land was not "bought out of taxed income" anyway; anybody who bought more than fifteen or twenty years ago effectively got the land for free. And if anything, that is an argument against income tax, not against LVT)

But he's now completely contradicated his first correct statement: the LVT is borne entirely by current owners in terms of lower future selling prices. (And most of those owners would benefit from an equal and opposite reduction in other taxes. The sooner we do the tax shift the more people will benefit i.e. if they move to LVT when you are 20 years old you benefit much more than if the move to LVT when you are 40. So why bugger about for another 20 years?.)

To keep it simple, let us assume 100% LVT, so land would be bought and sold for plus/minus nothing (i.e. land and buildings would be sold for the value of the buildings).

If land has no value then that value cannot be confiscated. The future LVT payments do not affect the future purchaser; instead of handing over the capitalised value of the future rent in one big chunk to the vendor, he pays much smaller amounts every year to the government.

More Fun to be had at the DT

Here

Japan's economy makes surprise fall into recession.......

....not.

From todays BBC report here,

"Japan's economy unexpectedly shrank for the second consecutive quarter, leaving the world's third largest economy in technical recession.

Gross domestic product (GDP) fell at an annualised 1.6% from July to September, compared with forecasts of a 2.1% rise

That followed a revised 7.3% contraction in the second quarter, which was the biggest fall since the March 2011 earthquake and tsunami.

Economists said the weak economic data could delay a sales tax rise."

As we speculated on this blog a couple of months ago, rises in sales taxes don't end up well. But for some reason mainstream economists think they are the least bad option.

Coincidentally, I was reading this piece by Mason Gaffney last night "Europe's fatal affair with VAT", which chimes in with what Mark has been banging on about on his blog for years.

Remind me? Why is this a Bad Thing...

Here

Amazing

From the BBC

A British antiques expert who restored items for royalty was a child abuser involved in a notorious paedophile campaign group, the BBC can reveal.

...

Social services documents described his convictions as a "real cause for concern" and warned that children should not be left unsupervised with him.

...

In 1987, Harding moved to Gloucestershire where social services were aware nearly 20 years ago of his criminal convictions.

Gloucestershire County Council declined to comment on the fact that he continued to run a music box museum in Northleach, which was regularly visited by children, until his death aged 82 in June.

I've been to the Keith Harding museum. It's about mechanical music and I took the kids there. Think I saw him walking around behind one of the counters.

If I offer to help my wife out with bringing stuff out from a Brownie hut, she tells me I can't because I'm not cleared.  But a convicted child sex offender running a museum for 20 years with loads of kids in it? No problem.

It couldn't possibly be that CRB checks are a load of security theatre, could it?

World Cup

From the BBC

The English Football Association has been urged to lobby Uefa for a European boycott of the next World Cup - unless Fifa implements meaningful reform.
Former FA chairman David Bernstein said it was time for drastic action against football's world governing body.
"England on its own cannot influence this," he said. "If we tried something like that, we'd be laughed at."
He says a World Cup would be weakened without Europe's top teams and that a boycott would have public backing.

As someone who watches World Cup matches I couldn't care too much where it's played. I'd prefer Russia to South America as it's closer to our time zone.

All this harumphing about what FIFA members did and who bribed them is largely irrelevant. It's no different to the FA selling off TV rights to Sky, except that that's done transparently. FIFA just have to keep up the pretence of picking the best country for prestige, while selling to the highest bidder, but under the counter.

Fun with numbers: "Children in Need 2014 raises £32.6m for charities"

Amount 'raised' by the BBC/Children In Need dowhattery: £33 million.

Amount raised by the TV licence fee to fund the BBC: £3,722 million.

(And as I always like to remind people, that's a smidge more than the UK government collects in Inheritance Tax).

Fraggle nails it in the comments.

From the comments to the post Money:

The question posed on the thread was: "If money is a “measure of indebtedness”, who is indebted to who when gold coins are used as money? The answer is “no one”. And the same goes for all commodity monies."

Fraggle replied thusly:

Wrong.

The extent to which a commodity is *used and treated as money* is the extent to which it is *no longer a commodity*. It's all about the reason why it is accepted in trade. An item or token is money when it accepted because of the expectation that others *in general* will accept it in trade.

When someone accepts something as money rathen than as a commodity, then for them the transaction is not actually complete, because they haven't yet got what they actually want. What they have is a general claim on stuff.

This claim is what money is a measure of and is equal and opposite to others' de facto obligation to give actual stuff for something that they do not want in and of itself, and it doesn't matter what that something is, nor what it *used* to be for.

Exactly. It's not difficult, is it?

Fun Online Polls: Angela Merkel's ultimatum & The price of crude oil

The results to last fortnight's Fun Online Poll were as follows:

How will Cameron respond to Merkel throwing down the gauntlet?

