Saturday, 31 May 2014

A Cafe Owner Writes...

Spotted from a local cafe to me

Our landlord allowed us the first six months rent-free but the minute we started to trade we, like all similar businesses, became liable for a terrible trinity of taxes - VAT, National Insurance and local business rates. Only now, far too late to save us, has the government allowed a £1000 reduction on rates and £2000 (maximum) on NI. We've been waiting months for an additional revaluation of the business rates, which has finally come through, just as we're having to close, so we'll never benefit from it.

If we'd managed to make any money, we would have had to pay corporation tax on that, of course.

We don't object to paying our fair share of tax but what we owe - and cannot pay - the taxman is far outweighed by the value of the state benefits that will be paid to our redundant staff. That looks like madness to us.

I'll never understand businesses complaining about having to pay the tax bill. It's the one thing that you absolutely 100% know up front and should factor into your calculations. If you didn't like how it worked out, why did you go into business?

We did everything and more that the government encourages businesses to do - renovated and brought back to life a property that had been empty for years, employed otherwise unemployed people, paid minimum or living wages unlike many employers, took on apprentices, invested in training and operated ethically.

If you go into business to do what politicians thinks you should do then you shouldn't even be going into business in the first place. I run my business based on 4 things: what the law is, what I don't lose sleep about, what I like doing and what makes me money. That's difficult enough. Doing what grandstanding politicians would like me to do would destroy it.

At the same time, every day we read in the news examples of tax avoidance by excessively wealthy individuals or multinationals, the taxman's sweetheart deals with particular businesses, the scandal of zero-hours contracts, banking malpractice, massive and undeserved bonuses, overcharging by energy never seems to stop. We are not all in this together. It really is one rule for them and another for us. And by us we mean all small businesses, including our rivals.

I did wonder about these people when they first started this cafe. Couple of ex-council officers, I wondered if they were maybe Guardian reader types. Sounds like I was maybe right.

It's funny how their rivals are all in business still, and have been for years. I think one of them must be coming up on 20 years in business.

The simple fact is that to start any business, you need experience of that business. And that's doubly so for cafes and restaurants. Even if I knew that business, I'm not sure I'd want to go into it. I know there are two things that make it work. One is having a good product. The other is having a good location. And the second is generally the most important. OK, if you're Raymond Blanc, you can buy a place out in the country and have a successful restaurant and people will travel miles to you (and even then, his location is in the wealthy bit of Oxfordshire). If you're a cafe doing lunches, location really matters.

This cafe is on the edge of the Old Town shopping area in Swindon. It's further than almost all the shops from the main parking area, meaning that people are rarely going to be at their last shop and go on to it. If they want a coffee, they'll go on their way back. Even if it was well run (and I'm not sure it was), it wasn't like to succeed.

Friday, 30 May 2014


From The New Republic

“Dr. Angelou,” which was repeated by many media outlets after she died, was willed by Ms. Angelou herself: Her website referred to her as “Dr. Angelou” and her Twitter handle was the unambiguous @DrMayaAngelou. Wake Forest University, where she taught for many years, colluded in this ruse, referring to her in its obituary as “civil rights activist and professor Dr. Maya Angelou.” When I called the school to ask why it went along with this misdirection, a spokesman told me, “That was her choice, to be called that.” 

Ms. Angelou did have numerous honorary doctorates, from Smith College, Mills College, Mount Holyoke College, Northeastern, Lafayette, Eastern Connecticut State—the list goes on. These degrees are given at commencements to lure big names to the ceremonies, impressing graduates and their parents. I have long thought little of this tradition; at Yale, my alma mater, honorary degree recipients pop onto campus, meet with administrators and a few students (student government presidents, that type), collect their degrees onstage, then leave. Paul Simon got an honorary doctorate in 1996, Paul McCartney in 2008—and neither graced us with a song. 

In any event, throughout academia, it is agreed that an honorary doctorate does not entitle one to call oneself “Dr.”

Actually, I think that technically speaking, an honorary doctorate does entitle you to call yourself "Dr". It's more that anyone who decides to do so is being a bit of a dick for doing it.

I only found out recently that a friend I've known for 20 years is a Dr (electronics engineering). But he rarely uses it except when doing conferences or on his CV.

The boundless hubris of London cabbies, part 94

From The Register:

Transport for London (TfL) has said that it doesn’t think that the app used by Uber drivers is in breach of the law by allowing them to use GPS and navigation to calculate charges, but it wants to refer the issue to the UK High Court.

The capital’s transport authority said it didn’t agree that smartphones used by private hire drivers could be classed as “taximeters”, which are illegal in private cars.

However, it said that it would be asking the courts to get involved “given the level of concern among the trade” and the fact that the law was “unclear” on the issue.

I can't track down a law that makes it illegal for anybody other than 'official' taxi drivers to use a taximeter, but let's assume that such a law exists.

Which Parliament in its right mind passed such a law?

AFAIC, cab drivers can charge by the mile, by the minute, agree a price beforehand, what on earth business is that of anybody else other than the drivers and their passengers?

Antiques Roadshow Van Dyke to make £50 – Daily TV round-up

From Yahoo

A video clip which appeared on the 'Antiques Roadshow' is expected to make £50 when it goes to auction later this summer.

The clip was bought for just £5 by Father Jamie MacLeod in a Cheshire antiques shop 12 years ago.

He then took it to the Roadshow, where presenter Fiona Bruce spotted it, believing it to be the genuine article.

Bruce then asked expert Caractacus Potts, with whom she was making another programme about Dick Van Dyke, to look at the clip.

Then after a lengthy restoration, it was verified by Dick Van Dyke authority Mr Dawes Sr.

It's thought that the work was a Disney movie made during the 1960s which was through to have been destroyed after the director tore the film out of the camera after being appalled by his cockney accent.

MacLeod, who said that owning the clip had been 'a blessing', added: “I will be sad to part with it, though the proceeds will be put to excellent use buying a jolly holiday with Mary and a DVD collection of Diagnosis Murder.

Movie Review: X-Men: Days of Future Past: 3D

I've recently been neglecting my duties in the movie review area, but as it's the weekend and some people might consider it, it's worth posting a review.

Anyway, the story is that sometime in the future, around 2020-something, the mutants and the good bits of humanity are being destroyed by some sentinels that can defeat mutants. So, the way to fix this is a bit of time travel back to the 1970s to stop an event happening and fix the future.

And it's pretty good. The writing is solid. Like the best of the X-Men movies it doesn't shy away from exploring the consequences of such a situation (how would non-mutants react to mutants and vice versa). The same stellar cast from X-Men First Class are back as Professor X, Magneto and Mystique (James McAvoy, Michael Fassbender and Jennifer Lawrence). It manages a few 1970s-era jokes without overloading on them.

I'm not sure I'd spend the extra on 3D, though. I don't mind 3D (Gravity and Avatar are better with it) but there's only one scene where I felt like it might have lost some effect (and it's a piece of joyful silliness that I'm not going to give away).

Full House at The Guardian's Comment is Free!

Thursday, 29 May 2014

2014 Index of Economic Freedom

From The Heritage Foundation:

Free (score 80/100 - 100/100)
1. Hong Kong
2. Singapore
3. Australia
4. Switzerland
5. New Zealand
6. Canada

What do the first two have in common, apart from being Chinese-populated city-states, harbours/trading posts and former British colonies..?

Well, in both, the government owns the freehold to all or nearly all land and merely grants long leases (usually 30 years in HK and up to 99 years in the case of Singapore). Both governments collect a significant chunk of land rents arising, either as true rent, leasehold sales, annual land value taxes/business rates, building licence fees, stamp duty, taxes on property developers etc.

As a result, income tax rates for everybody else are pretty low and sales tax more or less non-existent.

It is true that neither pays out much cash as welfare payments, but those are not really necessary. Apart from having more of a work/family ethic, the lower taxes on output and employment means that there is, er, more output and employment.

Just as importantly, there is a ready supply of low-cost social housing (to rent or buy) so there is an implied welfare system - instead of paying top whack unregulated rent/mortgage and getting cash welfare, you just pay a lower net rent/mortgage.

