Friday, 30 September 2016

Stupid Idea Of The Day

From the BBC:

Thousands of lorries could be banned from London to make the roads safer for cyclists, under plans proposed by London Mayor Sadiq Khan.

He wants a rating system from zero to five stars for heavy goods vehicles based on the driver's level of vision from the cab. The 35,000 zero star-rated HGVs currently operating in London would be banned by 2020 under the proposals...

Nine cyclists and 66 pedestrians were killed in the capital last year, according to Transport for London. The mayor's office said that over the past two years HGVs were involved in 23% of pedestrian fatalities and 58% of cyclist deaths in London, despite accounting for just 4% of the miles driven in the city.


Motor vehicles, bicycles and pedestrians just do not mix. Motor vehicles go on roads, pedestrians go on pavements and unfortunately there isn't really space for a decent network of cycle paths. It would be lovely if we had them, they are a joy to use, but we don't and that is the end of the matter.

Lorries only make up 4% of miles driven? So what? They bring in 90% of all the goods consumed in London and take 100% of the rubbish. Far more relevant to point out that only 1% of commuter journeys are by bicycle. London would manage just fine if nobody ever used a bicycle again, ban lorries and we're screwed. If politicians really cared about cyclists being killed and injured, they'd do a far better job by banning bicycles.

Further, for every one large lorry they ban, they will have to use a dozen smaller vans, so that will increase traffic volume by forty or fifty per cent, and I don't think anybody wants that, not even cyclists. Except all the people selling and driving the vans, I suppose.

Rant over.

Thursday, 29 September 2016

Daily Mail on Top Form

Stressed-out Barclays banker 'murdered his wife in their £2million Surrey mansion with an avalanche of 120 axe and knife blows after she said she wanted a divorce'

Scroll down for a second article about what a lovely area it is and all the famous people who have lived there. Which might illustrate the point which Steven_L made in the comments yesterday.

Fun Online Polls: Politicians, sugar & "hard" brexit.

The results to last week-and-a-half's Fun Online Poll were as follows:

Which of these politicians avoids sugar?

Jeremy Corbyn - 54%
Nigel Farage - 6%
Both - 16%
Neither - 24%


A bit of an anorak question, but 16% of participants got the right answer. Well done!

Top (and only) comment:

View From The Solent: Who cares?

Answer = not many. Only 50 people took part and only 16% of those chose the right answer (and one of them was me). It was multiple choice, so if people had chosen an answer at random, 25% would have chosen the correct one :-)
-------------------------------------------------
The gamble which some Brexiteers made appears to have paid off in some quarters, pint-sized former French president M. Sarkozy has said that if re-elected he would offer the UK a new treaty for a new Europe.

Clearly he could't care less about British votes, so presumably what he means is a new deal which will  favour France generally, the UK tangentially and placate some potential Le Pen voters. Former Tory leader 'Lord' Howard stretched his head out of his earth-filled coffin and "described the terms “hard” and “soft” Brexit as unnecessary and unhelpful."

In which he would be correct. So that's this week's Fun Online Poll.

"Which kind of Brexit would you like?"

Vote here or use the widget in the sidebar.

Wednesday, 28 September 2016

David Triggs' Law of Rent

He summed up the recent IU conference with one final thought, he said there are so many theories and explanations regarding land rent (von Thünen, Ricardo etc), but it's actually very simple:

"Rent arises where more than one person wants to occupy any particular plot of land. It arises quite independently of any actions or inactions of the 'land owner'."

Which pretty much covers it. Quite why the rent for one site is higher or lower than for other sites depends on a million and one factors, none of which have anything to do with the 'owner' of any particular site. There are plenty of examples where there is no 'owner', such as the middle of the ocean. If there is oil to be drilled or fish to be caught, that site will have value. And there is plenty of privately owned land in the UK with a rental value of effectively zero.

It also covers all sorts of KLNs, for example "It's about supply and demand. If we built more houses/restricted immigration, there would be more housing to go round and hence lower rents and prices"

Even if that were true, so what? The newly developed land has a much higher rental value than it did as farmland and the rental value of previously developed land falls a bit; the total rental value stays much the same, there will still be high and low value areas etc. The law still holds.

Or this KLN: "How can you say that land is a monopoly? I only own a small number of homes out of 27 million in the UK. I am competing with millions of other landowners."

There are 27-million households in the bidding for those 27 million homes; there is nowhere else for them to go. That is a monopoly which generates higher rents in the more desirable areas, tapering away to negligible rents in the marginal areas (there are plenty of homes in low wage, undesirable areas of the UK where the rent is effectively zero).

You can sub-divide this monopoly as much as you like, once all the other homes in non-zero value areas are taken, for the last remaining available home in a non-profit value area, there will be dozens or hundreds of potential bidders.

All those other occupied homes are off the market and have no influence on the price of the last available one. Even if there are only two bidders, the price that the winning bidder has to pay is rent and is dictated by how much the other person bids; which largely depends on how much he or she earns/can afford to pay, which has absolutely naff all to do with the current 'land owner's' actions or inactions regarding the site.

And so on.

Tuesday, 27 September 2016

Maths joke.

Spotted on the wall at my son's school:

Fibonacci numbers - as easy as 1,1,2,3..."

There's a fatal flaw in there, but maths jokes are few and far between.

Monday, 26 September 2016

Stupid advertising slogan

The one for Quorn, where Mo Farah is running a burger van has annoyed me for ages. The slogan is:

"When healthy food tastes great, you forget it's healthy"

This slogan makes more sense if you invert it completely:

"When unhealthy food tastes great, you forget it's unhealthy"

"When booze tastes great, you forget it will give you a hangover"

"When you're high on opioids, you forget that an overdose can kill you"


Etc etc etc.

Yes, yes, but what about behind bike sheds?

From The Guardian:

Smoking should be banned in all parks and playgrounds to reduce the chances of children growing up thinking that using cigarettes is normal, environmental health officers have told ministers.

Zoos, theme parks and anywhere else children play should also become no-smoking zones, in a significant proposed expansion of the outdoor areas in which smokers cannot light up.

Smoking has been illegal in enclosed public places such as bars, nightclubs and restaurants, as well as public transport and work vehicles, across the UK since 2007...


Ignoring the fact that children aren't supposed to be in bars, nightclubs or work vehicles in the first place, what about smoking behind the bike sheds, a noble British tradition? Will there be an exception for that?

Saturday, 24 September 2016

My talk on how the Council Tax system can easily be tweaked to be much like Land Value Tax

Here's my summary of a fifteen-minute talk I did last weekend, I think that some people understood it, or at least understood that I understood it.

What annoys me is that the the Homeys have a favourite KLN that it would require an army of expensive and intrusive surveyors but that the LVTers don't have a proper plan on how it could work on a tedious administrative level to shut them up.

To cut a long story short, all we need to do is set Band D Council Tax in each area as a fixed proportion of the site premium/land value of a Band D home in that area, instead of it being about £1,200, +/- £200 everywhere in the country. So on Day One of the new system, Band D Council Tax would be close to £nil in the very cheapest areas, about £1,400 in median areas, rising to £10,000s in central London. The rest falls into place.

Each of the steps is quite simple in itself, but you have to grasp them all to see how they fit together...

1. There is a fairly fixed relationship between selling prices, gross rental values and site premiums

The three concepts are quite different, but we all know what selling prices and gross rental values are, and selling prices are actually just a multiple of rents. On the whole the multiple is about twenty, which means that gross rental yields are about 5%. This multiple is lower in low rent areas and higher in high rent areas, which exaggerates the differences in selling prices, but hey.

However you calculate the site premium, it is a certain fraction of gross rental values, lower in low rent areas (maybe one-quarter or less) and higher in high rent areas (maybe three-quarters or more). The median is about half and the average for total UK site premium divided by total UK gross rental values (skewed by the top end) is about three-fifths.

Clearly, site premiums at the very lowest end are zero, if you do the numbers, the differences in selling price multiple of gross rents and the site premium as fraction of gross rents largely cancel out and you end with with site premium = +/- 3% of current selling prices. This percentage tapers away to 0% at the very lowest end, of course, where site premium is £nil.

Suffice to say, there are different ways of calculating the Site Premium, this is the least of our worries. Selling prices would be flattened by higher LVT, so can only be used as an indirect check on whether assessed values are about right in future.

2. In any smaller area, there is a fairly fixed relationship between the values of different sized homes

It does not matter whether you are looking at cheap or expensive areas; in most areas, the selling price of gross rental value of a one-bed flat is around 60% of the basic unit of housing, which is a 3-bed semi in the same area; a terraced house is 85% as much and a detached house is 154% as much. The ratio between gross rents is much the same. Therefore we can safely assume that the ratio between site premiums is much the same.

3. How Council Tax works

See Wiki.

To give an example and cut a long story short, a small local council has a spending budget of £100 million and receives grants from central government (out of income tax, NIC, VAT etc) of £76 million. So it needs to raise £24 million in Council Tax.