Continue to waffle on about renegotiating terms with the EU for as long as possible - 97%Hold a referendum as soon as possible - 3%

Cameron's gone awfully quite about it since, hasn't he?
'Nuff said.
-----------------------------------
There was am excellent article in today's City AM, worth reading in full, but here's the gist:

... at last I’ve found a conspiracy theory I can get behind: the whispered secret accord between the US and Saudi Arabia over the geopolitics of energy policy seems to me to be the real deal.

One thing is for certain; the Saudis are behaving decidedly oddly. While the price of oil has fallen off the map, having dropped below $80 per barrel to its lowest level in four years (in late spring it was perched at a lofty $115), the petro-kingdom has done absolutely nothing.

So that's this week's Fun Online Poll:

Is Saudi Arabia deliberately pushing down the price of crude oil?

I can't wait to see this film!

Toolips

Glad to have cleared that up.

Ralph Musgrave in the comments to an earlier post:

"If money is a “measure of indebtedness”, who is indebted to who when gold coins are used as money?"

If you swap gold coins for goods and services, those coins aren't money in the modern sense. They are just valuable assets, just like the goods you can exchange them for. So post-transaction, nobody is indebted to anybody.

"The answer is “no one”. And the same goes for all commodity monies."

Even back in the day when we used gold coins, the split second that any of the following occur, you have a debt-based money system:

a) You obtain (or supply) goods and services on credit, i.e. payment at a later date. The fact that the indebtedness is measured in terms of of how many gold coins will change hands in future is by the by. You can measure it in gold coins, pounds, dollars, payment in kind or bags of salt.

b) Somebody borrows gold coins from a money lender. The gold coins still very much exist, but the money lender no longer owns those gold coins, what he owns is a promise by the borrower that the borrower will repay x gold coins at a future date (an asset). The borrower now has whatever he spent the coins on and a liability. The money lender's new asset and the borrower's liability are equal and opposite and have been created out of thin air.

c) The money lender himself accepts "deposits" which is a polite way of saying "borrows gold coins from people". The gold coins he accepts from depositors are of course the gold coins from transaction (b). Each time they are lent out to borrowers and taken back in from lenders, the money lender's balance sheet grows. He splits the zero into assets and liabilties.

"Debt of course CAN BE USED as money, but it’s not the only form of money. Also the extent to which base money is form of debt is very debatable. E.g. £10 notes claim that the Bank of England will pay you on demand £10 (of gold presumably). But that’s an empty promise."

When I was a lad, the Bank of England very sensibly showed the face value of coins and notes in circulation as a liability from the point of view of the Bank. Which they are. The fact that they don't do this any more (h/t Bob Edmiston, deceased) is by the by, it's only tiny amounts.

And it's not an empty promise. If you owe the government £100 (for fines, fees, taxes) and have £100 in coins and notes, you can repay that liability by handing over the coins and notes. The government now has some worthless bits of paper and metal which it manufactured itself in the first place.

“If some "people's ability to buy... is thwarted" that's a PC way of saying that "they are poor". Nope. One can have a situation where everyone is well off (e.g. house and car owners) but if there was no money, their ability to trade with each other would be thwarted."

Money would come into existence all of its own accord, see a), b) and c) above. It always has done and always will.

The government *might* need to kick start this, like when they introduced the Deutschmark in the late 1940s. All Reichsmarks were declared null and void, every adult got bits of metal and paper with a nominal value of DM 40, and hey presto, things got moving again. Even people who were little children at the time remember this, suddenly, there was stuff in the shops, businesses were taking on employees and from that day on, everything hummed along nicely.

“No need for fancy "money creation"”. No? Then (as per above paragraph) if there was no money, we’d manage OK? A “no money” economy is a barter economy. That’s OK on desert islands, but not in Europe in 2014.

See previous response.

And, ahem, who started off by talking about gold coins?? Not me. I always assume that our starting point is Europe in 2014. And we are where we are, with a debt-based money system.

“As to "banning private money creation" if you understand double entry book keeping you would know this is impossible.” As regards whether I understand double entry book-keeping, I’ve got accountancy qualifications, so I think I pass that test. As to the idea that banning private money creation is not possible, several economics Nobel laureates think it’s possible.

All right, you try banning transactions a), b) and c) above, see how far you get.

For the umpteenth time, a bit of private money/debt/credit creation to oil the wheels and smooth the system is vitally important.

Where it gets dangerous is when banks capitalise land rents (that's eighty per cent of private money creation), which can only be sorted out by decapitalising land values i.e. with Domestic Rates, rent controls, mortgage restrictions caps etc. This is not hypothetical, it's what the UK did until the 1980s and it worked a treat - housing was affordable, owner-occupation rates shot up and the ocasional banking crises we had were as nought compared to what happened since 2008.