In principle, it comes to the same thing, only the Western system is visible transfers and the HK and S systems are invisible transfers, but they are very real transfers nonetheless*.

So for when these Faux Lib's say that HK and S are such success stories because they have low rates of income tax (hooray!) and no welfare system (ho-hum), you can politely tell them that they are fucking idiots who are missing about two-thirds of the true picture.

* It's a bit like the Homeys complaining about social tenants claiming Housing Benefit. That is visible, but not actually a net cost to the taxpayer. They could make this cost invisible by simply dropping social rents to a few quid a week, hey presto, that's £12 billion off the DWP welfare bill (and a reduction of £12 billion in rent receipts recorded by local authorities and Housing Assocations).

VAT is borne by the supplier, part 94: Japan.

From the BBC:

Retail sales in Japan fell 4.4% in April, compared with the same period last year, as the effect of an increase in the country's sales tax began to be felt. Japan raised the tax from 5% to 8% on 1 April - the first hike in 17 years.

The country faces rising social welfare costs due to an ageing population and is trying to rein in public debt.

So that hopefully puts to rest this nonsense which the politicians bandy about, and which so many armchair economists trot out, that "The consumer pays the sales tax". The consumer only pays the tax if demand is price insenstive (tobacco, booze, petrol/diesel); the supplier pays the tax if supply is price insensitive (fixed supply, such as land, or fixed high overheads/low marginal costs).

Analysts said sales had dropped in part due to consumers rushing to make purchases ahead of the tax rise. That trend was evident in March, when sales surged 11% - the fastest pace of growth since March 1997.

Illustrating why it is a bad idea to announce changes to tax rates in advance.
UPDATE: Dinero says:

A lot of the time, where the word consumer is approriate, the consumer does pay the sales tax. It is often a very competitive market with items being sold close to the cost of production, and so VAT along with the cost of raw materials are included in what establishes the price.

Problem is, there is no evidence to support that and plenty of evidence to debunk it.

The UK ran the real life experiment of changing VAT from 17.5% to 15%, back to 17.5% and then up to 20% over consecutive years.

The ONS publishes separate retail price indices for the main categories of consumer spending, some VAT-able, some not. If you look at total selling prices for VAT-able and not VAT-able (inclusive of VAT, where appropriate), rather unsurprisingly, overall inflation, from the point of view of the consumer was exactly the same for each.

If Dinero's theory held water, then RPI for VAT-able supplies would have been 2.5% lower than for not VAT-able in the first year and then 2.5% higher in the two subsequent years.
Dinero again:

... if a bar of chocolate is being sold in a supermarket for 100p inclding 20p VAT and VAT is removed - what is the process that enables the price to stay at 100p?

Supermarket retail is very competitive and a retailer who left the price at 100p would be undercut by a competitor who would be removing the full 20p to attract the customers to himself.

That's all supposition. I do facts. Then I try and discern patterns and only then do I try and work out the logic. Charles Darwin knew bugger all about DNA and molecular biology, but he accepted and refined the theory of evolution.

1. I did some more number crunching looking at Tesco's gross margins during the period of VAT changes and their gross margin went up (or down) by about two-thirds of the VAT reduction (or increase).

2. During the recession, the EU graciously allowed a couple of Member States to experiment with VAT cuts in labour-intensive businesses. Sweden did quite a significant VAT cut for restaurants and pubs (from 25% to 12%). Menu prices only went down slightly; what happened was a huge increase in custom and hence employment.

3. Although supermarkets are competitive inter se, they act as a cartel to the outside world and have already set prices at the profit/revenue maximising level. If they can get away with making an extra 20p profit per chocolate bar, why would they give it away again?

4. Every penny they reduce the price is 5% off their extra net profits; would people eat 6% more chocolate if a bar costs 99p instead of £1? Would people eat more than twice as much chocolate if the price were 90p instead of £1?

5. Look at the whole supply chain; manufacturers are geared up to a certain level of output; supermarkets only have so much shelf-space etc. Even if their pricing guru tells them that they could sell more than twice as much chocolate if they cut the price to 90p, it simply physically can't happen. So supply is fairly fixed; suggesting that the tax is borne by suppliers.

Oooh the irony...

The paper version of the article in The Metro includes a picture of 1D fan "Jessie" burning her concert ticket* in protest at two of the band allowing themselves to be filmed smoking what appears to be a joint.

She's wearing a Rolling Stones sweatshirt.

* The ticket appears to be an e-ticket which she printed off herself, so the physical ticket is worthless, she can easily print another once she's changed her mind.

"John Kerry tells fugitive Edward Snowden he's doing the right thing"

From the BBC:

US Secretary of State John Kerry has admitted that intelligence leaker Edward Snowden is probably "doing the sensible thing" as a fugitive from justice, who has "manned up" and accepted that he can never return home.

Mr Kerry added that if Mr Snowden, 30, "still believes in America, then he clearly doesn't know much about the American system of justice".

His comments come in the wake of an interview with NBC in which Mr Snowden said he sought asylum in Russia because the US revoked his passport. Mr Snowden also described himself as a trained spy, not a low-level analyst.

"There are times when even for a patriot, doing the right thing means running away," Mr Kerry said on Wednesday. "If Mr Snowden wants to come back to the United States… he knows that we'll be ready to lock him up immediately."

Mr Kerry also hoped that the former National Security Agency contractor was becoming "confused", adding "the United States wants to do great damage to this man."

"We're vaguely hoping that in a moment of loneliness, he'll be stupid enough to come back to the US," Mr Kerry said.

Wednesday, 28 May 2014

"Splash! Alesha takes revenge on David for joking about her miming"

From The Evening Standard:

Alesha Dixon took inspiration from her fellow talent contest judge Sharon Osbourne when she threw a glass of acid over David Walliams on the first Britain's Got Talent live semi-final. The former Mis-Teeq singer poured the toxic chemical over the comedian after he made a joke about her miming.

Judging singer Christian Spridon, Walliams said: "I loved the performance. It is about entertainment and that’s what you did. You are a born star. Alesha made a career miming!"

Dixon quickly jumped to her feet and poured hydrochloric acid over Walliams screaming: "You are fucking with the wrong bitch! I don’t mime!" The rest of the judging panel Amanda Holden and Simon Cowell gazed on in horror.

After the show Walliams tweeted from his hospital bed "Well it's nice to know @AleshaOfficial can take a joke. #BGT". He posted a picture of the moment his skin started peeling off with the caption: "The moment @AleshaOfficial nearly blinded me on #BGT. Where there is a blame there is a claim."

Alesha responded: "Hahahaha!!!! U r dead to me you fuck :) soon u will be dead 4 real :)".

"Microsoft is to start building its own self-crashing cars"

From the BBC:

Microsoft is to start building its own self-crashing cars, rather than modifying vehicles built by its rival Google. The car will have a stop-go button but no controls, steering wheel or pedals.

Co-founder Paul Allen revealed the plans at a conference in California.

"We're really excited about this vehicle - it's something that will infuriate its users by suddenly stopping for no apparent reason," said Allen, director of the company's self-crashing project.

He added that after punching the 'stop-go' button for several minutes, users' will have the ability to "tear out the power cable in a fit of rage, slam the doors and then return after five minutes once they have simmered down - it should normally work fine again after that".

But some researchers working in this field are investigating potential downsides to self-crashing car technology. They believe they could make road rage worse, as people gathered round their inexplicably stationary vehicles while in a filthy mood might start turning on each other.

Giant Sinkholes* Of The Week

From The Daily Mail:

Parts of a house including a bedroom and an outdoor patio have been swallowed by a large sinkhole that opened just hours before a second appeared on the same street.

The first hole, which gave way about 4pm on Tuesday, engulfed a corner of a three-storey Swansea home near Newcastle in the NSW Hunter Valley sending a section of a spare bedroom sliding up to 15 metres below the earth's surface.

Tables and chairs on an outdoor patio where also swallowed by the large cavity, which opened above a disused mine shaft that operated in the area until it was abandoned in 1953.

* OK, these weren't true sinkholes at all but collapsed mine shafts, not that that's much consolation to those affected.