Homes were originally banded by selling prices in 1991, at the time prices were fairly flat across most of the country, so most one-bed flats ended up in Band A, most 3-bed semi detached homes in Band C or Band D, all the way up to the biggest and most expensive detached houses in Band H.

Council Tax in Band A is 6/9 of whatever it is in Band D and so on, up to the largest homes in Band H where the Council Tax is 18/9 as much.

The council adds up the total number of Band D equivalent homes, so a Band A home counts as 6/9 of a Band D home, a home in Band H is 2 etc.etc,

The council then simply divides required revenues of £24 million by the number of Band D Equivalent homes. If there are 20,000 Band D equivalent homes in that council area, the Council Tax for a Band D home is £1,200.

Having calculated that, the tax in the other Bands follows automatically, Band A is 6/9 x £1,200 = £800 and so on up to Band H where it is £2,400.

Note - Council Tax is thus a highly arbitrary amount, it is a balancing figure between two arbitrarily decided numbers divided by an arbitrary number, LVT can't possibly be worse than this.

4. Put the first three together, and hey presto, Council Tax is in fact a low level LVT

Let's take the same local council, and assume the annual site premium on a 3-bed semi in Band D is £5,000.
3-bed semi's are in Band D, costing £1,200 = 24% of their site premium.
One-bed flats are in Band A, costing £800 on a site premium of about £3,000 = 27% of their site premium.
Terraced houses are in Band C, costing £1,066 on a site premium of about £4,250 = 25% of their site premium.
The largest detached houses in Band H cost £2,400 on a site premium of maybe £10,000 = 24% of the site premium.

That is a fairly flat tax (always something to be welcomed) - but only if you compare the tax bills within a small area. Across the country, the tax rate is hugely regressive, with an effective rate of 30% or 40% in the cheapest areas and 3% or 4% in the most expensive.

So people at the top end are paying nowhere near enough in annual Council Tax (quasi-LVT) but are paying far too much in the 'progressive', transaction and one-off taxes on housing (and private wealth), i.e. Stamp Duty Land Tax, Inheritance Tax, the ATED charge and other assorted nasties.

These all raise surprisingly little money (half as much again as humble old Council Tax) while causing huge amounts of grief to the few paying it and generating loads of work for the pinstriped professionals who leech off the already wealthy at no overall benefit to the economy.

In the spirit of fairness and neutrality, let's assume that our LVT replaces regressive Council Tax and progressive SDLT, IHT, ATED etc. That gives us target revenues of £36 bn a year.

5. Sorting homes/plots by size instead of value

It would be easy to sort homes/plots into bands by absolute size rather than 1991 values. So one-bed flats go into Band A, two-beds into Band B, terraced houses into Band C etc. all the way up to the largest detached homes into Band H. That can be done quickly and cheaply by looking at OS maps, walking up and down the streets and looking at them, seeing what kind of homes they were originally (ignoring extensions etc), how wide the frontage is (far more important that how long the back garden is). Each council can develop its own guidelines and rules of thumb, it's doesn't really matter as long as they are consistently applied.

This will be a lot easier and less contentious than the original Council Tax valuations, which were relatively uncontentious themselves. If we just did this and left Council Tax as is, most bills would not change. That is the beauty of maths, maybe in some areas everybody would go up a band; this increases the number of Band D equivalent homes, so the Band D tax falls accordingly.

This is a one-off exercise and does not need to be repeated for the system to work.

6. Dividing each council up into smaller valuation areas

In most councils, there is quite a discrepancy in values between the cheapest and the most expensive areas, so they would have to be divided up into smaller areas where values are similar. My preferred option is postcode sectors, with about 3,000 homes in each, this size is small enough for there to be little variation but large enough for decent sample sizes on selling prices and market rents.

With a bit of interpolation and sampling, it is a doddle to find out what the site premium of a 3-bed semi, i.e. a Band D home in each valuation area is.

The find the total tax base, we multiply up the site premium of a Band D home by the number of Band D equivalent homes in each smaller valuation area - exactly the same as under the current system - add 'em up to local council level, and then add those up to national level.

We end up with a total site premium for the whole of the UK of anywhere up to £200 bn, but let's call is £150 bn for tactical reasons.

This tells us that the tax rate would have to be 24% of site premiums, 24% x £150 bn = £36 bn, required revenues from 4. above.

The Band D site premium in an area x 24% is then the Band D tax in that area, and the tax bills in all other bands in that area follow automatically - exactly as happens now, see 2. above. Using my worked example in 4. above, tax bills in that council would barely change.

I see no reason why there has to be any great justification of why Band D tax is what is under this system any more than there is under the current system. There is no logic to SDLT or IHT rates and exemptions either.  It is just a tax you have to pay for choosing to own a home with at least some economic justification rather than being completely arbitrary bundle of different overlapping taxes as at present.

7. But Council Tax is a local tax to pay for local services!

… or so people believe, let them believe it if they want to, it is all smoke and mirrors anyway.

In the examples so far, central government will lose £12 bn in revenues from IHT, SDLT etc, so it can simply reduce total grants to those councils where people are now no longer paying so much SDLT, IHT etc. Central government breaks even.

So if our example local council above has lots of high value areas and a total tax base of £125 million, it will be expected to collect £125 million x 24% = £30 million in revised Council Tax, its budgeted spending is still £100 million so its grant from central government is reduced from £76 million to £70 million, Band D tax on average across the council will be £1,500* instead of £1,200 and so on and so forth.

* Clearly, in the cheapest areas within that larger local council area, the Band D tax will be about £1,000 and in the most expensive it will be about £2,000. So the tax on a one-bed flat in a cheap area will be £666 and on the largest detached homes in the most expensive areas it will be £4,000. Which puts paid to the nonsense that some people will be uprooted from their friends and family and forced into ghettoes, you will only have to move a couple of miles to cut your tax bill by 80%, so your previous friends and family will still be in easy reach - perhaps they will even move with you.

At the very bottom, there might be a few local councils where Council Tax will go down and their grants will increase and at the very top, there might be a few councils who are expected to collect more in Council Tax than their actual spending budget, this can all be sorted out and will all net off, let's not get bogged down in the bookkeeping between government departments.

8. Having got the ball rolling, we just keep going

Each year…
a) National taxes (income tax, NIC, VAT etc) are reduced a bit (or a lot),
b) This gives us higher targeted Council Tax/LVT receipts and lower central government grants to higher value areas,
c) Site premium valuations in each area are re-assessed, indexed up, recalculated, whatever,
d) These are totted up to give us the total tax base for the whole country
e) Divide b) by d) to get your new tax rate in %, that sets Band D tax in each area, the council enters that into its master list and everything else falls into place.

Friday, 23 September 2016

Friday Night Gear Change

I haven't heard a decent* new gear change in ages, but my brother in law stepped into the breach.

* All gear changes are inherently awful of course, they are the musical lowest-of-the-low, that's why I sometimes like them.

MJ Hibbett and the Validators, "(You make me feel) Soft Rock", well signalled gear change at 2 min 28 sec:




"The Gravito-Thermal Greenhouse Effect"

It appears that I have wasted all week trying to explain this effect, which seems blindingly obvious to me as it fits in with everything else we know about anything and I'm pretty sure that our physics teacher mentioned it once in passing:

Earth surface temperature (as well as the surface temperatures of 5 other rocky planets in our solar system) can be very accurately determined solely on the basis of two variables:
1. atmospheric pressure at the surface, and
2. solar irradiance at the top of the atmosphere.


For sure, it is only a starting point and you will probably have to make lots of other little up and- downward adjustments, but having Googled around, as per usual anything which offers an alternative/complementary/non-GHG induced explanation for why surface temperatures are what they are gets mired in purely political controversy and nit picking.

As PaulC points out, the paper linked to was withdrawn (yes I knew that), but an idea is not responsible for the people who hold it (pace Bayard). It is even hotly debated whether luminaries such as Maxwell and Feynman supported or rejected the idea, that's how mad it is.

I don't see how hard it can be to do all the measurements of a few different planets with differing atmospheres (I'm not sure why we should restrict it to rocky planets) and settle the matter one way or another to everybody's satisfaction, but hey...

Thursday, 22 September 2016

Politics of a Citizen's Income paid from a Land Value Tax

The following assumes no other changes to our tax and benefits system whatsoever.

According to Savills residential property values in the UK are £6,165bn. There are 28.2 million dwellings in the UK.

Let us assume that LVT is the equivalent to 3% tax on the current selling price of each home.

Total potential LVT revenues are £185bn.

UK population is 64.6 million.


A Citizen's Income from which we all get an equal share of LVT = £2,864 per person (including children).

Property value London/SE = £2,772 bn, LVT = £83 bn pa
Property value other regions = £3,393 bn, LVT = £102 bn pa

Population London/SE = 17.4m, Citizens Income = £50 bn pa
Population other regions = 47.2m, Citizens Income = £135 bn pa

Net flow of income to regions outside London/SE = £33 bn pa

Break even point for owner occupiers = £95,500 property value per person

So a household consisting of a couple with two children would be no better or worse off if they lived in a home worth £382,000.