Probably true.

Ryan Bourne is a bit of an apologist for the corporatists and rent seekers and is incapable of distinguishing between earned and unearned income, but you can't argue with facts.

From City AM:

In fact, it may well be that significant hikes in taxes are not even feasible – even if they were considered necessary or desirable.

The UK already has a high tax burden. According to the Treasury’s measure, it currently stands at 37 per cent of GDP with a forecast increase to 38 per cent in the next Parliament. But 38 per cent of GDP represents the absolute maximum that governments of any political persuasion have been able to raise in revenue – irrespective of the tax rates they have set.

So it looks like we are already at the upper limits of our taxable capacity. With increasing labour and capital mobility among those paying the lion’s share of taxes, we might expect this maximum taxable capacity to fall further in the future.

This is a slightly different way of thinking about the Laffer Curve, I suppose.

His figure of 38 per cent seems about right (let's not bicker over a per cent or two either way), no UK government has ever raised more than that, not even the supposed high tax governments of yesteryear. So let's face facts and try and keep spending down to 38 per cent max.
----------------------------------
What is not clear is how much of that 38 per cent is really tax (and how much of government spending is really spending).

For example: until last year, my wife and I received Child Benefit, so a primitive mind would count the £2,000-odd a year we received both as tax (which we'd paid in the first place) and as spending. It's a philosophical point whether it's both or neither.

Some higher earners chose to waive their Child Benefit entitlement without receiving a tax cut; does that mean the government is spending less? Sort of. Does it mean the government is taxing less? Nope.

I, being pig headed, decided to continue claiming the Child Benefit but the price I pay is that they add the equal and opposite amount to my tax bill. Would I be paying less tax if I waived the Child Benefit? Nope, clearly not.

We've got the same dilemma with e.g. public sector employees. As Lola has pointed out often enough, public sector employees cost less than their headline salaries because the government only pays out part of it, it keeps the rest under the heading "PAYE".

Ditto with Housing Benefit "paid" by DWP to local councils. You can count payments from the private sector to the government as "tax" and you can count payments by the government to the private sector as "spending" but book keeping transfers between government departments are neither.

Remember that local councils have to pool most of their income from social housing and hand it over to Whitehall (or they did until recently). That's neither tax nor spending. Housing Benefit payments from DWP to local councils are the same nothing, but in the other direction.

Money

In searching for something else I came across this.

One sentence early on in the text caught my eye:

"Someone has to be responsible for making sure that there is enough money in existence to cover all the buying and selling that people want to engage in."

Erm, why?

Winston Churchill and Boris Johnson. That was then, this is now.

Winston Churchill, a century ago:

Some years ago in London there was a toll bar on a bridge across the Thames, and all the working people who lived on the south side of the river had to pay a daily toll of one penny for going and returning from their work.

The spectacle of these poor people thus mulcted [?] of so large a proportion of their earnings offended the public conscience, and agitation was set on foot, municipal authorities were roused, and at the cost of the taxpayers, the bridge was freed and the toll removed.

All those people who used the bridge were saved sixpence a week, but within a very short time rents on the south side of the river were found to have risen about sixpence a week, or the amount of the toll which had been remitted!

Emailed in by Chrome Man, Boris Johnson a month ago:

"Each time a station is rezoned it results in a loss of revenue. In the case of Woolwich alone it would cost more than £1 million per year, a figure that would only increase with the introduction of Crossrail.

“In the case of Stratford [which was rezoned, which means people travelling from that station pay lower fares], I took a decision to absorb this revenue loss as another one of my agencies, the LLDC, is one of the principal beneficiaries of the change in policy and is likely to see an uplift to its land values.”

Fun with the Mansion Tax

I know we've done these before, but it's always reassuring to see the Homeys make equal and opposite assumptions about the impact of the Mansion Tax and then present equal and opposite arguments against it (and by extension, against Land Value Tax).

Exhibit One

According to City AM, the Mansion Tax will drive wealthy foreigners away. And that's bad.

Labour’s proposed mansion tax on homes worth over £2m is just the latest assault on the super rich, who have become an easy target for politicians; the top 1 per cent of earners already pay 30 per cent of all income tax collected in the UK.

Should we care? It may not be a very fashionable case to make, but I believe we should worry about driving away this much-maligned community.

One hundred and four billionaires live in the UK, and London is now the global capital for the super rich. They spend an estimated £16bn here every year, which means that they contribute a whopping £3bn in VAT alone...

If you’re super rich and you were born abroad, you could just as easily return home if tax demands become too draconian.