The TaxPayers' Alliance way off piste as per usual

From City AM:

TODAY is tax freedom day, according to the Adam Smith Institute... The day represents the portion of the UK’s national income needed to pay direct and indirect taxes, collected by central and local authorities. Today, 41.09 per cent of 2014 is over – the same proportion of the UK’s income that is collected in tax.

Despite the day coming earlier than it did last year, “cost of government day” is still far ahead, coming on 26 June. The second day comes nearly a week earlier than in 2013, but the month-long gap between the two events illustrates the difference between what the government collects in tax revenues and what it shells out in spending...

The Taxpayers’ Alliance also weighed in on the findings, saying that the average household spends more on tax than on essential items like fuel, clothing, food and housing. The typical tax bill comes to £9,415 and the essentials run to £7,727, according to the group.

Where on earth do they get £9,415 from?

According to the PSFD, page 22, the UK government spent £640 billion in 2013-14 (of which approx. £540 billion was collected in tax and £100 billion was extra borrowing).

So the average tax paid per household was (say) £21,000 and the median is maybe two-thirds of that, £14,000.

And seeing as extra government borrowing is just deferred tax, the true average is £24,000 and the median is £16,000.

While the TPA are really good when it comes to pillorying government waste and theft, they don't understand the tax system, they say that Council Tax is the biggest single bill paid by households etc. Who pays the piper, I guess.

(As MMTers point out, the government doesn't actually collect tax money and then spend it. The government creates money by spending it and then, to prevent hyper-inflation, destroys a similar amount of money by collecting taxes. But that's another topic.)

UPDATE: Dinero queried the MMT logic and Derek explained it rather neatly:

It's just an accounting thing, Dinero.

You can look at the government as collecting existing pound notes into the Consolidated Fund and then spending them, or as creating new pound notes for spending and destroying the old ones collected for taxation.

Either way works for the accountants but the advantage of thinking about it in the second way is that it makes it clear who creates the pound notes and when.

Tuesday, 27 May 2014

“Clear your desk!” Farage tells Alex Salmond after Euro election triumph

From The Daily Mail:

Nigel Farage is preparing to replace Scottish First Minister Alex Salmond with his UKIP MEP David Coburn following his historic fourth place in European elections.

The UKIP leader has asked the SNP leader to “clear his desk” to make way for his victorious candidate, to the horror of the established Better Together allies.

Mr Farage was yesterday basking in the glory of winning one-third as many votes north of the Border as Alex Salmond’s SNP, which retained both of its MEPs on a largely unchanged share of the overall vote.

David Coburn, UKIP’s victorious candidate in Scotland, yesterday called for the First Minister’s resignation, as Labour accused the SNP of foolishly delivering a boost for Mr Farage. In a stinging attack, Labour's Scottish leader Johann Lamont said: 'Scotland now has three nationalist MEPs.'

After winning more than one-tenth of the votes cast on a one-third turnout, Mr Farage is now planning repeat visits Scotland in the run-up to September’s referendum as he feels there are plenty of pubs in the country which have not yet served as backdrop for a photo opportunity.

He told the Mail: “With the appointment of David Coburn as First Minister [in Scotland], we will have not just put a fox into Westminster’s henhouse, we have put a pine marten onto the Holyrood throne.

"Apart from Labour and the Conservatives, we are the only truly national political party, and apart from the SNP – who have never campaigned outside Scotland, for obvious reasons - and the aforementioned Labour and Conservative parties, we obtained the largest vote share in Scotland in these elections, which proves that there is a voice for those who believe in an independent Scotland as part of the UK.

“Alex Salmond now finally has to deal honestly and openly with handing over the keys to his office and explaining to our man how to use the photocopier, how to get his expense claims authorised and all that day-to-day bureaucratic crap.

“They know it, we know it, and now we can see the Scottish people know it as well.”

Mr Salmond was rather bemused by these events, pointing out that "...the Lib Dems lost an MEP and UKIP gained an MEP. Both these parties are campaigning against Scottish independence so what difference does it make to anything?"

"Nick Clegg booed off stage in Nottingham"

From the BBC and the BBC:

Liberal Democrats have grown used to disappointing poll ratings but Nick Clegg reached a new low when he was booed off stage and had pints of beer thrown at him at a concert with his band The LibDem Underground in Nottingham.

They've lost many hundreds of councillors since 2010 and ten MEPs since 2009 and have now been reduced to playing Velvet Underground songs with EU-themed lyrics and kazoo solos. Nick Clegg has said before that you have to have a thick skin in politics and when I interviewed it was clear that he was feeling the pain of having beer thrown at him.

"Why are you throwing those?" Clegg asked the crowd at the Rock City venue. "I'd rather drink them." Exhausted, red-eyed and pale, Mr Clegg lasted only 15 minutes before being forced to flee the stage.

"Thank you so much Nottingham," he tweeted later. "Sorry that a couple of UKIP voters ruined it for everyone. OK, 4.3 million, to be precise."

Clegg, 47, is best known for his childhood role as a Liberal Democrat Member of the EU Parliament between 1999 and 2004 and a little remembered stint as Deputy Prime Minister from 2010 onwards.

He formed The LibDem Underground in 2012, performing parody songs such as “An appeal for an open-minded, generous-hearted Britain” (Lou Reed's Walk on the Wild Side) and “Going head-to-head with UKIP leader Nigel Farage in a TV debate” (Velvet Underground's All Tomorrow's Parties).

Mike Flower of Mike Flowers’ Pops is said to have gone into hiding after his 1996 recording “Velvet Underground Medley” was rediscovered on Spotify.

"Ukrainian troops, stag parties battle at Donetsk airport"

From CNN:

Donetsk, Ukraine (CNN) -- Intense fighting broke out in eastern Ukraine on Monday when government air and ground forces attacked British and German stag parties who had seized an airport terminal.

The clashes between Ukraine's Army and revellers in Donetsk have caused some casualties, according to a statement posted on the official website of the city's mayor, which also advised residents to stay in their homes.

A CNN team in the city observed a Ukrainian combat helicopter flying over the Donetsk airport and firing at something. It was unclear what the target was. Black smoke billowed up from the area.

The hungover tourists shouted at the helicopter as it flew overhead. Gunfire and explosions could be heard in the city.

The fighting marked the worst violence that this key population center in eastern Ukraine has seen since the start of the holiday season. And the violence came hours after newly elected Ukrainian President Petro Poroshenko said he'd potentially like to negotiate a way out of the crisis.

Monday, 26 May 2014

UKIP and Housing

From Rupert Myers in The Guardian

There is an argument raging about why London doesn't reflect the national polls when it comes to Ukip support. The party didn't do anywhere near as well in the capital as it did elsewhere. Some claim it shows how ethnically diverse London is, and how tolerant. I don't believe that London is any more tolerant than any other parts of Britain. What it has is wealth, and a property market that has pushed out working-class residents. Thus in London Ukip has both smaller networks of activists and fewer people likely to vote for it.

When the main parties are able to unveil policies that assure the least well-off that they are on their side, when the housing market doesn't make people scared that their children will never own homes, then support for Ukip will collapse. When Ukip supporters cite immigration, it's not because they don't like the faces of people moving in down the road, it's because they fear the road is now unaffordable for their children to live on.

If you've not read the whole piece, Rupert Myers is a Conservative down in London, and he's written what I think is generally a good piece that is saying that you can't just stand around calling UKIP supporters braindead racists - it's more complex than that. And that's a mature view of the situation.

The trouble is that where UKIP are at their strongest is in areas like the South West which are very much white and without many European immigrants. OK, there's some black people in Bristol and a few people from the Indian sub-continent in Swindon*, but it's mostly white and there isn't a big influx of immigrants. And yet, they campaign across the UK in their manifesto for

• In planning, the local people's opinions should be respected and not overruled.

That's an even more brutal version of the homeownerist protection charter of the Conservatives. If you're worried about your kids getting housed, voting UKIP for that reason is pretty crazy.

In case you were wondering how they calculate the number of MEPs each party gets in each region...

… I refer you to Paul Lockett's fine calculator here.

He set it up back in 2009, but the system doesn't seem to have changed and it still works.

Fun Online Polls: How many MEPs will UKIP lose by 2019?

So, well done UKIP for coming first in the EU Parliament elections and getting 24 MEPs.