Average UK house price £218,474.

                                                              Conclusion.

Almost all constituencies outside London/SE would be better off under a LVT + CI.

Couples with two children living in a house worth £382,000 or less (176% of current average house prices) would be better off.

Over half of Londoners who now live in rented accommodation would be better off.

In short, only a small minority of UK constituencies, mainly in the SE of England would be worse off and vote against such a proposal.

As well as reducing both regional and individual inequality, LVT + CI would allow the market to allocate property at optimal efficiency, reducing vacancies and under-occupation.

It would also reduce the selling price of property to its capital only value. Saving future title holders £36bn per year in mortgage interest repayments. (assuming current outstanding mortgages total £971bn would be reduced to £324bn)

A win-win-win.

For the purposes of a clear illustration of distributional effects, no changes to our tax and benefits system take place. However, it would be better if as many bad taxes were replaced with an LVT as possible, and our benefits system largely replaced with a Citizen's Income. Reducing the deadweight losses associated with each.

A win-win-win-win.

All we need is some politicians who can make a good pitch...

Gravity is more or less the same as acceleration.

From Quora:

Q: Obviously, the source of acceleration (without gravity) is transfer of energy from one object to another or change of its own energy structure so that one of its components changes into increasing energy of motion. But gravity occurs with no measurable energy transfer nor is the gravitating mass changing its energy structure in order to produce gravity.

If the cause of acceleration and gravity is not related at all is the Equivalence principle just a coincidence that the resulting effects are physically identical and indistinguishable?

A: By Frank Heile, PhD in Physics from Stanford University

I will try to describe in detail how gravitation works and how acceleration works and why the two different phenomena are really equivalent...


There follows a long and complicated explanation and comparison, but in folksy terms, anybody who has ever swung a bucket of water over his head at the right angle and speed knows this. As far as the water in the bucket is concerned, there is no difference between the gravity and the centripetal force/acceleration* while it is upside down. See also Einstein's famous thought experiment with the man in the accelerating spaceship.

* Acceleration is change in speed OR in direction, see here.

I refer you now to the comment by Nobel Prize nominee Ralph Musgrave:

Assume there’s just one atom in a car cylinder which is at room temperature. The atom bounces up and down between the piston and the top of the cylinder. Atoms at room temperature move around at about 1,000mph. If the piston then moves upwards at 1mph to its “maximum compression” point, the atom will gain a good 100mph in speed.

How is that possible, given the paltry speed of the piston? Answer… During the half second or so during which the piston is moving, the atom collides with it a hundred times or so, and it gains 1mph each time. I’d appreciate nominations for a Nobel Prize for this amazing insight.


So for air at ground level, the effect of gravity is like being driven by a giant piston accelerating at that speed and every time it bounces off the piston (the surface of the earth), it travels back faster than it set off (I'm not clever enough to work out how much faster at this stage and if so, relative to what). Relative to the surface of the earth there is no change in observed speed, just in direction (which as explained above, is acceleration).

Now imagine sweeping up sawdust with long straight strokes of a broom, you will get a bow wave in front of the broom where the sawdust is deeper, the broom is pushing saw dust which is pushing more sawdust etc. The pile is deepest directly in front of the broom and slopes away from it, the sawdust far ahead of the broom is entirely unaffected.

Which is why the atmosphere is thicker at the bottom. Which is another way of explaining why, from the point of view of an individual O or N molecule, in gravity/pressure/temperature* terms, the atmosphere is not static, it is constantly being accelerated from underneath by a giant piston (the surface of the earth), the same as the sawdust in front of the broom is being accelerated by the broom itself or by other bits of sawdust etc.

Like a bow wave, the force is carried ever upwards, so molecules in the upper atmosphere are bounced further out than they would reach under their own devices. So the upper atmosphere is less dense than it 'should' be and hence is cooler than it 'should' be, i.e. cooler than the surface of the Earth in the same way as the lower atmosphere is warmer than it 'should' be etc. To use another analogy, the atmosphere acts like a heat pump or fridge, it transfers heat from some places (cools them) to other places (warms them) but without changing the overall amount of 'heat'.

* I accept that there is minority few that increasing the pressure of a gas does not directly increase its temperature, which would mean that a lot of textbooks are very, very wrong on this one!

Wednesday, 21 September 2016

"What happens to the temperature when an ideal gas is compressed?"

From Wiki:

A gas compressor is a mechanical device that increases the pressure of a gas by reducing its volume. Compression of a gas naturally increases its temperature.

A lot of people seem to be stuck on that and blankly refuse to accept what is almost a truism. For a gas, pressure and temperature are almost the same thing. Increase/decrease either and you increase/decrease the other (until it levels out at the temperature of its surroundings, obis).

Dinero refuses to grasp this point:

"The main point is - There is no physical law that equates constant high pressure to constant high temperature. If you think there is then state it. As I said in an earlier comment Scuba diving tanks that are full with compressed air are actually not warm to the touch."

The metal skin of scuba tanks is a good heat conductor/poor heat insulator, so the overall temperature of the tank and the compressed gas (liquid?) inside it is the same as the surrounding air. Duh. But what happens when you reduce the pressure on that gas by releasing the valve? It cools down. You notice this when you are refilling a cigarette lighter with compressed gas, there will be ice round the opening where the moisture in the air has frozen. This is the basic "how a fridge works" model, see below.

So allow me to present related matters illustrating this single phenomenon, which is quite independent of sunshine or insulating effects of clouds and other minor greenhouse gases, can we please focus on the topic in hand...

1. From here:

In Lectures of physics, vol 1 by Feynman, it is written:

"Suppose that the piston moves inward, so that the atoms are slowly compressed into a smaller space. What happens when an atom hits the moving piston? Evidently it picks up speed from the collision. [...] So the atoms are "hotter" when they come away from the piston than they were before they struck it. Therefore all the atoms which are in the vessel will have picked up speed. This means that when we compress a gas slowly, the temperature of the gas increases."


Obviously, if the gas under pressure is not in a perfectly heat-insulated container, it will cool down again/warm its surroundings. Which is why Boyle had to wait for his compressed gases to cool down again before observing that pressure is proportional to volume; the immediate reading showed a higher pressure/temperature. Taking the atmosphere as a whole, it is in fact a self-contained heat-insulated container which contains itself. Gravity does the 'work' holding it in and the vacuum outside is to all intents and purposes a perfect heat insulator*.

The reverse is also true, if the volume of a sealed container with gas in it is increased, the gas will cool (until it is warmed up again by the non-insulating container).

2. See for example how fridges work:

A vapor compression cycle is used in most household refrigerators, refrigerator–freezers and freezers.

In this cycle, a circulating refrigerant such as R134a enters a compressor as low-pressure vapor at or slightly below the temperature of the refrigerator interior. The vapor is compressed and exits the compressor as high-pressure superheated vapor.

The superheated vapor travels under pressure through coils or tubes that make up the condenser; the coils or tubes are passively cooled by exposure to air in the room. The condenser cools the vapor, which liquefies. As the refrigerant leaves the condenser, it is still under pressure but is now only slightly above room temperature.

This liquid refrigerant is forced through a metering or throttling device, also known as an expansion valve (essentially a pin-hole sized constriction in the tubing) to an area of much lower pressure. The sudden decrease in pressure results in explosive-like flash evaporation of a portion (typically about half) of the liquid. The latent heat absorbed by this flash evaporation is drawn mostly from adjacent still-liquid refrigerant, a phenomenon known as auto-refrigeration.


Clearly, there is an added kicker here, the latent heat absorbed when the compressed gas (liquid) boils/evaporates again, but the principle stands. Heat coming out of the back of the fridge is equal and opposite to the fall in temperature inside the fridge (ignoring the extra bit of heat generated by friction).

3. Or let us take a jaunt into space and see what scientists say about the atmosphere of Saturn, which is so far out that the warming effect of the Sun is negligible:

Saturn's temperature and pressure increase from the exterior of the planet toward its center, changing the makeup of the clouds. The upper layers of clouds are made up of ammonia ice. Traveling toward the core, clouds of water ice form, with bands of ammonium hydrosulfide ice intermixed. The lower layers of Saturn see higher temperatures and pressures. Water droplets are found here, mixed with ammonia.

Or how about Jupiter:

The center of Jupiter is more than 11 times deeper than Earth's center and the pressure may be 50 million to 100 million times that on Earth's surface! The tremendous pressure at the center of planets causes the temperatures there to be surprisingly high. At their cores, Jupiter and Saturn are much hotter than the surface of the Sun!

Strange things happen to matter under these extraordinary temperatures and pressures. Hydrogen, along with helium, is the main ingredient of Jupiter's and Saturn's atmospheres. Deep in their atmospheres, the hydrogen turns into a liquid. Deeper still, the liquid hydrogen turns into a metal!


We can pretty much rule out the Sun as a source of this heat, and their atmospheres are mainly H and He with practically no traditional greenhouse gases. Leaving us with one surviving explanation of the three as to why they are so hot in the middle.