Exhibit Two

According to Tory councillors in Camden, the Mansion Tax will result in more wealthy foreigners living in London. And that's bad as well.

LABOUR councillors were warned on Monday night that plans for a “mansion tax” on properties worth more than £2million would drive residents out of the borough, paving the way for the ‘super-rich’ to move in.

Tories challenged the ruling group to pass a Town Hall motion pledging to lobby against the policy being spearheaded by Ed Miliband and his shadow chancellor, Ed Balls...

"... The mansion tax is going to do what you guys [Labour councillors] will be appalled at. It’s going to bring in the very, very super-rich and drive out local residents.”

Which is all part of the Homey strategy - don't have a coherent message, just shout the first nonsense which comes into your head, making it more or less impossible to have a sensible discussion.

Once you've pointed out the obvious flaws in one argument, they cheerfully go on the other tack and completely contradict their first argument with their next nonsensical argument but without missing a beat.

See also: "We should replace Council Tax with Poll Tax" versus "We should replace Council Tax with Local Income Tax". Poll taxes and income tax are at two extremes of the spectrum (being autocratic hard right and socialist hard left respectively); Land Value Tax sits comfortably in the middle, having the advantages of both and the disadvantages of neither.

Economic myths: "Low interest rates keep home repossessions down"

From the BBC:

Continued low interest rates and mortgage market competition has led to another fall in the number of homes repossessed in the UK, figures show.

There were 5,000 homes repossessed in the third quarter of the year, the Council of Mortgage Lenders (CML) said. This compared with 5,400 in the previous three months and 7,200 in the same quarter last year.

OK, it's only half a myth, but it makes the usual Homey assumption that house prices and interest rates are a given, that mortgage debt is something real and that banks are somehow important to the economy (their 'plumbing' is important, making payments, changing currencies, filling cash machines, operating debit/credit cards and Direct Debits and so on, but the rest is fluff).

What really matters is whether the banks are demanding more than people are willing and able to pay each month. And how much you pay each month depends on three things: the nominal amount of the loan, the interest rate and the mortgage term. (Let's assume that people have already extended their mortgage terms for as long as possible and ignore that variable).

So it would be equally valid to say "Low house prices would keep home repossessions down".

At present, there's about £1,200 billion nominal outstanding mortgage debt, on which banks are charging an average interest rate of 3.5% (estimate). So the banks are charging £42 billion interest (actually, ground rent or privately collected land value tax) each year.

If interest rates went up to 5% but borrowers can only afford to pay £42 billion a year, it's not really a problem, banks can just write down mortgage debts from £1,200 to £840 billion, sort it out with debt-for-equity swaps, job done. I don't see what else they realistically can do.

Killer Arguments Against LVT, Not (348)

Emailed in by MBK, from The Economist:

But if LVTs are so great, why are they so rare?

One explanation is that it is too difficult to value land separately from what sits on it. There is not much of a market, for example, for undeveloped land in central London.

The author knocks that one right on the head:

… this can be overcome. The 2010 Mirrlees Review of British taxation argued that bean-counters could compare the price of similar buildings in different locations, for instance.

Correct. Identify a few bellwether buildings (a three-bed semi-detached house, an office block of a given size, whatever) in a marginal area i.e. very cheap areas, i.e. one where it's just about worth maintaining an existing building but not much new is being built. The land value in that area is to all intents and purposes zero. The amount by which the total value of a similar building (a three-bed semi-detached house, an office block of that given size, whatever) in a different area exceeds the one in the marginal area is by definition the payment for the "location, locate, location". Simple subtraction and a bit of averaging is all you need.

In any case, the efficiency of the tax does not depend on accurate valuations.

Exactly. LVT would probably work best if it's the same % rate everywhere, but it doesn't really matter. So if the tax on a three-bed semi-detached house in a valuation area is set the same for all such houses in that area, the cheapest might be paying 90% LVT and the most expensive only 70%. So what? There's no magic to the 70% or the 90%, either way it's a tax on the land value.

The bigger barrier is political.

Correct.

LVTs would impose concentrated costs on today’s landowners, who face a new tax bill and a reduced sale price. The benefit, by contrast, is spread equally over today’s population and future generations. This problem is unlikely to be overcome. Economists will continue to advocate LVTs, and politicians will continue to ignore them.

That turns logic and facts on their head. Having done the spreadsheets umpteen times, it is quite clear that if you shift taxes off earnings and onto land values (and other monopolies), then in the short term one or two per cent of the population have their state granted privileges removed (and will scream blue murder) but at least three-quarters of the population would be thousands or tens of thousands pounds a year better off.