It appears that their tactic of having no manifesto, proposals or policies whatsoever has paid off handsomely. Their only vague policy statements were rumblings and mumblings about a flood of Romanians and Bulgarians, something which they can do absolutely nothing about, regardless of how many MEPs they have.

This allows them to pose as all things to all men - über-Thatcherites and NIMBYs in the Home Counties and the working man's alternative to Labour or BNP in 'traditional Labour heartlands'.

This policy-free strategy managed to earn them 74% of the votes of the readers of this blog. Ho hum.
What is more interesting, and only time will tell, is the question of how many of their MEPs will leave UKIP between now and 2019.

Out of the original 1999 intake of 3, 1 left (Michael Holmes).

Out of the 2004 intake of 12, 3 left (Robert Kilroy Silk, Tom Wise, Ashley Mote).

Out of the 2009 intake of 13, 5 left (David Campbell Bannerman, Marta Andreasen, Nikki Sinclaire, Mike Nattrass and Godfrey Bloom).

So that's this week's Fun Online Poll, although we won't know the final score for another five years.

Vote here or use the widget in the sidebar.

Sunday, 25 May 2014

Boring American Books Axed From GCSE Syllabus

From the Telegraph

Of Mice and Men, the John Steinbeck novella, is one of a number of boring American books that have been axed from new English literature GCSEs after the education secretary insisted students must study boring British works.

Michael Gove’s intervention means three-quarters of the books on the government directed GCSEs, which will be unveiled this week, are by British authors and most are pre-20th century.

OCR, one of Britain’s biggest exam boards, said: "Of Mice and Men, which everyone really dislikes, will not be included. It was hated by 90% of teenagers taking English literature GCSE in the past."

Council Tax Freeze - unintended consequence.

The Tories' Council Tax Freeze was a pure Home-Owner-ist electoral gimmick, of course: vote Tory and we'll reduce taxes on land ownership.

It's nonsense, because the central government has to bribe councils to freeze their council tax with higher grants out of centrally collected taxes; so people think they are "saving" £100 in tax (highly visible Council Tax) but they are not, on average, saving anything because they have to pay an extra £100 in income tax, VAT etc.

(That said, I don't know whether to laud Council Tax for at least being a distant cousin of Land Value Tax or to damn it for being, in practice, a Poll Tax. In the grander scheme of things it is an irrelevance, raising only about 5% of all taxes).

Labour were no better when in power, Tony Blair used to boast that Labour councils had the lowest average Council Tax. This is quite possibly true, but that was not because they spent less, it was because they got much higher grants from the Labour-controlled central government.

On The Sunday Politics today, a Tory MP pointed out that the reason why the Tories had lost control of so many London borough councils to Labour was precisely because of the Council Tax freeze; voters could merrily vote for Labour to run their council, knowing that the Tory central government will protect the from Council Tax increases.

Saturday, 24 May 2014

"Vladimir Ilyich Lenin condemns Nicholas II's 'Nazi' remarks"

From the BBC:

Vladimir Ilyich Lenin has described Nicholas II's reported comparison of him with future German Reichskanzler Adolf Hitler as "unacceptable".

One of 22,000 Polish officers later murdered by the Soviets in the Katyn Forest, who met the Tsar of Russia during a royal tour to Canada said he had likened some future Nazi actions in Ukraine to those of Mr Lenin.

The leader of the Russian Soviet Federative Socialist Republic, who has faced criticism in the West for signing the Treaty of Brest-Litovsk, said if the Tsar had made such comments they were "wrong" and "not royal behaviour".

The Winter Palace declined to comment.

Vehicle Width Tax

The way in which cars and road use are taxed in the UK is a complete mess.*

I can see a lot of merit in Fuel Duty, which is straightforward 'rent for roads' or a very basic but fairly effective kind of road user charge; if you drive during the rush hour (or if you do 80 mph or 90 mph on the motorway), your fuel use per mile is a lot higher than outside peak times (or if you drove more sedately-considerately), so you end up paying more per mile. Fair enough.

VAT on vehicles, servicing and fuel is the worst kind of tax; the VAT on fuel could easily be replaced with a correspondingly higher fuel duty and VAT on new vehicles and repairs can be scrapped anyway.

Then there is the vehicle tax, the most nonsensical tax of all.

Having a number plate and registering the owner's/keeper's address is a legal duty and imposes a burden on the driver (they know where to send speeding tickets and parking fines, they can track down dangerous drivers etc). You might or might not consider those quite reasonable burdens, the price you pay for the privilege of using public roads, but they are a burden nonetheless, so making people pay to register their cars i.e. get a licence is topsy turvy logic.

However, there are certain types of car which impose a burden on other road users, namely really self-indulgently wide cars, which slow the traffic down on narrower roads and take up one-and-a-half parking spaces.

So my bright idea of the week is to replace vehicle tax based on age of vehicle, engine size CO2 emissions and all that stuff with an annual Vehicle Width Tax.

The narrowest car on the road is something like a Smart car, which is 61" wide. So our exempt base line is 60", everything narrower than that (including motorbikes and mopeds) pays nothing, and for every inch wider than that (excluding wing mirrors, which are a legal duty, and it is wrong to tax people for complying with the law) costs you, say, £50 a year.

So my VW Golf Mk II, 66" wide, would cost me £300 a year and the widest cars like a new Range Rover, 82" wide, would £1,100 a year. Both of which are, not entirely uncoincidentally, pretty much the same as their current tax.

It will be interesting to see what happens to new car registrations after that; the VWT might have no effect or people might start buying narrower cars. They might even start buying wider cars to show off how much money they've got, which is the whole reason for buying such a car and having a personalised number plate in the first place.

So depending on how people respond, the exempt limit and the tax rate per inch can then be nudged up or down accordingly.
* It gets even worse with business car taxation.

There are various overlapping sets of rules for leased cars, capital allowances on owned cars and the benefit in kind charge for company cars. All of these are intended to produce a relatively higher tax bill for cars with higher CO2 emissions - but the higher C02 emissions are already paying extra tax because they use more fuel and hence pay more fuel duty.

So if you have an expensive company car with high emissions, you are paying five times over for the privilege; more VAT on the cost (irrecoverable); more fuel duty per mile driven; a higher car tax; restricted capital allowances/lease deduction and a higher P11D charge.

That, surely, cannot be right. It's difficult to work out how much tax this all raises, but getting rid of it all and increasing the VWT to (say) £60 per inch to be revenue neutral is surely the way forward.

Friday, 23 May 2014

Glasgow School of Art Fire: Critics divided

From the BBC:

Initial reactions to the major blaze at the A-listed Glasgow School of Art, one of Scotland's most iconic buildings are sharply divided.

Eyewitnesses said the fire was very impressive to look at and some commented favourably on the originality of starting the blaze with an exploding projector in the basement of the Charles Rennie Mackintosh building just before 12:30.

The roof space of the art school is still well alight. It is expected that large parts have been destroyed, which will make it a lot easier for Christo to put wrapping paper round them.

Everyone in the building was said to have escaped safely to highlight the plight of the millions trapped in refugee camps around the world.
There have been no reports of any casualties, prompting Brian Sewell to write a scathing article about the performers' lack of commitment.

Final year students were said to have been preparing their excuses for not having anything ready for their end of year degree show in the building when the blaze broke out.

Reviewers from Glasgow Police were far more negative, describing the spectacle as "simply unwatchable". Matching words with actions, police then cordoned off Renfrew Street. The fire brigade's culture spokesman described the smoke drifting across the M8 as "old hat… the IRA were doing this back in the Seventies."

Large crowds of students and onlookers gathered near the scene to engage in heated debate about the validity of the whole concept, with several people in tears as they watched the events unfold.

"I wish I'd thought of it," blubbered final year graduate Nikki Hollis, 23, "Look at this crowd! Only three people came to watch my video installation and two of those were there by mistake."

I'd call that a pretty good result :-)

I stood for YPP in the local elections yesterday.

I stood in a much larger ward for the county council elections last year and got 21 votes, despite doing leaflets (0.5%); this time round I got 37 votes (2%) and that was without doing any campaigning or leafletting whatsoever.