What you have to remember is that we think of as the 'surface' of the earth is in fact the bottom of our (relatively thin) atmosphere (where the pressure induced warming is strongest), and the 'surface' of gas giants is the top of their (very thick) atmospheres.

PaulC156 keeps digging in the comments:

"So gravity exerts a force on matter which thus transfers energy of motion / kinetic energy which in turn can be measured by increases in pressure, density and temperature. Nothing controversial until you go from the general and ideal situation of a collection of molecules in space to the specific Earth bound circumstance of an atmosphere over a heated surface."

Jolly good, some agreement, so what is heating the centres of gas giants? Are they not just collections of molecules in space?

"That latter phenomenon [from inbound ultra violet from the sun transforming to out bound infra red] is given a token nod in the form of ‘it may have a small impact of a couple of degrees’. This is just hand waving."

No it is not given a token nod, the whole phenomenon of clouds reflecting the Sun's rays back up or back down when it's cloudy, and CO2 and CH4 turning long wave into short wave radiation and reflecting some of it back down is incontrovertibly true - but it is a completely separate phenomenon. The same as the Sun heating things up in the first place. They are not three alternative explanations for the same thing and we ought not waste time arguing over which is 'correct', they are three quite independent factors which are all have an effect.

It is like accelerating in a car when you are going downhill, there is no point having an argument over whether it is accelerating purely because of gravity or purely because you've pressed the accelerator, as both are having the same effect to some degree, the interesting bit is splitting up the total acceleration into the part due to gravity and the part due to pressing the accelerator.

So I might as well point out that PaulC156 (not his real name!) is only giving the basic Gas Laws a token nod.

Bayard also refuses to accept that the extreme case of what happens in the middle of gas giants is repeated on a small scale in the Earth's atmosphere:

"Mark you still haven't made the necessary distinction between movement (of mass) and static states. To all intents and purposed the Earth's atmosphere is static…"

To all intents and purposes, the H and He which make up 99% of the volume of Jovian Planets (a fancy name for gas giants) are static. It floats up, it sinks down etc.

4. Or even further afield and ask how stars form:

Gravity pulls the dust and gas together.

As the gas falls together, it gets hot. A star forms when it is hot enough for nuclear reactions to start. This releases energy, and keeps the star hot.


Where does heat come from? From gravity compressing the hydrogen atoms/molecules. Luckily, the earth does not get anywhere hot enough to trigger nuclear reactions!
--------------------------------------
* Mombers adds:

Big hole in your analysis I think:
'the vacuum outside is to all intents and purposes a perfect heat insulator'
The vacuum provides no insulation for the radiant heat, which is why nights are colder than days.
Greenhouse gases on the other hand do provide insulation for radiant heat...


1. Yes, fair point, heat radiates from the earth equal and opposite to what comes in from the Sun. The net effect is zero. But let us rule the Sun out of this equation. There was no Sun shining on the earliest clouds of hydrogen, but nonetheless, they heated up (see also Saturn, Jupiter, above), the heat did not radiate out into space or else they would never have ignited. Deny that if you will. I am talking about a specific phenomenon that is independent of heat from the Sun.

2. The vacuum provides the same (lack of) insulation in daytime and night time. As far as I am aware, the reason it is colder at night is because the Sun is not shining on that part of the earth. The relative difference between temperature "where the Sun is shining" and "where it isn't shining" is a separate topic (and easily explained) to "why is it warmer at ground level than at higher altitudes (for a given surface temperature)".

3. Of course greenhouse gases i.e. clouds of H2O vapour reflect radiant heat. Everybody can notice that when it is cloudy at night it is surprisingly warm. That is quite a separate topic to "why is it warmer at ground level than at higher altitudes (for a given surface temperature)". Clouds at low elevation (fog) are warmer than clouds higher up.

Tuesday, 20 September 2016

"It's healthier to cycle than drive"

A recent reader's letter in The Evening Standard:

On Wednesday air pollution in outer London was worse than in central London, according to AirText. No doubt potential cyclists were put off by the nitrogen dioxide and particulates they would breathe in but as tests by Enviro Technology Services earlier this year showed, air pollution is actually worse inside cars than outside.

Nitrogen dioxide inflames the lungs, stunts growth and increases the risk of respiratory diseases such as asthma and lung cancer, particularly in children. So, despite the poor air quality, it is healthier to cycle than to drive.

Today marks the beginning of European Mobility Week, which aims to encourage local authorities to introduce and promote sustainable transport alternatives to cars. Only two authorities in the capital have signed up — Lambeth and the City of London.

In the week that the Government rejected a diesel scrappage scheme we all need to consider giving cycling, walking and public transport a go. The car is no longer king — and its pollution is killing us.

Andree Frieze, Make Air Safe & Clean (MASC)


Well, clearly it's not healthier to cycle than drive, unless you ignore the hundreds of people injured or killed while cycling, plus the nuisance value of the lycra crew blocking the roads when you want to go for a spin.

Assuming the facts as stated to be true, the solution to maximising your personal health/safety level is blindingly obvious:

a) Take the bus or train when travelling to inner London.

b) Drive a convertible car with the roof down when travelling around outer or outside London (or at least open the sun-roof and all the windows in a normal car).

Monday, 19 September 2016

Fun Online Polls: Atmospheric temperatures, politicians and sugar

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

Why is the earth's surface 30C warmer than it should be, and 60C warmer than the top of Mount Everest?

Greenhouse gases like H2O and CO2 - 20%
Gravity and Boyle's Law warm the lower and cool the upper atmosphere - 67%
Other, please specify - 14%

Which was of course the correct answer. I was told that more specifically I should have said Gay-Lussac's Pressure-Temperature Law:

"The pressure of a gas of fixed mass and fixed volume is directly proportional to the gas's absolute temperature."

(Though having re-read this, they seem to be saying the same thing.)

Atmospheric pressure at ground level is higher than at the highest altitudes, ergo it is warmer than it would be from sunshine alone, and at the top of the atmosphere, it is colder than the average temperature of the whole atmosphere.

Clearly heat can't come from nowhere so what the lower atmosphere gains (in terms of average number of molecules per unit volume with a correspondingly higher total kinetic energy of those molecules per unit volume, which can be measured as 'pressure' or 'temperature', same thing in this context) must be balanced out by lower numbers for density, temperature, pressure etc in the higher atmosphere .

There is an equilibrium, which depends on how thick the atmosphere is, the air at the bottom can only warm up so far before it rises and cools again; the air can only rise so far before the force of gravity pulling it down overrides its tendency to float up etc.

It's all well and good coming up with an explanation why the surface temperature is higher than it would be from sunshine alone (and yes, 'greenhouse' gases like H2O, CO2, CH4 contribute a couple of degrees but not a massive amount) but if that does not also explain why the upper reaches of the atmosphere* are colder than they would be etc, then that explanation is not coherent or plausible.

* Don't start with the thermosphere, that is high up but hot for very different reasons.
--------------------------
Going back to a Fun Online Poll of a few weeks ago, 71% thought that Merkel would never realise it was wrong to let a million Muslim refugees into the country.

Interestingly, she sort of did today, although it wasn't really an apology as such, more that she regrets having lost votes over it and wishes she had prepared the ground better before she pressed ahead and did it anyway.
-------------------------
On the topic of politicians, another politician-avoiding-sugar story popped up again today, I don't know why some people are so obsessed with other people's diets but hey, I try to avoid sugar where poss so he has my sympathy (although I don't make jam, don't really like the stuff).

From The Daily Mail:

* The Labour leader made the comment during a chat on Mumsnet
* Said he shunned biscuits because he was 'anti-sugar on health grounds'
* But mocked as he has a jam-making hobby, which usually involves sugar


Luckily, the internet never forgets. For contrast, there was another politician-avoids-sugar story a while back, which raised no eyebrows whatsoever.

So that's this week's Fun Online Poll (without following that last link first!)

"Which of these politicians avoids sugar?"

Vote here or use the widget in the side bar.

Saturday, 17 September 2016

Short Lists

Major political parties in Great Britain* with a male leader

Labour Party
Liberal Democrat Party

Much longer list:
Major political parties in Great Britain with a female leader

Green Party**
Plaid Cymru
SNP
Conservatives***
UKIP

* GB excludes Northern Ireland. That bastion of male chauvinism only has one major party with a female leader.

** Yes I know that technically they have two joint leaders and one is a bloke, but Caroline Lucas is the only one anybody's heard of.

*** Which gives me another idea for a short list: "European countries with a female prime minister/chancellor etc who never had children"

Friday, 16 September 2016

I expected a "despite Brexit fears" bonanza but was disappointed

From the BBC:

Bank admits economy is looking better

In one sentence the Bank has revealed it is ready to upgrade its growth forecasts for the UK economy.

"The Committee now expects less of a slowing in UK GDP growth in the second half of 2016," it said, referring to the Monetary Policy Committee of Bank economists and external experts that sets UK interest rates.

The key point - the Bank's internal judgement is that growth in Q3 (that's July to September) will now be between 0.2% and 0.3%, a pretty chunky upgrade on its August forecast of 0.1%.