Once today's rent seekers have found themselves proper jobs and rejoined the productive economy, everybody's happy. Or else you might as well argue that we can't legalise drugs because it would put deprive drug dealers of their livelihood. You can't miss what you never had.

And if we are not to worry about the future, we might as well throw in the towel right now.

"Government Electricity Rebate"

At the bottom of my latest gas and electric bill is a line saying "Government Electricity Rebate" and a credit of £12.

Seriously?

Yes.

The Department of Energy and Climate Change explains:

Rising energy bills have been causing concern for many households. Rising wholesale gas prices have contributed most to higher energy bills in recent years.

However, the costs of energy and climate change policies also make up a proportion of domestic bills. The policies bring a number of benefits to consumers and the economy. For example, by increasing the proportion of renewable energy we reduce our dependency on fossil fuels and by improving the energy efficiency of homes we reduce consumption and household costs. Without government policies, average household energy bills would be higher.

Government is taking action to make these policies more affordable.

The Government Electricity Rebate (GER) is a £12 government contribution to help lower the impacts of these Government environmental and social policy costs on consumer energy bills.

EU-related hilarity with Grant Shapps

From City AM:

The Labour leader has nothing to say about the deficit; nothing to say about the economy; nothing to say about welfare; and nothing to say about Europe.

Contrast this with the Conservative Party, and our record… Time and again, our Prime Minister David Cameron has confronted, not ducked, the difficult decisions in Europe. He has cut the EU budget and fought to get British taxpayers a good deal.

Perhaps our Prime Minister has indeed agitated for increases in the total EU budget being slightly smaller than they otherwise would have been (difficult to prove either way), but the total budget has indisputably gone up, and as to the last assertion...

Ahem.

Again, in all fairness to the Tories (not that they deserve it), the massive increases in the UK's net contribution since 2010 is largely down to stuff which the previous Labour government had signed us up to, but surely an incoming government can tear that up and start again? That's a basic principle of the British constitution. So if he has "fought to get… a good deal", he's made a pretty shit job of it so far.

This "Sandwich Makers from Hungary" Story

From the Northampton Chronicle and Echo

An article in the Daily Mail newspaper today said Greencore was having to recruit a 300-strong workforce from abroad to work in its new £30 million sandwich factory, opening in 2016, because “no local people wanted to do the job”. It led to the front-page headline, “Is there no one left in Britain who can make a sandwich?”.

But, in response, the company which produces 430 million sandwiches per year, said it had been “pleased” with the response from local job applicants.

It aims to recruit 250 new people in total to staff the new facility and is not looking to fill all the positions with Hungarians.

Good that all the other newspapers and TV companies didn't just print articles regarding that without calling up to verify, eh?

Sally Mortimer, officer for Unite the Union said: “We welcome the possibility of 250 new jobs in the Northampton area. With the closure of Solway foods in Corby, there are plenty of well-trained members that are looking for permanent work. The jobs fair will give hope to many of the unemployed local people who have struggled to find employment.”

Margot Parker MEP for UKIP pointed out that more than 500 jobs were lost earlier this year when the Solway Food factory in Corby closed. The workers were doing near identical jobs, she said.

She added: “It is apparent that the availability of cheap labour from Hungary is more important than the livelihoods of local people. It is doubly galling that the taxes paid by ex-Corby workers will subsidise the tax credits of the new Hungarian employees. Talk about sticking the knife in.

Jesus. Corby is 20 miles away on a not particularly fast road. I'd be surprised if many people from there would want to travel that far for such a job rather than finding something local in Corby.

And none of this would be a problem if we had a Citizen's Income, because a lot more of the people in Northampton that could do these jobs would take them as they wouldn't lose benefits.

The Good Developer

What really hacks me off about all this anti LVT stuff is the claim made by many antis that applying LVT would kill 'development' stone dead.

Well peoples, let me tell you about one developer. My dad. He railed against land price inflation and objected to being taxed on it, because all such increases he then spent on buying his next site.  That is he never factored land price increases into his profits.  He realised that this was not actually a 'profit' but a result of 'inflation' that in fact made his job much more difficult. Not in the least because it made all sorts of idiots think that being a developer was an easy way to big money.  He actually ran a development business - not a rent seeking operation.

I reckon he'd have loved LVT.

I was worried about something on the side of my son's head, but our GP put my mind to rest

"That's not EBOLA!" he shouted, "That's A LOBE!"

Killer Arguments Against LVT, Not (347)

Derek left the following rebuttal to the idiotic Faux Lib statement that replacing taxes on income with taxes on land values would lead to "the tragedy of the commons":

Whenever a Royal Libertarian brings up "The Tragedy of the Commons" it's worth mentioning that the author, Garrett Hardin, was talking about an unmanaged commons, i.e. a free-for-all, and that while not a Georgist himself because of his position on overpopulation, he did say:

"I have known... of Henry George's work for a long time and always thought it a shame that he could not have been born two centuries earlier and laid out the ground rules for the development of the New World."