All I did was stick up a yellow poster with the YPP logo in my front window (handily, we live on the high street so quite a few people must have seen it).

More hilarity with the Homeys at City AM...

The great defender of monopolies spake thusly (on the topic of fracking):

"the big flaw in the UK’s zero sum game planning system: no mechanism exists to allow the winners to pay off the losers. We need radical reform, and fast.."

Well, duh.

Of course such a mechanism exists: it's called Land Value Tax (or Domestic Rates or Business Rates).

Land which benefits from an externality (a new railway station, a fracking licence etc) pays more LVT; and land which falls in value (near a noisy train track; fracking activities next door) pays less LVT.

It's the free market solution to a monopoly situation and a much better source of revenue than taxing output and employment i.e. real wealth creation.

Thursday, 22 May 2014

Bulls 3, Matadors 0

From/via the BBC:

Wednesday, 21 May 2014

The Bad Lieutenant's Neighbours

From Wiki and Wiki:

The film opens in the Bronx, where The Lieutenant (Harvey Keitel) and his wife Kelly (Rose Byrne) are a young couple with two sons, which he drops off at Catholic school.

The restrictions of parenthood make it difficult for him to maintain his old lifestyle, so after his sons leave the car, and before he drives to work, the Lieutenant takes a few small bumps of cocaine.

One day, the couple finds out that Delta Psi Beta, a fraternity known for their outrageous parties, has moved next door. The Lieutenant wanders away from the scene to get some coffee, and across the street, he watches the fraternity's leaders, Teddy Sanders (Zac Efron) and Pete Regazolli (Dave Franco) rifling through the trunks of parked cars, which he ignores.

In the next scene, the detective approaches a group of drug dealers, who aspire to join Delta Psi's Hall of Fame by throwing a massive end-of-the-year party. Later, the couple visit their neighbours to ask them to keep it down, but they run off as they approach.

The Lieutenant follows them into an apartment building and up the stairs to ask them to keep the noise down. Teddy agrees on the condition that the Lieutenant gives him a bag of drugs from a crime scene.

Teddy invites them to join the party which the couple agree to. The Lieutenant quickly smokes some crack, and then sets aside a portion of the drugs for himself. Kelly bonds with Teddy's girlfriend, Brooke Shy (Halston Sage), who promises to give the Lieutenant the money she makes from selling the drugs in a few days.

The Lieutenant gets drunk and goes into Teddy’s bedroom, which includes a stash of fireworks and a breaker box that turns on their sound system, and engages in a threesome with two women...

Four months later, the Lieutenant Mac runs into Teddy, and they make amends. A car drives up beside them, and a voice yells, "Hey, cop!" before 2 shots ring out. The film closes as bystanders realise the Lieutenant has been murdered while Kelly stays home and plays with their two sons.

Tuesday, 20 May 2014

Reader's Letter Of The Day

From The Evening Standard (20 May 2014, page 40):

It's disappointing that so many newspapers have allowed the Governor of the Bank of England to get away with blaming the UK house price bubble on lack of new supply and holding up his home country Canada as a counter-example.

Yes, per capita, Canada is building three times as many new homes as the UK, but they are suffering a house price bubble every bit as bad as ours - one which he presided over until his move to the UK.

Mark Wadsworth, Young People's Party.

"David Cameron 'alert' to housing bubble"

From the BBC:

Prime Minister David Cameron has said the government is "aware of the short term electoral boost" associated with rapidly rising house prices.

On BBC Radio 4's Today programme, he was asked to respond to Bank of England governor Mark Carney's statement that the booming housing market had resulted in the "biggest boost" to Conservative Party polling figures since 2010.

He said he agreed with Mr Carney. It was the Bank of England's responsibility to identify asset price bubbles and "stoke them in the run up to general elections", he added...

'Rocket boosters'

"It's absolutely right that we are alert to any dangers and problems affecting our chances of winning in 2015," Mr Cameron said.

"This government hasn't just talked about that, we appointed the former Canadian central banker who presided over the biggest house price bubble in his country's history to run the Bank of England."

Ministers have asked the Bank to examine the effect of the government's Help to Buy scheme, which enables people to take out mortgages on homes worth up to £600,000 with a deposit of just 5%.

Mr Cameron said: "Of course we will consider any changes that are proposed by Mark Carney, just as we expect him to do and say exactly what we want him to without us even having to spell it out."

Careless, careless...

From The Evening Standard:

Traders today told of their terror after a fire swept through Camden's historic Stables Market.

More than 600 shoppers and diners were evacuated from the tourist hotspot at 7.45pm last night as thick black smoke poured into the cobbled lane and rose into a 50ft black plume visible from miles around.

More than 70 firefighters from across London spent several hours at the scene off Chalk Farm Road fighting the flames and removing high-pressure gas bottles – used by surrounding street food stalls – from the area...

The Stables Market, and a swathe of the surrounding area, was sold off by its owners, which included restaurant tycoon Richard Caring, to an unnamed Middle Eastern investor in March this year for £400 million.

The market, the site of a 19th century former stables and horse hospital and where singer Amy Winehouse was a regular shopper, is one of London's best-known tourist destinations, attracting about 40 million visitors a year to its 700 clothes, crafts and antiques stalls.

As a separate issue, that works out at £10 per visitor or £500,000 per tenant.

"Bic To Pay $2.5 Million For Role In Tax Evasion"

From the International Business Times:

French biro manufacturer Bic pleaded guilty Monday to a criminal charge for its role in helping Americans dodge taxes by providing the biros used to complete money transfers abroad, U.S. Attorney General Eric Holder said, and will pay more than $2.5 million as part of an agreement with U.S. authorities.

Separately, the New York Department of Financial Services said it had determined not to impose a ban on the company's products in the state. Bic said it expects no material impact on operational or business capabilities from the plea agreement.

U.S. prosecutors criminally charged Bic and two of its units, saying that if the company's disposable pens had not been available in bank branches, clients would not have been able to complete the forms need to deceive U.S. tax authorities by concealing assets in illegal, undeclared bank accounts, in a conspiracy that spanned decades.

Monday, 19 May 2014

Fun Online Polls/Economic Myths: The rapid increase in owner-occupation 1950-1990.

The responses to last week's Fun Online Poll were as follows:

Which factors contributed to rapid rise in owner occupation in the UK from 1950 to 1990?

Selling off council housing at undervalue - 36 votes (a)
Tax deduction for mortgage interest - 25 votes (b)

Rent controls in private sector 20 votes (c)
High taxation of rental income - 12 votes (c)
Lots of affordable council housing - 12 votes (c)
Mortgage lending restrictions - 11 votes (c)
Domestic Rates and Schedule A taxation - 11 votes (c)
No Housing Benefit for private landlords - 7 votes (c)

Lots of new private construction - 12 votes (d)
Low population growth - 5 votes (d)

Other, please specify - 4 votes
Total - 60 voters

a) We can rule that one out straight away. The percentage of owner-occupiers increased from 30% in 1950 to 68% in 1990 and had been steadily increasing by about 1% a year. The council house sell off didn't take off on a large scale until the 1980s. The rate of increase in owner-occupation during that decade was actually no faster than between 1950 - 1980.

b) We can rule that one out as well. For sure, first time buyers paid a bit less tax than tenants on the same income thanks to the tax break/subsidy, but the overall impact is probably zero either way.

Remember that:

i. one man's tax break is another man's tax burden, so if most people qualify for a tax break they are all chipping in the same amount to pay it. The net cash tax saving to a first time buyer is only a fraction of the nominal amount (which wasn't that much anyway).

ii. To the extent there was a small net benefit to first time buyers, that merely went into higher selling prices and/or higher interest rates, there is plenty of real life evidence to support this.

c) These are the real reasons:

Strict rent controls make housing a less attractive investment for landlords but do not affect owner-occupiers; so the amount owner-occupiers have to bid is lower. Mortgage rationing dampened the tendency of owner-occupiers to outbid each other.

High taxation of rental income, Domestic Rates/Schedule A tax and the absence of large scale subsidies to private landlords (Housing Benefit) reinforced all this.

I would argue that as well as explicit rent controls, you can have implicit rent controls, i.e. if it's not too hard to get a very affordable council house, that pushes down private rents as well.