A most interesting headline from the BBC. Even they appear to realise that Project Fear was overcooked and are trying to distance themselves from it.

Thursday, 15 September 2016

I'll be pleasantly surprised if this gets past the City AM moderators.

Kristian Nimitz wheeled out his Faux Lib nonsense for the umpteenth time.

Shooting the messenger: Rent controls have always and everywhere ended in failure

Quite clearly, in the real world they haven't, sometimes yes, usually no, depends on other factors.

My actual comment:

Badly wrong on at least two counts.

The UK had rent controls for most of the 20th century, but that did not mean that housing supply disappeared. All that happened was that landlords left the market - meaning there were more homes for owner-occupiers to buy, who also acquired all new supply.

(In European countries, rent controls coupled with yet another "government interference" i.e. minimum building standards have also led to favourable outcomes.)

This is a large part of the reason why owner-occupation rates doubled in the decades after 1945 and the number of private tenants halved.

Another major reason was that mortgage loans were capped at low income multiples, which set a natural cap on house prices.

His other glaring error is that granting even more planning permission will make no difference, it is pushing a piece of string. Land bankers/home builder have a profit maximising level of output of about 150,000 a year. If more permissions are granted, these are simply banked, which is why the largest home builders are sitting on land banks with planning sufficient for ten years' supply.

If Mr Nimitz left his ivory tower for a few minutes and took the trouble to read the accounts of Barrats, Persimmon et al, this would be obvious to him.

I imagine that the third mechanism adopted by UK governments to put a natural cap on rents and hence house prices will be completely unpalatable to Mr Nimitz. That was the easy availability of low rent social housing, which enabled millions to opt out of the land price Ponzi scheme altogether.

-------------------------
UPDATE, re Anti's comment.

The more complete list of policies which the UK had in one form or another for most of the 20th century until the Home-Owner-Ist era is as follows:

- rent controls (came in hard after each war, were then gradually whittled away)
- tenants were protected from eviction, as long as up to date with rent (until 1996 or so)
- as a result, neither banks nor building societies would lend to buy-to-let landlords (until 1997 or so)
- higher taxes on landlords' rental income
- private landlords not subsidised by Housing Benefit (until 1990).
- Domestic Rates (until 1990)/Schedule A tax (until 1964), which together were more like LVT than like Council Tax.
- little or no bank lending on land/mortgages.
- building societies had stricter criteria on minimum deposits and maximum loans-to-income multiples. If you can't borrow more than twice your joint income, that caps house prices at just above twice your joint income.
- there was the opt out from the whole Ponzi scheme i.e. social housing (peaked at 30% of all households in the 1970s).
- lower house prices meant that builders increased profits by increasing volume/quality; not by restricting supply to prop up prices, so little or no land banking.
- general political assumption that owner-occupation is the best form of tenure
- general cultural assumption that landlords were a bit sleazy, barely a step up from brothel owners or benefit claimants.

The inevitable result was low rents, low house prices, small and resilient banks and building societies…

… and rapidly increasing owner-occupation levels, which is where this Georgism-lite contained the seeds of its own demise and tipped over into Home-Owner-Ism again. The country is run by politicians who want to buy votes as cheaply as possible, so from the 1960s onwards, there was a political advantage in allowing house prices to increase year on year - a notional profit for a majority of voters and an invisible cost for future generations, all requiring zero tax increases.

Fast forward to last year, the scales were tipping the other way, more people were losing out from Home-Owner-Ism than were gaining, so the then Conservative chancellor started withdrawing tax breaks from buy-to-let landlords, ostensibly to shift the balance from landlords back to would-be owner-occupiers. If the shift from Home-Owner-Ism back to Georgism-lite takes as long as the other way, we will have Georgism-lite again by the middle of this century.

Wednesday, 14 September 2016

That "Bake off moves to Channel 4" story - the Daily Mail digs up the relevant facts and figures

The couple's home in Clapham is worth £3.5million and they live in it with their three children


That's all we need to know, isn't it?

Civilised discussion

To my mind, here is how civilised discussions should work, the rules apply to the pub, the dinner table, the blogosphere, anywhere.

One person, the bloghost, kicks things off by writing a post, reporting what he believes to be the facts, giving examples, linking to a couple of sources etc.

Other people then either agree; or disagree by giving counter-examples where the facts are different, linking to other sources; or ask the first person for clarification on certain matters etc.

Then the bloghost has the opportunity to say, oh yes, you are right, my original assumption was wrong. Or it's up to him to present more evidence or to explain why the counter-examples are invalid etc.

There is a fairly large sub-set of time wasters and idiots don't understand this and think that debating is all about trying to refute the original claims by insulting the bloghost (or other commenters); by taking his explanation ad absurdum; by claiming he has no expertise or experience - but without ever stating their opinion or  answering a direct question.

Let me give you an example of civilised discussion:

Bloghost: "I think most politicians are quite tall. Look at Tony Blair and David Cameron." He adds a link to a newspaper article, Wiki page or academic study on the matter.

In civilised debate, commenters will either agree ("I met John Major once, he is surprisingly tall"); or disagree ("I met Nigel Farage once, he's medium height at best"); or point out that Churchill and Hollande were quite small, possibly linking to some academic study saying that successful politicians tend to be small - or at least giving their honestly held opinion that on the whole, politicians are of average height.

The bloghost then has the opportunity to withdraw his first claim in the light of better evidence; give more examples; or decide that he his original statement was in fact correct and damn the doubters. If he is asked for clarification then he will give it. If he ignores all the comments listing small politicians and academic studies saying that politicians tend to be small, then so be it, let the court of public opinion judge the matter.

Let me now give you an example of full blown time wasting twats who have no concept of civilised discussion

Bloghost: "I think most successful politicians are quite tall. Look at Tony Blair and David Cameron." He adds a link to a newspaper article, Wiki page or scientific study on the matter.

Comments left by time wasting twats will be along the following lines:

"Tony Blair and David Cameron are actually very short."

"I bet you've never met any politicians."

"The source you link to is unreliable."

"If that's true, and the tallest people are basket ball players, how many basket ball players can you name who became president or Prime Minister?"


"I bet you're a short arse yourself. You're using this to excuse for failing in politics."

"I bet you're quite tall yourself and think that this gives you a God-given right to be a political leader."

"Why is this important? What has it got to do with Land Value Tax?"

"What qualifies you to speak? Are you a geneticist?"

"Prove it!"

"Are you saying that small people shouldn't be allowed in politics? Women tend to be shorter. This is a myth put about by sexists who want to disqualify women from politicos. I suppose you think women should just stay at home doing the housework? Typical UKIP voter!

"Define tall! In the middle ages, 5'6" counted as very tall.

"Not according to this link
" (which turns out to be totally irrelevant and hundreds of pages long).

If the bloghost makes the mistake of trying to engage in serious discussion by asking any of them "Go on then, you are rubbishing my theory, can you give me any examples of small politicians?" or "What exactly do you mean by that?" or "I am judging 'tall' by modern standards, i.e. at least six foot and a bit. Why does it matter how big people were in the middle ages?" the commenters will flatly refuse to respond.

If the bloghost is lucky they will at least acknowledge that a question has been asked and admit that they cannot or will not answer it, but the chances are they will ignore it or say things like "That is irrelevant." or "Don't think you can change the topic, your original claim is bollocks." or worse, they will answer a completely different question or repeat the assertion on which the bloghost was seeking clarification.

It does not matter than the bloghost's question is very simple and very relevant and that he wants to establish what the twat commenter is actually trying to say, the key is to ignore it.

So in response to the unfounded claim that Tony Blair and David Cameron are short, the bloghost might add links to some photos of summit meetings showing that Tony Blair or David Cameron were among the tallest in the photo, and ask the first twat commenter "Do you really think that they are small? Do you have any evidence for that?".

The twat commenter will probably refuse to answer the question and will not submit any evidence that they are short. At best, he will say "Photos can be misleading. The ones where they appear tall are photoshopped."

And so on.

Tuesday, 13 September 2016

"Despite Brexit fears" weekly round up

On a lighter note, here area few outings for that tired old journalistic cliché from the past week:

City hiring holds up despite banks’ Brexit fears

Kamel Mennour to Open London Gallery Despite Brexit Fears

Experts say Brexit will not cause a recession despite Project Fear scaremongering from Osborne before the EU referendum

How Yorkshire has remained strong despite post-Brexit fears

More than two-thirds of Britain’s smallest firms expect to see growth over next six months despite concerns over Brexit, research finds

UK ECONOMY RESURGENT DESPITE BREXIT FEARS

SMEs ‘to generate £16 billion a year despite Brexit fears’

London house prices: Fears of dip after Brexit defied as prices continue to rise

CORPORATE EUROPE REMAINS UPBEAT DESPITE BREXIT SHOCK

And so on, ad infinitum. It would be just as easy to find the same number of headlines reporting poor economic news, which is promptly blamed on Brexit Fears.

Whether the final terms of Brexit will be good or bad for the UK economy - which depends very much on your point of view* - is unknown, but big picture wise it will probably make bugger all difference.

* House prices being a prime example, there are millions of people who would gain enormously if they fell, as opposed to a few hundred thousand who would lose out. But in a Homey society, higher house prices counts as A Good Thing and we have to look at the world through their twisted perspective. Or we could take immigration from poorer European countries; that's good for UK employers and landowners; not so good for low skilled UK workers or the countries they leave.

Monday, 12 September 2016

Fun Online Polls - Applying for UK asylum in France, Boyle's Law Gay-Lussac's Law and Greenhouse gases

The results to last fortnight's poll were as follows:

The French want to allow 'refugees' seeking asylum in the UK to lodge their claim while still in France.

Good idea (we can reject them out of hand and they remain France's problem) - 73%
Bad idea - 27%


That is of course on the assumption that their claims are processed by British officials, and not simply rubber stamped by French officials keen to get rid of them.
-------------------------------
So China and the USA signed up to this Paris Agreement on restricting CO2 emissions last week.

Which made me think, unless they are just doing this for presentational reasons, maybe I'm wrong and there is something in this global warming stuff.

So I re-read a standard explanation, all just about plausible until this bit:

Without this natural greenhouse effect, primarily owing to water vapor and carbon dioxide, Earth’s mean surface temperature would be a freezing -1°F, instead of the habitable 59°F we currently enjoy. Despite their small amounts, then, the greenhouse gases strongly affect Earth’s temperature. Increasing their concentration augments the natural greenhouse effect.

That is, I am afraid, complete bollocks and if that's all they've got as evidence then I am still not buying it.

The real reason why the surface is approx. 30C warmer than it 'should' be, bearing in mind distance from the sun and albedo is because of Boyle's Law.

UPDATE: I conferred with VFTS, the more appropriate gas law is one of Gay-Lussac's Laws:

The pressure of a gas of fixed mass and fixed volume is directly proportional to the gas's absolute temperature… This law holds true because temperature is a measure of the average kinetic energy of a substance; as the kinetic energy of a gas increases, its particles collide with the container walls more rapidly, thereby exerting increased pressure.

So higher pressure = higher temperature and higher temperature = higher pressure and vice versa. The top half of the atmosphere pushes the bottom half down (compresses it) ; and the bottom half pulls the top half down (expands it). The bottom half is warmer than it 'should' be and the top half is colder than it 'should' be. On average, it is the right temperature, the -1F referred to in the first excerpt.

The atmosphere works like a giant heat pump - the upper atmosphere is colder than it should be and the lower atmosphere is warmer than it should be. The actual temperature half way up by volume i.e. 5.6 km is approx. 30C cooler than the surface and is in fact exactly what you would predict, bearing in mind distance from the sun.

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

Vote here or use the widget in the sidebar.

Sunday, 11 September 2016

Off Balance Sheet Government Debt



I treated myself to a new (well ex-demonstrator) car recently.  Oh OK.  Since you ask.  One of these:


In amongst all the negotiations I was offered a PCP deal.  Looking at the numbers (and the depreciation curve from Autocar and Whatcar) got me thinking about what exactly you are financing.

Inspecting the (badly sketched) graph above I have made a stab at plotting the depreciation. I have based the three year number on the quoted balloon payment.

The 'depreciation' has two components. (1) VAT (2) 'Depreciation'.  In regards to the latter with any new car you generally get all servicing thrown in for at least three years. (Mine included 5 years servicing). You'll get first years RFL. You'll get a guarantee - typically unlimited or perhaps 60K miles. All these have a cost to the maker but to you it means peace of mind (and that lovely new car smell). But all these benefits have 'run out' by year three ish.

However, you get nothing for the VAT.  Or rather the government gets 20% VAT that you have financed. You've borrowed money to pay tax.  Or rather again a bank has credited some money it has just made to your account so you can finance the VAT.   As I understand it 80% of new cars are bought on PCP deals. This is an awful lot of 'off balance sheet financing' for the government.

About 2m new cars are sold each year.  Say average of £17,500.  That's £7.0Bn per year in VAT financed by the Great Car Buying Public.

If that analysis is correct, someone should be told. Or have I missed something?

(Oh, I didn't use a PCP deal.  I put down a hefty chunk and financed the balance at a stupidly low rate as I can better use that money in my business.)




Classic roadster design

Let's start with the first identifiably modern roadster, the Jaguar E-type, which is a front engined 'cigar' shape.


From the other side of the pond came the slightly more 'geometric' Corvette.


Put those together and scale them down to affordable, flatten the boot, revert to round headlights and you end up with a Triumph Spitfire.


A Mazda MX5 Mk2 is a Triumph Spitfire but more 'cigar' shaped and with a hint of 'wedge' (the boot is higher than the bonnet). The Mk1 was even wedgier.


Starting from the other end, the first affordable rear engined 'wedge' shaped roadster was the Fiat X19.


The Porsche Boxster is a rear engined 'cigar' shape.


Scale down a Boxster to Fiat X19 dimensions (basically by chopping off the front and rear boots), pitch it somewhere between 'cigar' and 'wedge' and you get a Toyota MR2 roadster.


By overlapping the outlines of all of the above in Excel as far as possible; drawing the line of best fit; scaling it down to affordable; and improvising a bit, I ended up with this. I know the quarter-glass is old fashioned, but it leaves you more room for a 9" door speaker. The front end is a bit blunt, this is to give you space for a number plate above the air intake rather than having a more elegant line which is then ruined when you add the number plate

"Nation states" - not perfect but can anybody can come up with anything better?

Two people with whom I usually agree tweeted recently as follows:

Paul from Fintona @paulfmuldoon
"I can't wait for the concept of the nation state to be relegated to the pages of history where it belongs"

Duncan Stott @DuncanStott
"Guy Verhofstadt: 'We are suffering from having invented nation states and the nationalism that goes with them in the 18th Century'"

That's all well and good, nobody says they are perfect, any more than democracy is. They just appear to be the end result of lots of other forces, the desire to 'belong' (on the part of the masses), the desire to expand the area under their control (on the part of the ruling class - people like Guy Verhofstadt, for example) and the desire to feel 'sovereign' on the part of both masses and ruling class.

I don't see any realistic alternative, anarchy doesn't work; micro-states work but only if they are surrounded by larger countries; empires always collapse, even if they worked in the first place; most people resist the idea of supra-national government (UN, EU, TTIP etc).

As has been said before, democracy only works if there is a sense of a single national identity (however artificial, it cannot be denied there is such a thing) and tends to flourish more in economically developed countries.

Wiki says:

A nation state is a type of state that conjoins the political entity of a state to the cultural entity of a nation, from which it aims to derive its political legitimacy to rule and potentially its status as a sovereign state…

A state is specifically a political and geopolitical entity, whilst a nation is a cultural and ethnic one. The term "nation state" implies that the two coincide, in that a state has chosen to adopt and endorse a specific cultural group as associated with it. "Nation state" formation can take place at different times in different parts of the world.


So in the same way as land-ownership and the state are synonymous, I suppose we just have to accept that democracy, the nation-state and capitalism go hand in hand and are the least bad ways of organising things. Nothing which LVT and a Citizen's Income won't sort out.

Unless somebody has any better ideas?

Friday, 9 September 2016

They own land! Give them money!

From The Evening Standard:

Housing benefit would be increased for tens of thousands of people in London under Liberal Democrat proposals.

Lib-Dems are proposing to link local housing allowance, which private renters on housing benefit can receive, to average rents locally "so that the benefit reflects the actual cost of renting. LHA is currently capped and linked to the lowest rental costs in an area.

This would mean huge rises in housing benefit for many people who live in high-rent areas such as Westminster, Chelsea, Kensington, Fulham, Islington and Richmond.

The Lib-Dems estimate the housing benefit reform would cost about £3 billion a year by 2020-21.


Or more accurately:

Housing benefit would be increased for thousands of landlords in London under Liberal Democrat proposals.

Lib-Dems are proposing to link local housing allowance, which private landlords whose tenants are on housing benefit can receive, to average rents locally "so that the benefit maximises the value they can extract from society". LHA is currently capped and linked to the lowest rental costs in an area.

This would mean huge rises in housing benefit receipts for those who own several homes in high-rent areas such as Westminster, Chelsea, Kensington, Fulham, Islington and Richmond.

The Lib-Dems estimate the housing benefit reform would benefit the Duke of Westminster by about £3 billion a year by 2020-21.




"Stalins benefits underestimated, review says"

From the BBC:

The benefits of mass murdering megalomaniac dictators are underestimated and the harms exaggerated, a major review suggests.

Published in the Lancet and backed by a number of major health organisations, it says Stalins lower heart attack and stroke risk. The review also suggests side effects such as surveillance and punishment without trial do occur, although in relatively few people.

But critics say healthy people are unnecessarily being subjected to forced labour camps and widespread hunger.



Thursday, 8 September 2016

Killer Arguments Against LVT, Not (405)

Googling around for raw material to this epic series, I stumbled a good recent summary at Another Angry Voice (as did Bayard and BenJamin', it's a small world).

The first KLN was a half hearted "But the government will just have LVT on top of existing taxes" which was batted away.

The second KLN was:

Lydia Conwell

I'm not convinced it would work. Taxing land ownership would give people the incentive to own no land and instead rent. Wouldn't the tax the landlords have to pay be then transferred to the tenant through increases in rent?

Also you may not be able to move vast amounts of land to tax havens but you can position a company in a tax haven and that company can own the land, can't it?


The first one is clearly circular logic. In real life, most people choose whatever is probably going to be cheaper over their chosen time frame - 'buying/paying a large mortgage' or 'renting'. So by and large, the cost difference is negligible. What usually swings it is how long people intend to stay in that home/that area.

It will be exactly the same when people have to choose between 'buying/paying LVT/paying a smaller mortgage' or 'renting'. The two will end up costing much the same over a foreseeable medium term.

Further, if there the incentive to own no land and instead rent, doesn't the same apply to landlords? What they will own is the buildings, so spend £100,000 on the building and collect £5,000 a year rent net of LVT. It's the same for a new entrant; pay £100,000 up front, have the simple pleasure of decorating the home the way you like it and save yourself the £5,000 rent.

But I couldn't be bothered with that and dealt with the easy one:

Mark Wadsworth @ Lydia Conwell

Lydia, the UK has quasi LVT on commercial land (Business Rates), much of it owned by foreigners and the collection rate is still 98%, higher than any other tax.

Lydia Conwell @ Mark Wadsworth

That's a good point.


Which was a bit of a disappointment, I was expecting "Yes... but that is because the occupant is liable for Business Rates not the owner", which I would have countered with "In the event of non-payment, the council will take control of the building and collect the rent until the arrears are paid off", fully expecting "But what about vacant buildings?" and so on.

Where's the fun if people just read and understand what you have written?

Each side of this building is in a different postcode district*





* Or more accurately, the west side is in WC2, the north side is in W1, the east side is in WC2 (again) and the south side is in SW1.

Wednesday, 7 September 2016

A vignette of the value of land

In Argentina, the government is currying votes by encouraging the "Originarios", the self-proclaimed descendants of the tribes who occupied the land before the Spanish conquest, to claim back their "tribal lands" off the descendants of the people the Spanish gave the land to.

From Bill Bonner's Diary*

“You are so naïve,” said an engineer who came to check on our grapes and oversee the pruning. "You don’t really understand anything. This whole originario thing is a scam. They call themselves the ‘Diaguita Community,’ but no one knows if they have any real connection to the Diaguita people that once lived here. And they say they want to live in a traditional way on their land. But it’s nonsense. They want pickup trucks and television, just like everyone else. The originario thing is just a way for the organizers to get money. The local people are pawns. They don’t know what’s going on.

You think you’re going to go to them and explain the situation. You think you can tell them why it is a bad idea… and why they would be better off in the modern economy. Well, of course they would be better off. If this succeeds, they’ll be condemned to live hard lives with just enough from the government to get by. The government will say they are living in a ‘traditional way,’ but you’ve seen what that means. No heat. No running water. No education. It’s terrible.

The best thing that could happen – for them – would be for you to go to the ringleaders and make a deal. You give them some money. And they back off. Look what happened at [a neighboring ranch that was seized by the government and given to the originarios]. It was all an inside deal. The originarios made noise. And the owner of the land had a good contact with the government. He was paid by the government for the land… far more than it was really worth. Everybody came out ahead, except the originarios. The politicians gave the land to the originarios and won some votes. The landowner got his money. But the originarios now live in a state of perpetual poverty. No one wants to invest in their community because they don’t respect property rights."


*Bill Bonner owns a ranch in Gualfin, Argentina.

Homeys going round the logic clock yet again.

From City AM:

Rents kept on an upwards climb in August, but the pace of rent growth is slowing. In August, prices grew by 3.1 per cent year-on-year, according to HomeLet's rental index. Tenants signing new agreements paid an average £913 a month.

But this increase compares with annual inflation of between 3.5 per cent and 3.8 per cent for the last four months, and this time last year, year-on-year growth was nearly six per cent. The slowdown was most apparent in London and the sought east, and it correlates with the stamp duty tax changes that came in at the beginning of April.


Why on earth they imagine that rents should increase smoothly and you can simply project from the past into the future is anybody's guess. Rental values are a function of how well or badly the economy is doing; you have to forecast the economy and work backwards from that.

It's the last bit that rankles. There's no reason to assume that taxes paid by landowners/landlords collectively have the slightest impact on rents, they will neither push them up nor down.

Nonetheless, it makes a refreshing change from the squealing of a few months ago:

Rents increased across most of the UK as a stamp duty hike for buy-to-let landlords came into force, an index has found. The average rent in the three months to the end of April was £764 for the UK, excluding London, up from £755, the month before...

Landlords are also facing a financial squeeze due to restrictions on their tax breaks. It has been suggested that in the longer-term, tenants may see the extra costs passed on to them through increases to their rent.

Tuesday, 6 September 2016

All I need now is a clever play on words using "meddle" and "medal"...

From The Evening Standard:

A crackdown on bogus war heroes who wear medals they did not receive is set to be backed by the Government.

Ministers are poised to support a private members bill to stop so-called “Walter Mitty” characters disrespecting soldiers and their families. The new bill has been put forward by Dartford MP Gareth Johnson.

A Government source said: “On the face of it, this looks a very sensible bill that will strengthen and reinforce current safeguards.” The bill would stop people wearing medals or insignia they are not entitled to when they intend on deceiving the public.


From The Daily Telegraph:


The Earl of Wessex, who famously failed to complete his Royal Marines commando course and never saw active service, nevertheless holds nine honorary military appointments in the UK and Canada.

Today he chose to wear the dress uniform of the Royal Wessex Yeomanry, a reserve armoured regiment, of which he is Royal Honorary Colonel. It enables him to wear a striking scarlet peaked cap and gold braid, while on his chest he wears the Silver Jubilee Medal, the Golden Jubilee Medal, the Diamond Jubilee Medal and the New Zealand Commemorative Medal. Beneath his medals he wore the insignia of the Order of the Garter and the Royal Victorian Order.

Reader's Letter Of The Day

From yesterday's Evening Standard:

Chris Roberts dismisses Rohan Silva's piece on housing costs by saying that "there are plenty of cheaper places to live than London" which misses the point.

Of course there are plenty of towns where the cost of living is £10,000 a year lower but in those towns wages are also £10,000 a year less. Any apparent saving in rent would be matched by a fall in wages.

To put it another way, half of all UK graduates move to London, attracted by the higher wages and better job opportunities, but landlords have simply increased their rents to soak up those extra earnings. Most of the official growth in the London economy ends up in the pockets of landlords or those who sell up and move away.

Younger people like Rohan Silva are caught between a rock and a hard place, and lucky Baby Boomers who bought their homes for a song 20 or more years ago should be thanking their lucky stars, not sneering at people who will have it so much harder.

Mark Wadsworth, Young People's Party

Sunday, 4 September 2016

Censorship

Over the years of leaving comments on articles and blogs, I've noticed a few don't make it pass the moderators. Frustratingly, the more well thought through and polite the comment, sometimes the less likely it is to make it into the public domain.

One of my favourite places to leave the odd comment or two is the London School of Economics SERC( Spatial Economics Research Centre) blog. There, economists like Professors Cheshire, Overman and Hilber write about the evils of the UK planning system and its stifling effect on new construction, the cause of our so called Housing Crisis.

To be fair, they do by and large indulge my hectoring of the learned professors, but when I do manage to point out the contradictions in what they say, my comment never goes up.

Here's my latest in response to this article written by Professor Hilber over a month ago "The UK planning system: fit for purpose?"

"I completely agree with Prof Hilber that supply is not being matched with demand in the UK housing market, causing many serious problems. I am sure the Professor would agree that market rents are the best way of allocating scarce resources like valuable land(location). Problems arise when owner occupiers can impute their rent, as the market can not then fully internalize opportunity costs. This leads to misallocation, the cause of excessive vacancy, under occupation and investment distorted in favour of London/SE, at the expense of the economy as a whole.

We can therefore kill two birds with one stone. A title deed can currently be seen as meaning"rent free". If title owners paid full market rent(as tax) for exclusive rights to a valuable location, as renters do now, the selling price of land(location) would fall, theoretically, to zero. Dropping the selling price of property to its capital only value.

Only then could the market allocate land and immovable property at optimal efficiency. Negating the need to wastefully build homes and additional infrastructure where a functional market would deem them surplus to requirements.

It’s a puzzle then why the Professor and his colleagues continue to recommend policies that concentrate on building more houses, as this is clearly sub-optimal from an efficiency point of view, let alone one where lowering house prices is a priority. 

Of course politics of land value taxation is tricky, but then the consideration of political issues is not the job of an economist."

 If Prof Hilber responds on this blog it would be gratefully received and published.




Economic Myths: Additional supply in the housing market.

In the comments to this post, L Fairfax put up a spirited rebuttal of my statement that:

Observation tells us that in the medium term, additional supply in high demand/high wage areas creates its additional own demand and the overall effect is to push up rents and prices, but his point stands.

The evidence he gave was as follows (I hope I have summarised correctly):
- The Spanish seem to have proved that if you build enough new flats on the outskirts of towns they become cheap
- my family in Spain live in a city of 228,000 people and mass house building has caused prices to go from EUR 100,000 to EUR 35,000 for starter flats
- £120pcm for the mortgage on a flat in parts of Spain.
- wages have fallen not that much


To which my reply is:

1. Perhaps I should have focussed on rental values rather than prices in my original statement. The agglomeration effect I referred to apply only if the population of the town increases in response to the additional supply; in which case added supply and added demand cancel each other out and we would expect no downward movement.

2. Golden rule: rents are the Maypole around which house prices dance. Rental values are a far better reflection of the absolute "location, location, location" value (average local wages minus time cost of travel to place of work etc) and, unless something in the real economy changes, are fairly stable.

3. House prices are rental values divided by the prevailing interest rate, plus or minus expectations of future price changes, so booms and busts are self-fulfilling. People who paid EUR 100,000 for a home which only has a rental value of EUR 2,000 a year must have been gambling on massive rent or price increases, this is completely irrational short term behaviour which is difficult to factor into economic models.

4. Rational people will buy if the initial repayments on a mortgage are roughly the same as the rent, plus or minus a bit.

5. Flats cost EUR 35,000, so you'd expect the annual repayments on a mortgage to be around 5% of that = EUR 1,750 = EUR 150 cpm = £120 = looks about right.

6. So I would assume that local rents for a starter flat are about EUR 150 pcm, give or take a bit. It's not going to be much higher or else nobody would rent, they'd all buy instead.

7. So the missing bits of information here are:
- what has happened to rental values since the building boom started? If they have fallen by two-thirds, then that puts a hole in my theory, if they have remained stable (or merely fallen in line with GDP), that supports my theory.
- what has happened to the population of that town since the building boom started? If it has increased by less than new supply, that puts a downward pressure on (average) rents and prices (supply exceeds demand and no agglomeration benefit).

Saturday, 3 September 2016

Economic Myths: Corporation tax is a tax on capital.

The Faux Liberatarians say little about the worst taxes of all (VAT and NIC) and usually refuse to countenance the least bad tax (LVT). Which leaves us with Milton Friedman's second least bad tax, a flat tax on income.

The Faux Libs, for reasons unknown to me, are putting the superficial legal form of a tax above substance and by some convoluted process of logic decide that corporate income is somehow special compared to employment or self-employment income, or indeed interest or dividend income.

Enter stage right The Institute of Economic Affairs…

Bringing capital taxation into the 21st century

Woah! Corporation tax is not and never was a tax on capital! Imagine Joe, our self-employed van diver who owns his own van, he drives around picking up and delivering parcels. Are his takings earned income? Yes of course. You could if you wished split it into a small part for return on capital and the rest as true labour income, but why? He claims the depreciation and running costs as an expense and only pays tax on the value of his labour. The small part that relates to depreciation and running costs is in turn earned income of the car factory and the repair workshop etc. You could then split the income of the factory and the workshop into 'return on capital' and 'labour', but ultimately it is all labour (until you get all the way back to raw materials in the ground).

If Joe decides to form Joe Limited and trade through that, does the nature of the income magically change from labour income to capital income? Of course not.

As a matter of fact, corporation tax is a tax on income, full stop. There is no particular reason why this should be taxed at higher rates or lower rates than any other kind of income. It is not a tax on 'capital'. A business with capital worth £1 million that makes £50,000 profit pays the same tax as a business with very little capital and a £50,000 profit. A bit of a clue. I would have thought?

Summary:

* Corporation tax is an inefficient way to raise government revenue. It has a negative impact on growth, investment and entrepreneurship. A 2014 review of the literature found that 57.6 per cent of the amount raised by corporation tax is borne by workers.

Corporation tax, like any tax on income, is an inefficient way to raise tax (but not as bad as VAT/NIC), as is anything but LVT. That's an argument against taxing earned income, not against corporation tax per se. That 57.6% is questionable indeed, but even if true, so what? Do they really believe that if employers get a tax cut, then they would pay their workers higher wages? And if you are a worker, would you rather have PAYE which you bear 100% or corporation tax which you only bear 57.6%?

And in a large, faceless corporation, managers are supposed to try and maximise profits and dividends for their shareholders as a vague collective body, and managers are paid according to results. Does it make any difference to the manager that in economic terms, the government is large but silent shareholder who automatically receives a certain % of profits?

* Since 1981, the average corporate tax rate in key OECD countries has dropped from 47 per cent to 29 per cent. However, corporate tax revenues as a share of all taxation have remained stable during this time. They have increased as a share of GDP, in line with growth in the tax burden.

The first bit is probably true, the last bit isn't - tax as a share of GDP of western economies has been surprisingly stable for decades (35% - 40% of GDP). Laffer effects ensure that it is nigh impossible to get over that 40% threshold.

And the reason why corp tax revenues have remained stable despite the (welcome) fall in rates is partly Laffer effects and more likely because corporate profits have increased as a share of GDP, which in itself is a bad sign because that extra corporate profit is largely monopoly income (patents, land income, monopolies, government contracts etc).

* Economic developments such as globalisation and the growing importance of intangible assets underscore the need for reform of the way in which capital income is taxed.

It's not capital income, see above. Intangible assets are a government protected monopoly right/source of income and so the government is perfectly entitled to collect more tax from those who benefit from the system. Which means that registering IP (which stifles the economy) would no longer be a one-way bet; people would have to choose between giving it a go in the free market at a lower tax rate or relying on government protection but paying the appropriate price.

* The OECD’s BEPS proposals are likely to entail new costs and uncertainty for multinational firms. Furthermore, their volume and complexity means that effective implementation will be difficult, especially for developing countries.

If multinationals played ball, it would not impose 'new costs'. Somehow the global profits of such businesses have to be allocated between the various countries in which they operate and each country taxes its own share at whatever rate it chooses. So each multi-national just submits one worldwide tax return and whatever info is needed to enable total profits to be apportioned between all the countries in which it operates. The various countries taking part in the scheme then chuck all these returns on a pile and agree on how to apportion profits.

* Radical proposals for reform include a tax on turnover, a sales-based corporation tax, and formulary apportionment of multination profits. While these reforms might curb opportunities for tax avoidance, they would have damaging side-effects of their own.

Boo to turnover and sales taxes, the worst taxes of all. All tax on income is arbitrary and so the formula will be arbitrary, so what? In theory at least, reducing avoidance means that a lower tax rate can be applied overall to a larger amount of taxable income (which must be a good thing).

* The only radical reform that would improve on the status quo without introducing new distortions would be to replace corporation tax with a tax on the income distributed to shareholders. Such a system would overcome the weaknesses of the current system, while also reducing incentives for avoidance, and raising revenue in a growth-friendly way.

Here we go again. These people do not live in the real world. That is exactly the position that Apple is in - it siphons off most of its surplus/rental income into tax havens and parks the money in government bonds. For psychological reasons, it does not want to use that to pay dividends, because transferring the money back to the USA triggers a high tax bill. So Apple shareholders never get their dividends and no government ever gets the tax (they have to borrow money from Apple's offshore companies instead!)

Or to use an analogy: wild animals are free gift of nature but a bit scarce. People like catching and eating them, so the government decides to levy a tax. Surely it makes sense to levy the tax on actually catching the animals to minimise the number of animals being caught. With a reduced number of animals being caught, we can be pretty sure all those caught will be eaten. What the Faux Libs propose is zero tax on catching animals, but then imposing a tax when they are eaten. The result if this will be that many more animals will be caught a lot of them will be wasted. Plus being even more difficult to police.

* This reform could be implemented in stages to ensure the UK’s international tax treaties are updated. Once fully implemented, the new system would see UK shareholders taxed on their worldwide capital income, while foreign shareholders in UK firms would be exempt.

That's a terrible idea. We can safely assume that people in rich countries own more shares in companies in poor countries than vice versa. So governments in poor countries would be getting less tax and governments in rich countries would be getting more tax.

The only way to do it would be to make companies pay tax when they pay dividends, which means that companies will end up sitting on vast piles of untaxed cash, like the Apple situation.

* It is important to recognise that this discussion is about tax structure, and not necessarily the overall level of taxation. Those who wish to maintain existing levels of taxation would be better served by the proposed reform than by the status quo.

They don''t understand the maths of it. Corporation tax in the UK is a nice low 20% and roughly half of profits are paid out as dividends. To remain fiscally neutral, the tax on dividends would have to be about 40%. This is such a high rate that companies will either not pay dividends (meaning cash is just parked in government bonds and not put to its best use) or they will find devious ways of dressing up dividends as capital payments (like share buy backs and so on) which are usually taxed at much lower rates. As a tax advisor, I say bring it on, but I don't see why anybody else would be in favour.