To put it in context, the radio spectrum (for example) is just there for free, nobody created it. But if everybody were allowed to broadcast what they like on whatever frequency they like, it would be worthless.

Society in general (i.e. the government) therefore allocates broadcasting rights to individual businesses and hounds pirate broadcasters - without this consensus and enforcement, radio spectrum would have little or no value to anybody whatsoever, all you'd hear is acoustic soup.

So far so good. But this creates windfall gains for the lucky people who are allocated frequency at all other potential broadcasters' expense.

So to even things up, it is only just and equitable for people who want to be allocated broadcasting rights to pay for them, that money goes into the pot to pay for stuff which benefits everybody (or would do in an ideal world).

Land is no different. It's just there, for free, but without society in general agreeing that we are all collectively better off (some more than others) if individuals are granted exclusive rights to occupy bits of it, land would have little or no value. That's what creates the value, or that is a precondition for plots in favourable locations having value (some land has no value either way).

And the justification for society in general imposing an equal and opposite user charge or occupation fee is exactly the same.

So the LVT-free world which the Faux Libs dream of is exactly the opposite - everybody is trying to grab as much land as possible, even if that is to the detriment of society as a whole. Which is "The Tragedy of Commons" in a nutshell.

Twats.

"Man in charge of nation’s finances struggling with concept of half"

It's a funny old world where spoof news website Newsthump comes up with the clearest explanation of why George Osborne's much vaunted success at negotiating down the UK's EU contributions is no such thing:

The Chancellor said that the UK will now be able to offset its EU rebate of £850m against the surcharge, meaning it will only have to pay £850m extra to the EU next year.

Economist Simon Williams, who actually understands the principle of ‘fractions’, told us, “The point here is that the Chancellor has given away the rebate we were due to get next year.

“So we’ve given up a £850m rebate from the EU, in order to have £850m taken off our surcharge bill. You don’t need a degree in economics to see how this isn’t the same as ‘halving your bill’.”

"Thousands of balloons released to mark fall of Berlin Wall"

Absolutely ridiculous.

Why are they using helium balloons, which fly upwards when released, to symbolise something "falling"??

Far better would be to throw thousands of blocks out of an aircraft. They could make them out of foam or polystyrene to prevent injury and damage, of course.

"The release came amid a massive open-air party at the Brandenburg Gate. Earlier at the party, UK performer Peter Gabriel sang a version of David Bowie's Heroes."

People associate the song "Heroes" with the Berlin Wall*, but it's not actually that specific. It's a love song which contains the following verse:

I, I can remember
Standing, by the wall
And the guns shot above our heads
And we kissed,
as though nothing could fall

* David Bowie record the album in Berlin and released a version of "Heroes" sung in German (I know because I've got the single).

Next question: if they were releasing balloons, why didn't they go round the clock of inappropriate metaphors and invite Nena in to sing "99 Luftballons"?

Jobs and Fun

From the Telegraph

It is one of the world’s greatest theatres attracting opera lovers from across the globe to its celebrated performances.

But according to the trade union Equity, the professional freelance dancers entertaining thousands of fans every week at London's Royal Opera House are paid less than the theatre’s box office sales assistants.

It is claimed the highly-skilled dancers hired to star in Royal Opera productions are paid just £9.14 an hour during rehearsals, compared to the £10.70 hourly rate awarded to box office staff.

Of course they do. They love dancing and get paid to do it, and so do lots of other people. No-one loves working the box office, and most people will take it as an alternative to working in Starbucks.

See also: why quality auditors get paid more than male pornstars.

"Escaped cow... charges man, leaving him injured"

Emailed in by James Higham from The Geelong Advertiser:

A MAN ended up in Geelong hospital with head and chest injuries after an escaped cow charged at him in Hamlyn Heights yesterday.

Paramedics rushed to Vines Rd after reports a man in his 50s had been knocked out by a cow about 4pm.

The man was taken to hospital in a stable condition.

Police and City of Greater Geelong officers spent more than two hours trying to capture the animal, believed to have escaped from Geelong sale yards.

Killer Arguments Against LVT, Not (346)

Tim Worstall wrote one of his (presumably) paid pieces mis-describing taxes on land values as taxes on personal capital or personal wealth.

Taxes on land value are not actually taxes, they are user charges for private use of public/national capital or wealth. It's no different to a landlord charging rent. Either you agree with LVT or you agree that landlords should not be allowed to charge rent.