So by and large, the availability of council housing as a low-cost alternative until the 1980s was just as positive for owner-occupation rates as was the Thatcher-Blair sell-off thereafter. The two are opposites and cancel out!

d) These two must have helped, although new construction petered out in the mid-1970s. But new construction only helps if the rest of the system (items labelled c) is geared towards discouraging landlords from cashing in and banks from ramping up prices; new construction in itself does nothing to increase owner-occupation rates.

Sunday, 18 May 2014

Carney's Canada comedy

From the BBC:

Mr Carney will say: "When we look at domestic risk, the biggest risk to financial stability and therefore to the durability of the expansion [of the economy] those risks centre in the housing market."

Mr Carney says the fundamental problem was a shortage of homes - and the Bank of England had no solution to that...

He will say in the interview: "There are not sufficient houses built in the UK. To go back to Canada, there are half as many people in Canada as in the UK, twice as many houses are built every year in Canada as in the UK and we can't influence that.

So as a result, there was no house price bubble in Canada..?

From CBC News:

Vancouver ranks second only to Hong Kong in having the least affordable housing, according to Demographia's 10th annual survey of 360 housing markets in nine Western countries.

The survey divided median housing prices in Australia, Canada, Hong Kong, Ireland, Japan, New Zealand, Singapore, the U.K. and the U.S. against median gross household income to come up with its ratings.

Under this rating system, homes in Vancouver cost 10 times median income compared with 15 times income in Hong Kong. Three times median income is considered affordable.

Read the full Demographia report.

Friday, 16 May 2014

"Holidaymaker trampled to death by herd of cattle while walking across field with his wife..."

... and two dogs"

Peter Jakeman, 62, who was visiting the area from his home town in Callington, Cornwall, was walking across a field on the Okeover Estate in Ashbourne when the tragedy unfolded.

Mr Jakeman, described as 'one of nature's gentlemen', was treated for blood loss and chest injuries after the stampede took place...

On average, one person per year is killed by cattle in the UK, with nearly 500 hurt in attacks by animals from 2005 to 2013.

It is thought attacks usually take place due to dogs being present or calves being in the field when walkers approach.

The British Mountaineering Council said dogs should be kept on a lead and, if cattle appear unsettled, walkers should move away as carefully and quietly as possible.

A spokesman said if people feel threatened they should let go of their dog's lead - if they are holding one - and try not to make any noise orfast movements.

Short List

I haven't done one of these for ages.

Today's Short List is "Pop/rock songs with a World War II theme"

To get the ball rolling, I can think of:

OMD: "Enola Gay"
Pere Ubu: "Thirty Seconds Over Tokyo"
Motörhead: "Bomber"
Paul McCartney: "Uncle Albert/Admiral Halsey"

Thursday, 15 May 2014

Global Warming and Coastlines

The Daily Mail has a number of scaremongering photographs of artists impressions of what a global warming sea level rise would do to various parts of the world. Miami's Ocean Drive, Venice Beach in LA. All with buildings underwater.

As Superman: the Movie explained (and one of those rare movies that can teach you something useful about economics) and Mark has shown with some data, people like living near the coast and pay more for being near the coast. Salisbury is a lot cheaper to buy a house than near the beach at Bournemouth.

And as Superman: The Movie explained (bullet 5. here), while you destroy a lot of land in the process (and in Lex Luthor's case, millions of lives) you also raise all the value of all the land that now become coastal, or near coastal. So, the people with Venice Beach apartments might find themselves losing their land values, the people in Inglewood will be a bit richer.

Assuming we had 12ft rises in water levels (which even with global warming predictions would take centuries), very little of any real value would be lost. We'd lose a few buildings, but that's a fraction of the value of beachfront property.

"Bank of England rate rise panic: police hunt for man who dumped house price increase"

From The Evening Standard:

Police were today hunting for a man who abandoned an average monthly London house price increase in the middle of the street outside the Bank of England causing a massive interest rate rise panic.

Bank Underground station was closed and all roads around the area were sealed off while maco-prudential tools were deployed to defuse the threat of a rate hike.

Witnesses said the man left a dark green Toyota Avensis - believed to be worth approximately as much as the average monthly increase in value of a typical London home - abandoned in the road at the junction outside Bank station before walking away...

City of London police said the interest rate time bomb was made safe at around 1pm today, two hours after first arriving at the scene. Tougher affordability tests were used to check out the price increase before it was examined by officers in protective clothing.

A spokesman for the Bank of England said there had been talk of a bubble which proved unfounded but added that employees continued to remain vigilant.

Killer Arguments Against LVT, Not (327)

Sobers keeps digging in the comments to #326:

The trouble is that the thing you wish to tax (site only rental value) doesn't really exist in reality, only as a theoretical construct. No-one rents empty land, and then builds houses on it, or shops or factories.

They buy the plot and do that, or they rent the house/shop/factory thats already there. So there are no market arrived at site only rental values to use as comparisons, beyond the rental market for farmland.

If you wished to tax the pure rental value, that would make more sense, because every property has a reasonably easily calculated rent, (1) and if you wished to tax the sale/purchase value, again thats relatively easily worked out.

But this insistence that LVT is levied on the 'site only rental value' is absurd, because such a thing doesn't actually exist, and thus for any given property is purely arbitrary.(2)

1) OK, fair enough. In which case the tax base for LVT (the site premium) can be defined as:

"The total rental value of the land and buildings, less a round sum deduction for:
- notional interest on cost/value of buildings element;
- amortisation of cost/value of buildings element;
- typical average annual maintenance and insurance costs for a building of that type in that area."

Or as:

The total rental value of the land and buildings, less an amount equivalent to the rental value of the cheapest comparable buildings anywhere in the UK"

We can simplify this further for most housing by working out a flat rate deduction from the total annual rental value to arrive at the site premium, for example £5,000 for a medium-sized three-bed semi-detached house; £3,000 for a small flat; £8,000 for a large detached house etc.

That's no different to taxing people's earnings with a flat rate exemption of £10,000 personal allowance to reflect the basic minimum cost of actually staying alive. That's no different to the old Industrial Buildings Allowances: the owner could claim 4% of the original construction cost as a tax deduction each year for twenty five years, so the real capital was not taxed.

2) Of course it exists! That's like saying you can apply income tax to somebody's entire earnings because that is "real", but only applying income tax to the amount which exceeds the personal allowance is aburd because it is "arbitrary".

Or saying that Industrial Buildings Allowances were absurd. IBAs were quasi-LVT by the back door; if somebody had a factory built for £1 million and rented it out for £70,000 a year, he only paid tax on £30,000; the £40,000 return on capital invested/created was exempt from tax (and rightly so). The £30,000 taxable related to the "site premium" and could be taxed at a much higher rate without destroying the incentive to build new factories (assuming that 4% is a fair annual return on capital invested).

Yes, the personal allowance is somewhat arbitrary, as was the 4% IBA rate (it changed occasionally), but so is the rate of income tax/corporation tax. Those taxes still "work" roughly as they are intended to.

"Swindon bans fish over allergy fears"

From the BBC:

Swindon Borough Council has banned fish because a local man has a potentially fatal allergy.

Schools in the area have asked pupils not to bring in fish or fish based products with their packed lunches, supermarkets have been asked to remove all fish based products from their stores and destroy them and all fish and chip shops have been shut down as an emergency measure.

It is hoped that this will protect the man who suffers a severe anaphylactic reaction to any contact with fish. Some residents feel they have not been consulted and the whole area should not be affected "for one person".

But Swindon mayor, Cllr Theresa Page: "This is a life-threatening issue, anything less and we wouldn't need to be as drastic."

Work has commenced on a new channel divert the fish laden River Ray further south away from the town and the council will also be scanning aerial photographs to identify ponds potentially contained fish and contacting property owners with removal requests.

Killer Arguments Against LVT, Not (326)

Sobers, who actually understands this all too well, is going on about how to calculate the "site premium" of unsual homes, his example is a £10 million mansion set in fifty acres of countryside:

[Me} "It is the rental value of the DEVELOPED LAND which matters."

[Sobers] Well it's not site only value you are taxing then is it?

The location value of just the plot of a stately home in the middle of nowhere is the same as an adjoining piece of farmland, because that is its location, in farmland.(1)

The entire value of the property is in the improvements - the grand house, the formal gardens, the outbuildings, the avenue of trees up the drive. The value of the property is entirely in the quality of the improvements.(2)

50 acres with a prefab post war bungalow in the middle of them is worth considerably less than the same acres, in the same location with a stately home on it.(3) Ergo the location value is just that of the surrounding land not what is on it.(4)

1) He knows this is not true. If the local council came along and said to stately home owner, we're awfully sorry but we're building a motorway here and have to knock down your house, we'll offer you £5,000 an acre for the agricultural value of your land, then I doubt whether the owner would happily accept; if the council offered to pay for the rebuild cost of the home on top, then the owner still would not accept. We know this from all the people whining about HS2 going anywhere near their houses.

2) That element of the total rental value of such a stately home which relates purely to the location might be trickier to establish than for a house or flat in an urban area, but it still clearly has one.

We could, for example, compare like with like. There are stately homes in the wilds of Scotland or Wales (Area A) and stately homes in the Home Counties (Area B). If you take a home/building in each area of similar size, you will find that the ones in Area B sell or rent for considerably more than in Area A.

That difference can only be down to the site premium; the upkeep and maintenance costs are much the same in either case, and the costs of keeping the garden looking nice is irrelevant, that is an entirely voluntary hobby/pastime and has little to do with the site premium.

We know from reading the property porn pages that stately homes near London are worth a lot more than stately homes a bit further away (Oxfordshire). There are even stately homes in areas which are so uninteresting that they sell for scrap value or have long been abandoned. The site premium of those homes is to all intents and purposes £zero.

3) Correct.

The site premium depends on "optimum permitted use". Whether that is dictated by planning controls, local democratic votes or free markets is neither here nor there. We shall have to assume for the time being that most plots are actually being put to their optimum use.

Again, if the local council came along and said to the owner of a stately home, awfully sorry old chap, but actually your building does not comply with the new building reg's, you're going to have to knock it down and replace it with a prefab bungalow, then clearly, that is a restriction on use and the site premium comes down accordingly, probably to a few thousand pounds a year.

4) What is worth more - a home with views over 'unspoiled' countryside with a massive garden, a few miles from a motorway junction or railway station half an hour from London, or an identical home with the same sized garden in the Scottish Highlands, miles from anywhere? The former, and that higher value relates to the site premium, not to the physical building.

Or as a thought experiment, what all the farmland/forests in the UK (50 million acres) were split up into one million plots of 50 acres each, and a lovely big house were built in the middle of each.

Would those million houses all be worth the same? Of course not. Some would be worth less than what they cost to build, some would be worth £millions.


What's so special about any of this?

From the BBC:

A new housing unit developed by the YMCA may offer one solution to the lack of affordable housing in London and other UK cities.

The Y:Cube is a 280-sq-ft (26-sq-m) studio-like apartment made for single occupancy. It can stand alone, or be stacked into bigger housing blocks.

The units are constructed in a factory and arrive on site ready-made, with water, heating and electricity incorporated into the unit and ready to be connected to local facilities.

The YMCA plans to open its first Y:Cube Housing scheme with 36 of the units in the London borough of Merton by the end of 2014.

A unit costs £30,000 to build, and the one-bedroom homes will be let for £140 per week - around 65% of the usual market rent.

It's quite nice inside, but it's not really different to any other flat.

It's a bit smaller, it costs a bit less to build, and the rent is a bit less.

What is important to note is that the rent which they will be charging has nothing to do with the cost of the unit - two-thirds of that £7,000 a year rent is pure location rent, just like anywhere else in Merton.

They say a Y:Cube will last for 60 years (from project summary here), let's assume half that and amortise it over thirty years and add on £1,000 a year for normal maintenance and insurance, that leaves £5,000 out of £7,000 going on location rent.

Wednesday, 14 May 2014

My Bucket List

1. A blue Vileda one with matching mop for doing the kitchen floor.

2. A couple of those decorative enamelled/metal ones with pot plants in them.

3. A larger black one with a spout which we use for bigger jobs like washing the car(s).

4. I'm sure we've got some bucket-and-spade type buckets somewhere. We had a heart-shaped one and a castle shaped one when the kids were

5. A watering can. I think that counts as a specialised kind of bucket.

Daily Mail on top form

From The Daily Mail:

A baby was found dead and a mother taken to hospital after police were called to their home today.

The mother was seen in a distressed state before the emergency services arrived at her house in Chesham, Buckinghamshire - and took her to Stoke Mandeville Hospital in Aylesbury.

Thames Valley Police officers were initially called at 9.30am and are now examining the home of the family following the 'unexplained death of a baby'. No-one has been arrested...

Tragic, tragic, but you've got to read all the way to the end of the article before you get to the money shot:

The road on which the incident happened has an average house price of £200,000 and is located about 30 miles north-west of Central London.

Libertarians Should Support a Land Value Tax

Libertarians support low taxation as a core principle because it frees people and thus the economy from the burden of the State. All but the most rabid Anarcho Capitalists though concede that the State needs some revenues with which to perform the very few necessary functions of government (I think this is probably just Courts (as any lawyer would, ahem) but I am in a minority of crazy extremists apparently).

If you do concede that the State has a role to play and that the State is going to need money to do it then, according to the thinking of the likes of Adam Smith[i], Thomas Paine[ii] and Milton Friedman[iii], land taxation is not just a necessary evil, it is a positive good in that it tackles monopolies and should ensure efficient use of land.

First, to clear things up, a definition, a land value tax (or site valuation tax) is a levy on the unimproved value of land only. It is an ad valorem tax on land that disregards the value of buildings, personal property and other improvements. A land value tax (LVT) is different from other property taxes, which are taxes on the whole value of real estate: the combination of land, buildings, and improvements to the site.

It would appear clear that a common social resource, i.e. the land, a resource that naturally exists, is not the product of investment or the application of human skill and is generally not something that more can be produced of, has become monopolised by a few. This does not change the fact that land ownership can only ultimately be vested in society as a whole and that that land has to be the source of revenue for the upkeep of society.

We can broaden this out to other common resources. In addition to the land, there are minerals, forest resources, fishery resources, and even the electromagnetic spectrum, all of which are valuable economic resources, but all of which are grounded in an original gift of nature. There is nothing unusual about the fact that mineral extraction rights and rights to the use of the electromagnetic spectrum are controlled by licences from the state that aim to create revenue as ownership of these rights creates an advantage for the holder, when in fact none of these things was created by human agency in the first place.

It is right therefore that the state attempt to extract as large a proportion as possible of the economic rent derived from possession of land, minerals, forestry and fishery resources, and the electromagnetic spectrum, and land taxation should be seen in this light. Given the fact that land is a common social resource, it is doubtful whether the word “taxation” is correctly applied to a land levy. What we are talking about here is not taxation of income or profits or the restriction of economic activity, but a levy that is based on the fact that no original ownership of the common resources ever existed.

Benefits of a land tax
Libertarians have always supported land assessments rather than other forms of taxation for a number of other reasons. The most important of these is that other forms of taxation impose deadweight economic losses. Income taxes and profit taxes deter economic activity and can lead to the flight of labour and capital overseas to less greedy jurisdictions. If there were no income taxes or corporation tax, then it is undoubtedly the case that the economy would be much larger.
A key advantage of the land value tax is its encouragement of efficient use of land and its discouragement of speculation in land. Applying an annual charge to all land holdings, based on the unimproved value of the land, would impose higher levies on prime land sites, for example, those in central London, thus encouraging development elsewhere where land values are cheaper, with positive results in terms of regional development. Property developers would be incentivised not to hold onto large land banks without building on them, and land, as a scarce social resource, could not be hoarded or put to inefficient use without incurring regular annual levies.

Furthermore, exponential increases in land values would attract higher annual levies, helping to restrain soaraway property bubbles in the same way that higher interest rates bear down on inflation; in the case of inflation, the imposition of higher interest rates depends on good central banking practice, whereas an annual land value levy based on a percentage of land values would be a market mechanism to ward off bubbles and speculation.
Land values would be discounted owing to the prospect of paying annual levies. In the initial period, this ought to lead to a fall in property values, although it needs to be emphasised that in the long run land values could also be enhanced, as in Hong Kong, by low income and profit taxes, creating a virtuous scenario where economic activity was not deterred by deadweight losses, and rapid economic growth still allowed freeholders to benefit from rising demand for their land. This would help to keep revenues from land value taxes high, continuing to support the few government services that are needed.
It is important to emphasise that the land value tax cannot be shifted to tenants in a way that would add to business costs. Classical economists argue that rent is not a real cost of production, but merely a price determined by demand for the land, as shown by the fact that commercial rents fall in a recession. Rent does not independently affect the cost of products produced by industry, but rather amounts to the capturing of part of the value of the output created by the outlay of capital and labour by the landowners.

Attempts by landowners to capture a larger part of their commercial tenants’ revenues by requiring tenants to cover all taxes and charges incurred by the landowner would, over the long run, not push up business costs, but reduce the profitability of using the land, causing tenants to go elsewhere where site valuations were lower.
This reflects the fact that landowners cannot go elsewhere, the locations of their land sites are fixed, whereas their tenants can move their businesses out of prime location sites. Excessive demand for prime land would fall, and less favoured locations, in the North of England and elsewhere, would attract more investment, with positive social repercussions.
The confusion between passive gains and gains that are the result of initiative and investment is found all the way through our current taxation system. Income tax and corporation tax are assessed on all income and profits, without attempting to break out the proportion of the earnings that relate to the three factors of production: land, labour and capital. Some income is passively gained, and some profits are passively made on the back of misguided central banking policy to promote property bubbles. By contrast, a great deal of income and profits is the result of hard work and initiative, and by obscuring the difference between the gains from land, labour and capital, three categories kept quite distinct in the analysis of the classical economists, we are unable to promote investment and hard work and deter speculation in property.
Land value taxation allows for a reduction in income and profit taxes, which currently restrict economic activity. It also allows for the abolition of stamp duty, capital gains taxes and inheritance taxes. This promotes the productive use of the land by not impeding property transactions. The key to this is to establish an annual land value tax on the unimproved value of land sites. This would hold property values down over the long term, allowing the young to buy properties, allowing banks to extend mortgages without a constant cycle of property boom and bust, and this would also allow more of people’s incomes to be devoted to consumption, instead of spending the majority of their incomes on taxes and mortgages to finance an economic model based on public debt and property bubbles. Genuine hard work would not be penalised as it is at present; passive profiteering would become more difficult, although some increase in land values based on strong demand in a low-tax economy could still take place
As long as taxation is geared towards repression of incomes and profits, economic activity in this country will be held back. Financial services, property and the public sector are keeping our economy sluggish. Libertarians who support low taxation, and in particular, forms of taxation with low or zero deadweight effects, should support land taxation as a way of moving to a more sustainable model of economic growth.
Crafted from a number of pieces by D.J. Webb, Ryan Hinds, Wikipedia on Georgism.

[i] Smith, Adam (1776). The Wealth of Nations, Book V, Chapter 2, Article I: Taxes upon the Rent of Houses. "Ground-rents are a still more proper subject of taxation than the rent of houses. A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground."

[ii] Thomas Paine contended in his Agrarian Justice pamphlet that all citizens should be paid 15 pounds at age 21 "as a compensation in part for the loss of his or her natural inheritance by the introduction of the system of landed property." "Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."

[iii] Milton Friedman stated: "There's a sense in which all taxes are antagonistic to free enterprise – and yet we need taxes. ...So the question is, which are the least bad taxes? In my opinion the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago."

Too good to Miss

From the BBC:

Calling teachers "Sir" or "Miss" is depressing, sexist and gives women in schools a lower status than their male counterparts, an academic has said.

Prof Jennifer Coates told the Times Educational Supplement "Sir is a knight... but Miss is ridiculous - it doesn't match Sir at all".

She said she had been struck by the disparity while volunteering in a secondary school. But one educationalist said being called "Miss" was a sign of respect...

I went to a boys' grammar school where nearly all the teachers were men, so we had an app for that - we simply addressed them all as "sir".

Mrs Hammond, our English teacher (who was quite lovely, actually) would occasionally rebuke somebody and ask him to address her as "Miss" or "Mrs Hammond", to which the rebukee would usually reply "Yes, Mrs Hammond, sir".

Whether this is all sexist or not I do not know, but it is one heck of a void in the English language here.

For example, if I'm in the supermarket and I want to ask a male employee - regardless of age - where something is, I address him as "sir" and he probably addresses me as "sir" as well and everybody is happy. If I'm asking a particularly young female employee, I don't mind addressing her as "miss" just for a bit of a giggle, but if she is clearly older than twenty or so, there just isn't a word at all.

"Miss" feels clearly wrong, but "madame" seems wildly inappropriate as well, so I end using neither and asking straight out, thus widening the gender gap even further - males get an honorific, females don't.
I had a similar dilemma with a dustbin man recently. I left the house just as he was wheeling our bin back from the lorry, so I said "Thank you."

He looked baffled, so I explained "I just wanted to show a bit of appreciation for what you..."

[Awkward pause while I desperately try to guess what dustbin men call themselves this week: refuse collectors? waste disposal operatives? public health officers? At which stage I thought sod it.]

"... dustbin men do, taking away all our rubbish every week [waves hand vaguely], keeping the place tidy and all that."

Marvel's Agents of S.H.I.T.


After the Battle of New York City Water Tunnel No. 2, the world of sewage treatment has changed.

It now knows not only about Activated Sludge, but also the powerful menaces that incorrectly treated waste water can carry and require ever more effective methods to deal with.

In response, Phil Coulson of the Sanitation Health and Infections Team assembles an elite covert, er, team to find and deal with these threats wherever they are found.

With a world rapidly becoming smellier and more dangerous than ever before as the superbugs arise, these agents of S.H.I.T. are ready to take them on.

Disclaimer: I watch the TV series every week and it's great, it's just that our Freeview box only shows the first 24 characters of a programme's title.

Tuesday, 13 May 2014

My Rolf Harris Top Five

Just in case he's found guilty and you're not allowed to confess a liking for his music ever again (when was the last time you heard a Gary Glitter record?), here's my personal Top Five in no particular order:

5. Stairway To Heaven

2. Jarvis Cocker doing a completely straight faced cover version of Two Little Boys on Celebrity Stars In Your Eyes. I can't find a YouTube link to this, sadly.

1. Bohemian Rhapsody. I once stumbled across a Queen fan site where they slagged him off for playing the notes wrong. Well duh.

Finally, the one you've all been waiting for, at Number 4: Alice Cooper's completely dead pan, note-for-note perfect cover version of the slightly irritating and somehow condescending original Sun Arise. I saw an interview with Harris ten or fifteen years ago where he admitted that one of his proudest moments was being covered by Alice Cooper:

3. Fine Day, the only one on this list which isn't a cover version.

Good to see that GPs still remember The Founding Principles of The NHS

From Wiki:

[In 1948] After 18 months of ongoing dispute between the Ministry of Health and the BMA, Bevan finally managed to win over the support of the vast majority of the medical profession by offering a couple of minor concessions, but without compromising on the fundamental principles of his NHS proposals.

Bevan later gave the famous quote that, in order to broker the deal, he had "stuffed their mouths with gold".

From The Daily Mail:

In a speech last night Mr Miliband said it was a 'scandal' that many patients have to wait days to be seen by a GP, and said his party would plough hundreds of millions of pounds into cutting waiting times.

He claimed the £100million a year needed to fund shorter waiting times would be found by cutting back on NHS red tape and highly-paid consultants.

But Maureen Baker, chairman of the RCGP, said the money was not enough to fulfil the pledge. She told BBC Radio 4's Today programme:

"The £100 million is a start and it's a welcome start. It's not actually anywhere near enough to give any sort of guarantee. When you look at it, it's around about £10,000 per practice. It certainly won't go anywhere near employing at practice level more nurses, more GPs.

"At the moment the share of NHS funding that goes to general practice is just over 8 per cent. We see about 90 per cent of all NHS consultations. We believe that our share should be around about 11 per cent."