Lola left a comment and got this Faux Lib f-wit reply:

"Do you remember the story of ‘the tragedy of the commons’? Land open to all to exploit can be ruined – individual ownership can limit such pressure and preserve it as a productive resource.

Land Value Tax assumes that individuals own i.e. have exclusive possession of land and thereby privileged access to "the commons" (i.e. whatever it is that makes that area desirable). That's what they are paying for. So nobody will try to grab more of "the commons" than he needs and/or is willing to pay for. In its wider sense, LVT extends to all "commons" such as pollution, road use, radio spectrum, airport landing slots, extraction of natural resources etc.

They [landowners] have to continually expend resources protecting it, and maintaining it – that’s a service.

Yes, but he's talking about the building, not the land. More lies.

And the “location premium” is in large part defined by how one’s neighbours use their land, thus how a landlord uses their land contributes to the ‘location premium’ of their neighbours.

Quite true, but…

1) The rent-paying tenants contribute far more than their landlords, and our commenter overlooks the fact that there is an endless list of othe things which dictate location values (positive or negative) and it's not simple addition and subtraction. A chain is only as strong as its weakest link - so you could have the best state school in the world, but if there were no jobs or transport links in the area, location values would still be low.

2) It takes very large numbers of people to generate the 'site premium'. As a general rule, the more people, the higher the site premium. I'd be surprised if anybody generates more than 1% of the site premium of his own land (it's usually close to 0%). We can deal with this quite simply by setting the tax rate at no higher than 99% of the site premium. Seeing as the medium term aim is to tax land rents at approx. 80% and to give everybody their share of the land rent via personal allowance/Citizen's Income, that is a non-point anyway.

3) What about houses which are worth more precisely because of scarcity value, because people are prevented from building in the vicinity, i.e. in the Hallowed Green Belt?

Who creates that value?

Salma Hayek on Feminism

Via Salma Hayek

Despite her passionate support for women, Hayek told PEOPLE that she does not consider herself to be a feminist. 

"I am not a feminist," she said. "If men were going through the things women are going through today, I would be fighting for them with just as much passion. I believe in equality." 

This is an important distinction. Feminism isn't about fighting for equal rights. It's about fighting for women's rights.

OK, women didn't have the same rights as men some decades ago. Some people might argue they still don't have the same rights as men, although I'm really not sure.

But the point is that feminists will cry "equality", but only when women are at a disadvantage. They weren't crying out for pension age equality, or for an investigation into why men get longer prison sentences like they cry about the women's pay gap.

If you want equal rights, you're an egalitarian, not a feminist.

"Yacht loaded with £40m Michael Caine fleeing London is seized by police"

From The Evening Standard:

A yacht has been seized in the Caribbean loaded with up to £40 million worth of Michael Caine trying to escape the streets of London.

An 81-year old man and his 57-year old wife were arrested on the SY Hygeia Of Halsa after a joint operation involving Scotland Yard, the National Crime Agency and HM Revenue & Customs.

Detectives say they are investigating a London-based land-owning group, with connections to the Caribbean, who are suspected of large-scale avoidance of the Mansion Tax.

The UK-registered vessel was boarded by French Customs officials off Martinique on Monday as it began a transatlantic crossing. Officers recovered up to 80kg of Michael Caine, with a potential on-screen value of between £30 million and £40 million.

"Jumper"

From Wiki:

In Ann Arbor, Michigan, 15-year-old David Rice gives his crush, Millie Harris, a hand-knitted sweater. A bully, Mark Kobold, throws the item of winter clothing onto the ice near a river.

While trying to retrieve it, David falls through the ice and is pulled away by the current. He suddenly finds himself in the local library and discovers he can use the jumper to "jump" (teleport) from one place and instantly appear in another. Amazed with the knitwear's ability, he runs away and is believed dead by his alcoholic father.

Eight years later, an adult David (Christensen) lives lavishly using money stolen via his jumping ability, purchasing dozens of cashmere upper garments. One day, he is ambushed in his home by Roland Cox (Jackson). Roland belongs to the Paladins, a group of religious extremists which has been tracking down and killing these teleporters, the "Jumpers", because they believe "only God should have the ability to look stylish in wool".

He tries to trap David with a system of high-voltage cables, which badly singe the pullover, thus preventing him from being able to jump. David escapes and returns home to Ann Arbor, seeking his old crush Millie.

He is attacked by Mark, the same bully, and purposely teleports him into a Pakistani clothing sweatshop where he is forced to work for 80 cents a day. David then returns to Millie and invites her to travel with him by conventional means to Rome.

This could go either way...

Article by London's Deputy Mayor for Housing in City AM:

It is time legislation was introduced to enable that land to be transferred direct to the mayor for disposal, providing homes for Londoners rather than being left to waste. At City Hall, we have a “Domesday Book” of Greater London Authority assets. It offers more transparency and could be expanded to include everything from the public sector.

And instead of auctioning assets off, consideration should be given by public bodies to how to extract more value over the longer term, by partnering with developers. This sort of thinking is happening at some big landowners like Transport for London. These bodies have the potential to be the Great Estates of the future, like those who built large parts of central and west London.

Ho hum.

"Partnership" always sounds so cuddly and nice and is oft wheeled out by the UK government to justify giving large sums of money to its mates i.e. Private Finance Initiative and so on.

But if you take his words "extract more value over the longer term" literally, the blindingly obvious thing to do would be for the GLA (or whichever government body) to retain ownership of the land and ask a developer to build the building.

Whether the GLA and the developer split the future income in proportion to the relative value of the land (about three-quarters) and the cost of the building + profit margin (about one-quarter), or whether the construction costs are just paid off out of the first few years rental income* is minor details.

* Rents per square foot per annum = bare minimum of £10 in outer London fringe, all the way up to £100 and beyond in the top decile.

Build costs per square foot = £100.

Not a lot of people raise their house prices

From the Daily Mail:

Sir Michael Caine was among a string of stars who left the country in the Seventies to escape the punitive 83 per cent income tax rate.

Although the actor is now happily ensconced back in Britain on his Surrey estate, Ed Miliband’s proposed mansion tax has got him worried again.

‘This is a preposterous and silly tax, and I’m very unhappy about it,’ he tells me. ‘I’ve also got a two-bedroom flat in Chelsea Harbour and, due to its value, that’s now a mansion as well.

So, sell it, then. You don't need to live in London, you can live anywhere in the UK with your job.

‘The tax will be based on current property values, but what if there’s a property slump and it goes down? Will I get my money back?’

If I have a good year at work, followed by a crappy year, do I get my income tax back?

Caine and his wife, Shakira, own a Chelsea Harbour penthouse and Keston Lodge, a Tesco-style country mansion in Leatherhead surrounded by 20 acres, which he bought for £1 million in 1999.

Right, so live near Leatherhead. Perfectly nice place to live, and if it was £1m in 1999, it's probably a whisker under £2m now.

‘I feel sorry for all the older people who’ve worked hard all their lives and their London suburban house falls into this category,’ adds Sir Michael, 81, speaking at his artist chum Adam Bricusse’s Kaleido preview party at the Lights of Soho gallery.

Who did nothing to end up with £2m houses.

Caine, the son of a fish porter and a charlady, is worth £50 million after appearing in more than 80 films.

So, why's he bothered about the frankly paltry amount of tax that his £2m house will cost? Few grand a year, he makes a lot more than that for 5 minutes on screen as the elderly sage in all of Christopher Nolan's films.

It does have to be asked, though: How much would his house price fall if he blew the bloody doors off?

Sometimes, the post titles write themselves...

Shop 'til you drop

Please sir, may we have some more?

From City AM:

The Bank of England (BoE) made an unprecedented move yesterday as it allowed certain non-bank organisations to access its account facilities – expanding its so called lender-of-last-resort access.

For at least a century, only commercial banks and building societies had the privilege of keeping accounts with the BoE...  From now on, designated investment firms and central counterparties (CCPs) will be allowed to keep accounts at the bank...

Go on then, what's a CCP? (the old Soviet Union in cyrillic with a letter missing?)

CCPs manage risk by stepping into the middle of a financial transaction between two parties. Instead of dealing with each other, both parties deal with the CCP...

CCPs have been around for a long time but only started playing a larger role in financial markets after regulators made their use mandatory for certain activities.

Good stuff. Get private players using their own money to backstop/insure/underwrite the banking system, keep the taxpayer and government out of it.

Recognising this, the BoE has allowed them access to its account facilities to ensure it can always be rescued should another crisis hit financial markets.

A primary example of a CCP in the UK is LCH.clearnet which “clears” half of the world’s interest rate swap market ­– a transaction where a fixed rate is swapped for a variable one.

Jolly good.

So the UK government is now underwriting the underwriters? That was the whole point of making the underwriting mandatory so that the UK government wouldn't have to underwrite them.

And we're underwriting interest rate swaps even though most people don't even know what they are, and most swaps are purely speculative (gambling on interest rate and currency movements).

Mystery solved.

Anni Dewani's murder was the result of a tragic mix up!

It was not her husband Shrien Dewani (left) who placed the order with the contract killers. It was Labour politician Sadiq Khan (right) using his mobile 'phone while driving. He was trying to order a takeaway and dialled a wrong number. The footage from the hotel is actually Mr Khan berating the taxi driver for turning up twelve hours late, still without his pizza.

Here's the conclusive bit of evidence: