Wednesday, 31 May 2017

LVT - Edging Towards the Mainstream

A complimentary piece from Tim Worstall of the ASI appears on the CapX blog.

But LVT is one of these generally good ideas that no one ever actually does. There’s an awful lot to like about it – not least that it annoys all the right people while still holding true to decent economic principles.

Which is why, of course, that it has been proposed for over a hundred years and never quite happened.

Tuesday, 30 May 2017

One of our candidates was on the BBC's Daily Politics today

Monday, 29 May 2017

Killer Arguments For Basic Income


Interesting to see the speaker flagging up the old myth that the poor are a breed apart. Homo Pauperens perhaps. William Cobbett in the C19th was complaining about this view, if I remember correctly.

Killer Arguments Against LVT, Not (414)

From The New Sratesman, it was published in 2010 but I've only just noticed this bit:

Before he went to work in Nick Clegg's private office, Richard Reeves, biographer of John Stuart Mill and the then director of Demos, argued persuasively for the introduction of capital gains tax on the profits made from house sales.

I asked his successor at Demos, Kitty Ussher, the former Labour Treasury minister, what her position was on this. Like Reeves before her, she favours introducing capital gains tax on primary properties.

“This should be relatively straightforward to achieve, as we already do it on second homes," she says. "I'm extremely in favour of it, though I know the Daily Mail would hate it... if we'd had such a policy in place during the housing boom, it would have taken the edge off rising house prices for sure."(1)

I asked Ussher what she thought of introducing a land value tax - in effect, a tax not on the value of residential or business property, but on land ownership itself. "Umm. I remember when I was at Oxford someone senior at Balliol telling me that the college owns half of Scotland or something like that.(2)

"But surely it all depends on how much the land you own is worth. Even if you owned a huge bit of Scotland, it would depend on the value of that land - but if you owned a chunk of Knightsbridge (3), then the tax could have a powerful effect. Surely this tax would have most effect in the early years, because it would encourage divestment and changes in behaviour. The yield would go down."(4)

1) The KLN she trots out at the end applies in spades to the tax she favours - capital gains tax on main residences. It has been observed over and over that the revenue-maximising rate of CGT is very low indeed as you can avoid it by simply never selling - this is the opposite of what LVT would encourage, the yield would be very low indeed and by gumming up sales and purchases, might push prices up rather than down.

2) Yes, the government of the day always buys off the opinion formers.

3) Well duh, that's why it's called Land VALUE Tax. An acre of Kinghtsbridge is worth as much as all the farmland in Aberdeenshire (give or take a bit).

4) That makes no sense whatsoever. As it happens, the Dukes who own central London probably wouldn't change their behaviour, they'd accept a cut in net income from £10 billion a year to a mere £1 billion a year and bide their time until they can push tax policy back in their favour. If it did change behaviour and they sold off all their thousands of homes and business premises, then the purchasers (ex-tenants) would be paying the tax instead. The yield would be entirely unaffected by this change.
From a recent article in the FT:

Sir Peter Rogers, chairman of the New West End Company, a lobby group that represents hundreds of businesses around Oxford Street, Bond Street and Regent Street (1), has called for a radical rethink.

“Our proposal is a more appropriate tax, possibly a sales tax or turnover tax, which is difficult to avoid, easy to collect (2) and reflects the economic performance of individual businesses.(3)”

1) Nope, look at the list of their members and supporters, it's all big landowners and banks with a few token actual businesses as a fig leaf.

2) Is he having a laugh? Property taxes (Business Rates or LVT) are nigh impossible to avoid and easiest to collect. Turnover taxes are at the other end of the scale.

3) Business Rates reflects the rental value of buildings, which in London is largely location value so barely different from proper LVT. It is a tax on those rental values.

Funny how landowners always recommend the most Socialist of policies.

Double- double--etc bluff

From The Evening Standard:

Some of the UK’s biggest music festivals are planning to let revellers test their illegal drugs before destroying them.

Reading and Leeds Festivals and a number of other live music events will introduce the testing, with the support of local police forces, for the first time this summer...

1. For this to make any sense, we have to assume that people will buy slightly more than they intended to use, secrete most of it and then take a token amount for testing. If they get the thumbs up, they sacrifice that bit and consume the rest.

2. AFAIAA, testing for what's in substances is heinously difficult. If you take some random powder or liquid and test it to see if it contains cocaine or speed or whatever, you can normally get a 'yes' or 'no' answer. But you can only find what you are looking for, you can't tell what else is in it.

3. The list of chemicals in the so-called designer drugs is more or less endless, you'd need a fairly big sample (several grams?) and plenty of time to go through them all, and the user would have to give the tester a fairly accurate description rather than using the drug's street name.

4. Some drugs are often cut with something else to bulk up the volume, some are harmless, some are downright dangerous. the tester can probably test for the common ones, but not all of them.

5. So even if the tester can confirm that the substance actually contains what the user intended to buy, the answer will probably be "it's 60% [what you actually wanted] plus 30% [icing sugar] plus 10% heck knows what".

6. It's usually the "heck knows what" that kills you, meaning that an ethical tester will have to inform most users that the drugs are "probably" unsafe, even though statistically, only about one dose of illegal drugs per several hundred thousand is actually fatal.

7. So in most cases, the user is none the wiser. Even if the tester can identify some chemical or other, how is he to know whether the user will have a bad reaction to it? Clearly, most don't or the number of drugs deaths would be tens of thousands a year, not a few hundred.

8. It's highly unlikely that such market forces will work back to the actual source. If the manufacturer/importer knows that his drugs will be tested this way, he'd concentrate on producing the purest, safest stuff. But the distribution networks are so long and vague, this is unlikely to happen.

9. This is all beating round the bush:

David Raynes, of the National Drug Prevention Alliance, said: "I'm cautious about it because it normalises drug taking behaviour. Every year there will be a new generation of of festival goers who will be influenced. Those [drugs] are illegal because they are unsafe and it will lull people into a false sense of security."

No, you twat. Drugs are unsafe because they are illegal and not the other way round.

Sunday, 28 May 2017

Fry making Hay?

Poor old Stephen Fry. How detached can one Blairite, Uber Luvy become? When asked to prepare a thesis of his own in celebration of  Martin Luther’s: Ninety-five Theses in 1517. Fry describes what he thinks is an 'extinction level event' in cyber space. He says here:

 “An extinction-level event ... will obliterate our title deeds, eliminate our personal records, annul our bank accounts and life savings, delete all the archives and accumulated data of our existences and create a kind of digital winter for humankind,” he warned.

Notice 'our' order of horrors. He couldn't even manage to mumble something about 'our' NHS records. I know the old chap has a fine command of the English language and even works for the BBC, but it seems to this reader, Fry is actually confusing the definition of his 'digital winter' with the definition of 'freedom'. Something of a insult to all those poor and starving serfs who before, and since Luther, have sort to destroy the tax and tenancy records of their overlords as a first act after battering down the master's door.

I was not invited to the Hay festival, but I would like to contribute some ideas in celebration of Luther's work. After careful consideration, I have reduced the list to one central thesis: Fuck off, Stephen Fry.

Friday, 26 May 2017

Cool one-off car

Click for website, he* actually had a complete one made (not clear whether it actually drives) and exhibited it at the Geneva Motor Show.

* Who is coincidentally my cousin.

We own land! Give us money!

From This Is Money:

Landlords call for help as tenants can go almost a year without having to pay rent due to lengthy eviction process

Tenants are able to live rent-free for up to almost year if they're in dispute with their landlord about moving out, experts have warned.

Strict laws about evicting a tenant means it can take weeks, if not months, for a landlord to repossess a property.

Arla Propertymark, the industry body for the lettings agency, described the eviction process as 'a chaotic mess' and is calling for new housing courts to be established to help speed it up.

Don't ask paying tenants to leave then. Problem solved.

Thursday, 25 May 2017

Resale price maintenance - maybe DBC was right all along.

Spotted by Lola at the ASI, a fairly long article on a relatively minor but nonetheless interesting topic.

My view is, manufacturers can (or should be able to) dictate the retail price contractually - by simply not selling to shops which sell their products for less than the set price, and it's not up to the government to ban this.

It's all down to market power anyway. If you make a generic product (white sugar, toilet paper), shops can simply switch to a lower-cost alternative; if you have a reasonably well differentiated/distinct product (a Porsche, or a specific book or music CD), you can probably enforce this.

Wednesday, 24 May 2017

Rent v tax v cost of services - you know it when you see it.

From the comments here:

I suggest that the payment for queue jumping is not rent, but the premium paid for convenience and saving time.

Would you classify the premium paid for supersonic travel as 'rent'? Or the taxi fare versus the bus fare plus a walk at both ends for the same journey?

Anything collected by government is tax.


A good way of defining "rent" is "premium paid for convenience and saving time". The magic word is "premium". Consider: it costs the same to build and maintain a home in a good location for commuting or in a bad one. People will pay more for the former, primarily for convenience and saving time, ergo the difference/the premium is "rent".

Tools and capital are labour saving devices, I use an electric drill not a hand drill for convenience and to save time. But there are enough competing drill manufacturers and the price of a drill is a fair price for making it, there is no premium and no rental element.

The Daily Mail article explained that doing a certain operation costs the NHS £5,000, but people will pay £14,000 if they can queue jump and get it done next week. That breaks down into £5,000 actual cost of service provided and £9,000 rent.

Anything collected by government is tax.

Nope. If the NHS i.e. the government collects it, it is £5,000 cost and £9,000 rent. If an NHS surgeon takes the day off and does the operation privately for £14,000, it is £5,000 cost and £9,000 of it is rent.

The fact that the NHS i.e. the government collects it does not make it a tax. A tax is an arbitrary payment with no relation to cost or value of services provided to the individual taxpayer. So VAT, income tax and National Insurance etc are taxes.

Would you classify the premium paid for supersonic travel as 'rent'?

Not a live issue, let's take a real life example

I recently flew Stansted to Edinburgh and back for £49, car parking for a day also cost £49. There must be a small rental element to the £49 ticket price or else the airline would not be able to afford the Air Passenger Duty, but for the sake of this discussion, let's assume it's £nil and £49 is for cost of services.

The price for parking a car is nearly all rent (apart from a few pence for maintaining the tarmac).

London to Edinburgh is 332 miles. London to Paris is only 214 miles, but return tickets cost (say) £200 and upwards. Therefore three-quarters of the London-Paris ticket price is rent; one quarter is for actual cost of services. Of course, the government collects some of that rent in Air Passenger Duty, landing fees etc, but it is still rent.

"Or the taxi fare versus the bus fare plus a walk at both ends for the same journey?"

The cost per passenger of ferrying one passenger is clearly higher than one seat on a bus so of course it a taxi will cost more. In a free market, the taxi driver is charging for cost/value of services provided with no rental element. If there is a restriction on the number of taxi driver permits, then taxi drivers can charge a bit more; that excess is rent (as measured by the value of a taxi permit on the grey market).

There's no point being too scientific about this or pretending that there must be one all-defining way of describing it, but you know it when you see it.

Tuesday, 23 May 2017

More debunking of Piketty.

This time from a hard-left perspective, from

The bulk of Piketty criticism has focused, rather boringly, on whether the rate of investment return will remain steady when the wealth-to-income ratio soars. But economists like Dean Baker, J. W. Mason, and now Naidu have pioneered a more interesting line of attack. According to them, Piketty has not made some mistake in judging elasticities. Rather, he has the entire order of events backwards. It is not an increase in the wealth-to-income ratio that prompts capital’s share to rise — it’s the exact opposite dynamic.

Piketty’s account of how wealth builds over time centers on savings. In his telling, the capitalist is prudent, dutifully investing large amounts of his income every year into capital goods. As these investments steadily accumulate, so too does the national wealth (which, according to this account, is the sum of all the previous years of savings minus depreciation). When the quantity of total past savings becomes very high in relation to the country’s annual income, the seemingly permanent 5 percent rate of return on wealth drives up the capital share.

The problem with Piketty’s story, which Naidu and his peers get at in various ways, is that it doesn’t match reality. Assets like real estate, equity, and debt are not assessed according to the quantity of savings that go into creating them. They are assessed according to the expectations of how much income those assets will deliver to their owners in the future. Put simply: asset values are forward-looking, not backward-looking.

This has quite startling implications for the way we think about the nature of wealth in a capitalist economy. Ownership of something like a company share does not entail ownership of capital goods in any real sense. It amounts to owning a bundle of legal rights to future flows of income. Thus, the value of assets, and therefore wealth, reflects the value of the rights to future income flows — not the value of accumulated savings.

Once this truth is understood, it becomes easy to see why Piketty may well have everything backwards. If capital increases its ability to extract income from the economy, that would boost the future flow of income that goes to owners of existing assets, and thereby increase the capital share. When a greater portion of the national income is being funneled to owners of assets, the market value of those assets will go up, causing measured wealth to go up as well.

In other words, the capital share drives the wealth-to-income ratio, not the other way around.

Or as I always say, it makes most sense to look at incomes and disposable incomes after housing costs (and other rents), forget about "assets". Let's say a tenant and a home-owner next door, do the same job, have the same gross income, pay the same in tax and live in very similar homes. Clearly, the home-owner is "richer" because he owns an "asset". But that's comparing apples and pears. Far easier to say that the tenant has a much lower income after housing costs.

Superficially, you could say there is income equality between the two. Of course there isn't. Whether somebody is a net collector/enjoyer or net payer of rents makes the biggest difference to real inequality.

Compare that with two home-owners living next door with the same gross incomes, but one has a priceless masterpiece hanging on the wall. The value of that painting has nothing to do with the way society is run, it is not subsidised by the taxpayer, does not generate income and does not place a burden on anybody else. If the painting were destroyed, the owner is poorer but nobody else is better off. Their net disposable income is the same, the fact that the one with the valuable painting is "richer" is of no concern to anybody (and certainly not a suitable subject for taxation).

Monday, 22 May 2017

Fun Online Polls: NHS charges for queue-jumping; Rhyme and Reason

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

Is it acceptable for the NHS to allow patients to pay extra to jump the queue?

Yes - 31%
No - 46%
Depends on how the extra money is spent - 23%

It seems like a fine idea to me. That extra payment (way in excess of actual cost) is "rent" and so to the extent we can't eliminate it, it might as well be the government that collects it.

DP came to exactly the opposite conclusion and thought the rent should only be collected privately. As we know, many NHS surgeons do private operations on the side, if the NHS won't let rich people pay to queue jump, NHS surgeons will just take a day off and do the operation privately. So the normal NHS waiting list stays as long as ever. If the surgeon uses an NHS operating theatre, the NHS could claim a fair chunk of the rent as, er, rent, I suppose.

The last option was a trick answer, it is nigh irrelevant because it is a futile exercise trying to match up sources of government income with particular items of expenditure. It's pretty futile for most people, as a matter of fact.

But clearly I'm in a small minority on this. Thanks to all 71 who took part.
This week's Fun Online Poll is hair splitting (and I don't know whether there is a right or wrong answer).

"The word "seam" rhymes with...
Seam (the word itself)."

Vote here or use the widget in the sidebar.

"The number of passenger journeys has doubled since rail privatisation"

From The Guardian:

The number of train journeys made each year has more than doubled since the late 1990s, according to a new report.

About 1.65bn passenger rail journeys were made in the past 12 months, compared with 801m in 1997. The figures come from analysis by the Rail Delivery Group, which represents train operators and Network Rail, and is based on data from the auditors KPMG.

Sounds impressive, but so what?

The number of passenger journeys on the government-run, state-owned London Underground in 1997-98 was 832 million; the number of passenger journeys on the London Unddergound and the DLR in 2015 was 1.44 billion.

Daily Mail on top form

Sickening smirk of the suspect who’ll never be tried for the shooting of PC Yvonne Fletcher as he enjoys family life in his £600,000 home in suburbia

Friday, 19 May 2017

Social care costs: The Homeys are muddling up two entirely separate topics.

From The Guardian:

Dilnot, a former director of the Institute for Fiscal Studies, said that by refusing to implement a cap, the Conservatives would be leaving people without any protection against care costs.

“So people will be left helpless, knowing that what will happen is that if they are unlucky enough to suffer the need for care costs they will be entirely on their own until they are down to the last £100,000 of all of their wealth including their house,” he said.

“I do feel very disappointed for all of us, the millions of people who are very, very anxious about this, and I’m a bit surprised, because what social care is a classic example of a market failure where the private sector cannot do what’s needed...

“The changes just fail to tackle the central problem that scares most people. You are not tackling the big issue that people can’t pool their risks. There is nothing that anybody can do to pool their risk with the rest of the population, you just have to hope that you are not unlucky.

“It is not providing insurance. You could easily have care costs of £300,000 each if you are a couple; you are not able to cover that extreme risk which is what we all want to do faced with anything else which we can insure. That’s the market failure and these changes do nothing to address that.”

Classic bit of Home-Owner-Ism there, the bit that stings is that your wealth includes the value of your house, well duh.

Amazingly, Mr J Hunt takes the non-Homey/free-market position:

The health secretary, Jeremy Hunt, confirmed the Conservatives were planning to abandon a previous manifesto pledge to cap care costs.

Speaking from West Yorkshire, where the Tories will launch their manifesto, he told Today: “We’re dropping it because we don’t think it is fair because you could have a situation where someone who owns a house worth £1m or £2m, and has expensive care costs of perhaps £100,000 or £200,000, ends up not having to pay those care costs because they are capped. And those costs get borne by taxpayers and we don’t think that’s fair on different generations..."

When it was suggested the plans amounted to a death tax delayed, Hunt said: “It is not a tax. We are saying that the assets that you build up over your lifetime should be used to pay for your own care costs.”

Dilnot's ramblings about "market failure" and "people losing the family home" miss the point, probably deliberately, that there are two completely separate issues here:

1. Taking out insurance against the risk of ending up with expensive long term care costs.

2. Taking out insurance against falls in value of your home/estate.

Re 1, another Guardian article says that the average cost of care is £20,000, i.e. £nil for the vast majority that never need it,  up to £100,000s of £1 million for the few who do.

I'm sure that insurers can cope with that basic idea. You pay in £1,000 a year from the age of 50 onwards (or whatever) and hope for the best. The problem will be who decides whether somebody requires long term care; how much they need etc, and there will be a veritable punch up between the insurance company's assessor and the GP who makes the call. I can't see that GPs are going to appreciate wasting hours defending and justifying each and every claim.

That's not "market failure", it is just too many unknowns. Insurance companies don't want to put themselves at the whim of government employees (yes I know GPs are technically self-employed). So the only agency who can sort this out is the government itself by providing low-cost, compulsory  mass insurance i.e. taxpayer-funded 'public' services. And as we know, the best source of revenue to fund this is LVT, which completely goes against Homey principles, they want it to be funded with more taxes on workers and businesses.

Re 2, clearly, the taxpayer should not be called on to subsidise the value of other people's assets, in particular their homes. In an ideal world, land values would be taxed away with LVT, so homes would largely fall out of the "wealth" equation. That leaves other assets (which in an ideal world would not be subject to Inheritance Tax), if people could get insurance against long term care costs, they wouldn't need to worry about those assets being sold to pay for care, be definition.

Daily Mail on top form

From The Daily Mail:

A widowed teacher with arthritis froze to death in her garden after she fell and neighbours failed to respond to her cries for help, an inquest has heard.

Ann Waddington, 61, slipped and fell in her back garden in her nightdress late at night, but nobody living on her road who heard noises realised what it was.

Her body was found the next day on the lawn of her £87,000 semi-detached home in Blackburn, Lancashire, when one neighbour became concerned for her welfare.

Thursday, 18 May 2017

Theresa May, making the same stupid mistakes as Jeremy Corbyn

We've looked at Jeremy Corbyn's waffle, now let's look at Mrs May's bizarre deliberate blurring of the fundamental difference between rent and earned income.

From The Soaraway Sun:

PM's pledge to help struggling Brits is part of a drive to shift the Tories to Left — and follows her pledge to cap energy bills.

THERESA May will vow to target fat cat railways bosses, phone firms, landlords and lawyers who are ripping off struggling families. The PM pledges to tackle a stunning range of rigged markets to ease the spiralling cost of living crisis...

The scale of Mrs May’s desire to use the power of the state to intervene in failing markets will stun some traditional Tories who want to shrink the government’s reach.

The people whom she claims to want to 'target' are basically all collecting rents and/or abusing a monopoly position. These are not "failing markets", that's how markets work when a supplier has a monopoly; his income is largely rent, and rents have nothing to do with the supplier's costs/efforts etc. The people she claims she wants to 'help' are the very people at the bottom of the ladder who are generating the rent and then being asked to pay for it

The obvious conclusion is that the government, acting as agent for society as a whole, is perfectly entitled to ensure a fairer distribution of these rents (by taxing them more and taxing earnings less, or rather more crudely by setting price caps).

(I'm not sure why she singled out mobile 'phone companies, for sure, some of their advertising is misleading, pricing confusing and they gamble on people being too lazy to change providers, but all in all, you can get pretty good deals, like sticking with an old Nokia on a SIM-only contract for £5 a month. And they also pay/paid full whack for the exclusive right to use certain frequencies for a limited duration, which is basically Land Value Tax, they have pre-paid the monopoly/rent element of their profits which they are now collecting, so fair play to them.)

We did energy bills a couple of days ago, nothing to add to that.

The issue with "fat cat railways bosses" is that railway companies have a monopoly position as far as many commuters are concerned, so they can charge pretty much what they like. And apparently, the so-called privatised railway operators receive twice as much in subsidies (net of franchise payments) as British Rail did (not doubt others will say it's half as much, who knows?).

You can't just go round capping train fares if trains are already over-crowded, that makes things worse, but at least you can stop subsidising them (which is halfway to taxing them properly). The "fat cat" salaries are a symptom of this malaise, not the cause. If you address the monopoly/subsidy issues head on, that all sorts itself out.

Unlike Corbyn, she actually mentioned landlords, that's is always top of the list if you are trying to distinguish between "rents" and "earned income", so we'll give her half a bonus point for that.

Wednesday, 17 May 2017

"Tory and UKIP voters are all thick" vs "Universities are hot-beds of leftie brainwashing"

Click picture for full article:

Another goodie from the BBC:

We know that almost three million extra people turned out to vote in the EU referendum [compared to the General Election in the previous year]. Saying who they are - and what happens if they reappear - is where it gets difficult...

The real mystery is whether those additional voters in 2016 will come out again to vote in the 2017 general election - and what difference they could make... Are they people who are totally dissatisfied with the political system and became serial non-voters but were unable to resist the chance to give the establishment a thoroughly good kicking at the referendum?

I suspect that's correct. Although I have only missed voting in one election in twenty four years (it was a local election and I simply forgot), I voted 'Leave' largely for the fun of stirring up the hornets' nest.

Tuesday, 16 May 2017

If only Corbyn talked about RENTS instead of waffling on about PROFITS

Corbyn was on the telly just now, muttering about the "obscene profits" made by privatised utilities. By doing so he misses the point and lays himself open to the knee-jerk Tory response, for example from The Telegraph:

Jeremy Corbyn will take Britain back to the 1970s by nationalising industries, forcing wage caps on businesses and giving huge power to the unions if he gets into power, a leaked copy of Labour's draft manifesto reveals.

The 43-page document, obtained by the Daily Telegraph, shows that Mr Corbyn plans to nationalise energy, rail and mail and will introduce a 20:1 pay cap for businesses...

Nationalising "industries" generally and the government running them is always a disaster, of course, we know that.

There's nothing wrong with a genuine business making large profits. If VW make a million good quality, affordable family cars and make a thousand pounds profit from each one, good luck to them. Nobody's forced to buy a new VW, you can buy a second hand one, buy from another manufacturer, or arrange your life so you don't need (another) car etc. If VW fuck up with the 'emissions scandal' (a storm in a teacup if you ask me), they make a loss. Tough.

Punishing successful businesses regardless of how they earn their money is a stupid idea anyway, or else we'd punish VW (or their British equivalent) for making good cars and reward them for the 'emissions scandal'.

But if you think about the list of things he'd like to (re)nationalise*, you'll realise that the bulk of their so-called profits are not profits in the economic sense or the cost-accounting sense. They are "rents".

Rents are notoriously difficult to define, but you know 'em when you see 'em.

1. You are stuck with one water supplier, you have to use their services (although this is sensibly alleviated with price caps). In the absence of these, they could double or treble water and sewage charges and 99% of people would just pay up.

2. You can choose from a small number of gas and electricity suppliers, they themselves don't make super-profits and shouldn't be the target here but the people selling oil, coal and gas to the power stations are very much collecting rent (natural resources). The National Grid on the other hand really does have a monopoly as between power stations and end users, it only exists because the UK government set it up back in the 1920s and 1930s, no private enterprise could ever have achieved that (the biggest problem is getting rights of way over land, not the technical stuff).

3. If you work in any larger town, you have to get in by public transport, they can set their season ticket prices at a large chunk of the extra salary you can earn by working in town and not stacking shelves in the village shop.

4. The Royal Mail (used to) have a monopoly on posting letters and unless you are couriering urgent stuff a short distance, they still do in practical terms. I'm all in favour of bottom-up privatisation i.e. allowing private businesses to deliver letters, but a top-down privatisation i.e. sell off of The Royal Mail with all its criminally undervalued land and buildings merely to generate fees for merchant bankers was a straightforward scam.

5. Urban land is the largest chunk of rent in any modern economy, Corbyn gave that less importance**, but we know that banks get most of their income by acting as debt collectors for land sellers, so they are just collecting rent. This is why the largest salaries and largest salary discrepancies are in businesses that primarily collect rent (banks, insurance and privatised utilities etc). If VW are happy to pay their chairman ten million quid a year, good luck to them, that's a spat between bosses and shareholders and doesn't affect the price of VW cars or even the wages of VW workers.

* Of course, most of our so-called privatised utilities are still state-owned. The German national railway owns our railways, the Spanish government owns our airports, the French national electricity company owns our water companies etc, heck knows what the Norwegian Sovereign Wealth Fund and the Arabs own.

** The "rents" which Corbyn would never mention are the obscene salaries which a few public sector fat cats pay themselves, as well as everybody working for a government department that has no reason to exist in the first place, but that's Socialists for you.

There are endless examples of rents and rent-seeking, they add up to about 50% of the whole economy, so he could double most people's disposable income if he either eliminated them or taxed and redistributed them (preferably by reducing or eliminating taxes on earnings and output).

Here endeth today's rant.

Monday, 15 May 2017

Refundable bottle deposits 2

Re last weeks Fun Online Poll, on the subject of refundable bottle deposits.

The Surfers Against Sewage website that promotes this, says the following:
The system would be largely self-funded through the small proportion of unclaimed deposits.

Evidence from existing systems shows that this is not entirely true, not too far off either, but so what - what's the point of a system that has to be used less than optimally to be funded?

Norway has had refundable bottle deposits for a long time, the reverse vending machines have been in shops since the 70s, and the current legislation/system is structured in quite a nifty way. From the outset, all drink bottles and cans are subject to a tax per bottle. After all, the most efficient and sensible way to pay for refuse treatment is for it to be pre-paid. There's no compulsion to join the deposit-refund scheme, and if producers find it's not worthwile, they don't. They can however join the scheme, through a member-owned organisation that handles the return and refund bit. The tax per bottle is then reduced in stages, until it's reduced to zero if 95% of more of the bottles are returned and handled.

The economics of this can be read from the 2015 annual reports of Infinitum, the cleverly named company reponsible for the scheme (in Norwegian).
Annual operating/admin costs before deposit refunds: 438 million NOK.
Net deposit income after refunds: 206 million NOK
Sale of materials: 124 million NOK
Net costs, of which most are paid by producers, and ultimately passed onto consumers, are around 108 million NOK.
This works out at around 1p per bottle/can that is run through the system, compared to the alternative tax which is slightly more than 30p.

For this you get the benefit of virtually no bottles and cans lying around or drifting off the coasts, and an easy source of pocket money for the kids. Both producers and consumers are left with the choice of partaking in the scheme / returning the containers or not, but enough people do so, and between 80-90% of bottles and cans are returned.

You can basically apply this principle to most products and materials, and the degree of intervention isn't very high except for the tax - importers/producers work out the particulars amongst themselves as long as the end-result is satisfactory.

Big Dope? WTF?

Peter Hitchens in City AM re the Lib Dem suggestion that we legalise cannabis:

No. This cynical and rather ignorant proposal is another triumph for the billionaire Big Dope lobby which hopes to open up an enormous and lucrative new pleasure drug market.

As usual, it prefers not to admit its real purpose, hiding behind the dishonest euphemism “regulation”, when what it really means is a free for all.

Fun Online Polls: Recycling & NHS queue jumping

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

It would be a good idea to charge refundable deposits on...

Glass drinks bottles - 13 votes
All glass jars - 12 votes
Plastic drinks bottles - 9 votes
Aluminium cans - 10 votes
Other, please specify - 0 votes
None of the above 7 votes

Total voters - 22

The low turnout might be because I messed up the widget, or maybe the topic is not that interesting.

That's not an overwhelming majority in favour of deposits. IMHO there are three main reasons for deposits:

a) To encourage recycling of valuable materials
b) To discourage littering, knock-on pollution
c) To discourage use of disposable materials, the production of which harms the environment in the first place.

In which case, the results are the wrong way round.
- Plastic drinks bottles got the lowest number of votes. They are a waste of raw materials but those materials aren't worth much. The point is that producing them causes pollution and they end up shredded in the oceans, so not a good thing.
- Aluminium cans got the second lowest number of votes, even though aluminium is the most valuable raw material and drinks cans are very likely to end up as litter.
- Glass got the most votes, even though it is not a particularly valuable raw material and is quite heavy to take back to the shop. Food jars are unlikely to end up as litter, and if they do they are completely inert so don't cause any knock-on pollution (although splinters of drinks bottles can cause injury or puncture tyres, I suppose).

All in all, I'm not sure what to make of it.
There was some wailing in The Guardian recently about people paying £145 to see a GP privately. Their arguments against are that this "will mean NHS patients without money will wait even longer for care" and it will lead to a "two-tier NHS".

Both those arguments are nonsense, the doctors are operating privately, so good luck to them. The real argument against is that these GPs are rent-seeking, they are selling earlier access to taxpayer funded healthcare.

For a more neutral look and a better example, see a Daily Mail article of two years ago:

Hospitals are letting patients jump NHS queues for knee and hip replacement surgery if they pay for the operations themselves.

Patients are being charged up to £14,000 for some procedures – almost treble the cost to the Health Service – leading to accusations that hospitals are ripping off the sick. Knee and hip surgery is being rationed across England, forcing some patients to wait in pain for more than a year to get to theatre.

Yet The Mail on Sunday has found that more than 40 trusts are promising patients they can have the ops in as little as a week – if they can afford it.

I don't see a problem:

a) a voluntary extra payment for a better service is not being ripped off, you pays your money and takes your choice. If the NHS doesn't do this, then surgeons will just do the operations privately for the same charge.

b) The NHS has to get money from somewhere. If it can get a bit more from better-off patients then in an ideal world and all thing being equal, either the taxpayer pays in a bit less or the NHS has a bit more money so waiting times will not go up.

c) The extra payment is just rent under the Von Thünen definition (money paid for shorter journey time) as it bears no relation to the cost of the operation, so the NHS might as well collect it as anybody else

d) It also illustrates my point that the value of a place in a queue depends on how many people are behind you, not how many are in front of you - if the normal waiting list time were two weeks, nobody would pay that much extra to get it done next week. So the NHS now has a perverse incentive to make waiting times even longer, that means it can actually boost the charge for queue jumping, that's the only downside I can see.

So that's this week's Fun Online Poll: "Is it acceptable for the NHS to allow patients to pay extra to jump the queue?"

Vote here or use the widget in the sidebar.

Sunday, 14 May 2017

YPP manifesto - new draft

The old version is (or was) here, I think we ought to tie it all in better from the start, once you understand the basic principles all the detailed policies fall into place. As usual with me, it all seems so simple and obvious when I was drafting it in my head over the past few weeks but once I try and write it down, it gets really long-winded, so I need your help to whittle it down.
Most political parties (and most voters) assume that in the natural order of things the world is divided into nation-states and that each nation-state has a 'government' and base their election campaigns/policies/voting decisions on what the government should be doing. So political parties have a rag-bag of inconsistent policies based on little more than buying enough votes to get into power and their snouts in the trough while keeping their real financial backers happy.

This is the wrong question: the proper question is, "Why do we have nation-states and governments in the first place?". Once you have thought this through, the question as to what governments should (or should not) be doing in any particular detailed policy area (from taxation to the NHS, Trident or  immigration) more or less answers itself.

Most people know why we have nation-states and governments if they think about it for a few minutes, it was a gradual progression from scattered hunter-gatherer families with every family fighting for itself via tribes and more settled farmers to full blown nation-states with governments. Sadly, some nation-states are dictatorships, theocracies or kleptocracies, but the Western/European style democratic, liberal, free-trade model works the best.

These are all merely ways in which society organises itself and the advantages of smaller groups merging to become larger groups are obvious. A nation-state is big and strong enough to defend its own borders and within its own borders, governments carry out the role of policeman in a literal sense, they are there to protect life and property (by punishing criminals), thus freeing everybody else to get on with their lives. In an ideal world, this increases everybody's personal liberty.

There is an upper limit to the size of a nation-state, which is all the people who identify as members of that nation, so multi-ethnic empires always collapse after a few centuries.

The reason for this is also obvious if you think about it.

A. Within the borders of one country, everybody speaks the same language, uses the same currency, has the same rules and customs, which makes socialising ad trading so much easier. People prefer dealing with people who follow the same rules as they do. As far as international trade is concerned, most civilised countries have a legal system which allows a wronged party to sue in the other country for non-delivery or non-payment which facilitates trade.

B. More subtly, each nation-state has to have rules on how you are allowed to behave. This is fine as long as these increase people's overall liberties, which is obviously the case with punishments for murderers and thieves. Once it gets more detailed, there is always a balance to be struck. So a 20 mph speed limit in residential areas enhances the safety of road users and keeps noise disturbance down but from the point of view of the motorist this is a burden and a reduction in personal freedom. Overall, this is a gain for society and so it's a good rule. Imposing a 20 mph speed limit on motorways would clearly a loss to society. Some detailed rules, like the ban on people smoking in their own vehicles, merely place a burden on a minority while benefitting nobody whatsoever.

Unfortunately, people tend to be most aware of those rules which restrict their personal freedoms (not those which benefit them). However, as long as they know that people who are benefitting from these restrictions are fellow nationals (or immigrants who will respect those standards of behaviour), most people will put up with it, however grudgingly. If individuals break these rules, then we expect them to be punished. This is called 'social cohesion'. Where it breaks down is when larger groups in a country have a different national identity and merrily flout the rules imposed on natives or try and impose their alien rules on the host society.

So there are clear benefits to having nation-states and 'governments'.

The next question is: "How do we measure the benefits in £ terms and who benefits most?", having answered that, how (and whether) 'governments' should raise money (taxation) and how they should spend it are obvious. Under the established political system it is all back-to-front. Politicians first decide how they would like to spend money (buying votes or subsidising their financial backers and businesses which will give them cozy consultancy jobs when the leave office) and then try and finance this by raising taxes, or to keep pensioners (who'll never have to repay it) happy, by running deficits.

That's easy. Superficially, almost everybody is safer and better off and can produce more/earn more in an industrialised/civilised society, that's the whole rationale.

But in £ terms, the biggest winners in civilised societies are those who can derive income from things which would have no value in a society of hunter-gatherer bands or small tribes of settled farmers. The former has no concept of land-ownership and the latter no concept of individual landownership (it belongs to the whole tribe) and neither system has patents/copyrights or other privileges which preventing 'outsiders' from carrying out certain activities/professions.

Land/location is the easiest to understand and measure in £ terms. Land-ownership and nation-states are synonymous, you cannot have one without the other. And as the estate agents say, land value is all about "Location, location, location". Quite simply, the more 'civilised society' you have in an area (more people, hence better opportunities to socialise and trade, more job opportunities, more leisure and spending opportunities and more potential customers, which then means more transport infrastructure, water, gas and electricity on tap, better broadband and mobile phone reception etc), the higher the rental value of land.

So there is a vast difference between the rental value of farmland and land in the middle of nowhere and in town and city centres and there is a vast difference between rents in high wages areas and in high unemployment areas. The rental value of a shop in Bond Street in London is hundreds of thousands times as much as  the rental value of a Scottish grouse moor or a sheep farm on a hillside in Wales, simply because the benefits of the UK (as a nation-state) are very focussed in certain relatively small areas.

While people's innate skills are pretty much the same wherever they are from, they can increase their productivity/earnings (and quality of life) by moving to an area with lots of 'civilised society' i.e. towns an cities and especially London. Most of the extra they get by doing so goes into higher rents, leaving them little better off in £ terms. All tenants and newcomers are paying extra simply to be near other tenants and people who are paying (or have paid) extra to live there and the landowners are cashing in. Who or what causes or creates that extra value as measured by rents? The answer is, "Everybody in the UK (or in any neighbouring country) who abides by the common rules".

So to whom does this extra value/rent belong? Either everybody or nobody and certainly not a privileged few who have a government-guaranteed title to that land. But because in most countries - and certainly in the UK - certain militarily powerful leaders/invaders declared themselves simultaneously to be 'the govenment' and owners of the land, they rigged the system to make themselves sole collectors of rent and taxes and it has stayed that way for centuries.

There are plenty of other sources of naturally arising 'rent'. Radio spectrum is just there as a free gift of nature, but any frequency only has value to a business if the government is there to prevent anybody else from using it. Rain falls from the sky and is stored by rocks and soil, it costs a few pence per cubic metre to purify it, the government (or recently privatised water companies using stet-granted access rights) builds vast pipe and sewerage systems. The value of mains water and a sewerage system (without which towns and cities could not exist) vastly exceeds that cost (if water and sewerage charges doubled, you'd pay it).

And there are plenty of other examples of rents arising by the actions of the government. This is in the public sector itself, like all the council oficials, quangocrats and senior civil servants on six figure salaries with gold-plated pensions, or pretty much anywhere where public and private sector overlap. A patent is ultimately just the government protecting a business from new competition; the statutory requirement for companies to have their accounts audited is a free lunch for 'auditors'; Legal Aid might be a good thing in and of itself but it is a free lunch for barristers; restricting the number of taxi permits, while giving them extra rights (using bus lanes, parking outside stations and preventing other drivers from picking up fares on the street) is a free lunch for taxi licence holders, and so on.

A free lunch for one group of insiders (from land-owners to taxi licence holders) is not just a transfer of wealth (legalised theft) or a zero-sum game (redistribution upwards), it is a huge drag on the economy.

So how should a government deal with 'rents'?

Simple - depending on circumstances, some combination of measures which get rid of rules which protect certain groups of insiders; dismantling barriers to entry; shutting the revolving door between politicans/civil servants and private sector businesses they have favoured while in government; price caps on sources of rental income; providing a low-cost alternative and taxing the rents themselves instead of taxing productive economic activity (and using the proceeds to spend on things which increase rental values, which is what most government spending does).

Simple examples are radio spectrum, most governments auction off the licences periodically which is a like a voluntary tax; and most governments either run the water and sewerage themselves or impose price caps on privatised water/sewage companies.

Land rents (and mortgages) are the largest chunk of rents and the largest state-sponsored transfer of wealth from younger generations to older generations, landowners and banks. They are, in £ terms, about one-third of people's after-tax disposable incomes or businesses' after-tax profits (and by implication, about one-third of the whole economy), so let's focus on those.

For most of the twentieth century the UK (like most western and civilised countries) had a combination of measures which prevented too much land rent ending up in private hands, thus benefitting 'everybody else' (the people who created or caused the rents to arise in the first place). These measures were:
- price caps. These took two forms, a) rent controls and tenant protection and b) house prices were controlled indirectly because building societies would only lend a low multiple of buyers' incomes. If a couple can only borrow twice their annual income, then the average house price will not be much more than twice an average couple's annual income (about £80,000 - £100,000 in today's money);
- there was no implicit guarantee that the goverment would bail out building societies which lent recklessly, which is a kind of subsidy to higher house prices;
- higher recurring taxes on housing (Domestic Rates) and higher tax rates on rental income than on employment income;
- offering a low-cost alternative, i.e. council housing, which has always produced a modest profit (in cash terms) for local councils. The fact that councils were not charging the full location rent was an equal and opposite benefit to their tenants.
- reducing barriers to entry. Getting planning was much simpler, so smaller developments were more viable, so there were lots of small building companies and more new construction than today (although not that much more, most of the extra construction was council housing). Getting planning permission nowadays is so expensive and onerous that only large developers can ever get anything off the ground. This has led to consolidation, so half a dozen large companies own all the land banks (enough for about ten years' output) and they can drip feed new developments onto the market to maintain their profit margins. As we saw in 2008 or so, if demand drops slightly, they simply lay off all their sub-contractors and put all their developments on hold until prices recover.

The landowners' lobby constantly points out that rent controls have the effect of reducing the quality and quantity of accommodation available to rent. This is largely true, but so what? The wider benefits vastly outweighed this - a rapid increase in owner-occupation levels (and the nigh eradication of the landlord class); plenty of social housing for those who couldn't qualify for a mortgage; a small and stable financial sector hence no financial crises; and a much greater equality of disposable income (after housing costs) between younger and older generations.

These general principles apply to all forms of rent and rent seeking.

Having decided the best way for a 'government' to raise revenue is to from the value of (land) rents and other state-granted privileges (to the extent that those privileges can't simply be scrapped), the question on what the 'government' should do and how it should spend money is obvious.

On the one hand, a government acts as a (mutually owned) service provider, executive branch of society or glorified landlord, so will do things and spend money on things if those things enhance rental values by more than the cost, thus generating a 'profit'; on the other hand, the government is duty bound to return those 'profits' as equally as possible to each and every one of its 'owners', being every citizen/voter/resident in the country. Remember - one way of returning those 'profits' is to reduce taxes on employment and output; people and businesses who add the most real value should be paying less, not more, into the general pot.

YPP is actually broadly happy with a lot of the spending side, our welfare and pensions system is largely universal (although pensioners, a quarter of whom had a 'free' university education now benefit from the pensions Triple Lock; while millenials face high tuition fees and are persecuted when claiming unemployment benefit); and everybody has the right to use the NHS or send their children to a state school 'for free'.

YPP is not so happy with all the spending which benefits insider in the public and private sectors, and especially unhappy with collecting taxes from workers and non-protected businesses merely in order to prop up rents and house prices. The most extreme example of this is Help to Buy, of course.

In a way, most forms of spending fall into various categories, good and bad.

For example, spending on state education. On the good side:
- is a universal benefit/entitlement, which levels the playing field and increases equality of opportunity;
- helps the economy by providing a better educated future workforce;
- it caps private school fees by being a low-cost state-provided alternative;
- even if you opt out and pay to send children to a private school, they will be far better off than if all the other children had never been to school;
- it enhances social cohesion if children go to school with other children of both genders and from all walks of life, rich and poor, good and bad alike.

On the bad side:
- the state sector is prone to producer capture, teachers will teach what they want to teach and to enforce the establishment view on their pupils;
- the education sector will always hold out for more spending and protect their privileges. They can go on strike for more money but will fine parents who take their chidren on holiday during term-time;
- there is rent seeking by the upper echelons. New graduate teachers are paid quite badly, the trick it to scramble up the ladder, get out of the classroom and get a much better paid job in the bureacratic heirarchy;
- if state education achieves its main aim and produces a more productive work-force, a large part of the growth in the economy merely goes into higher rents;
- there are plenty of good state schools. But these simply push up rental values and selling prices in their catchment areas, so as usual, the landowners are the big winners and this dismantles the 'universal benefit' aspect; only higher earners can afford to move to those areas and hence get their children into the best state schools.

++ Four hours later, I have to stop to have a break and eat something, to be continued once I've had time to think this through, clarify etc ++

Friday, 12 May 2017

NHS - Disbelief

Exhibit 1

No doubt we'll get the usual 'NHS funding crisis', 'Tory cuts' wailing.

But what about this?..

And this?

And this?

And this?

There is a lot more of 'this'.

Why don't they just concentrate on the basics?

Wheeler Dealers - a good illustration of price setting mechanisms

We know that these programmes became more and more staged with each successive series, and the numbers don't add up etc, but there is still a lot of truth in them. Let's assume that they are true to life, the three stages are a good illustration of monopoly and competitive price setting.

Stage 1. Mike goes to see some 'classic car'. These aren't being made any more, so supply is fixed (and gradually dwindling) and prices are set purely by demand.

It's a variation of the normal supply/demand thing, the only reason why some of the cars they buy and sell are worth that much is because they are so rare. In one episode they sold a Bond Bug for £8,000, FFS. I assumed they'd jumped the shark, but if you look online, that's what the best ones sell for.

So Mike haggles quite ruthlessly. The seller only has one car to sell and wants/needs cash, Mike has cash but can walk away and buy something else instead.

(When Mike sells the car at the end of the show, it's exactly the same situation, no need to cover that one separately).

Stage 2. Mike gets the wheels refurbished and Mike or Edd get the seats reupholstered and/or the car body sprayed etc. They hardly ever haggle on the price because they know full well that if they fail to offer the market rate for labour, expertise, use of plant machinery and supplier's profit, then the work simply will not get done. Presumably they go to the supplier with the best price/quality mix, and the supplier knows it. When they make a half-hearted attempt at haggling, the supplier tells them to piss off, so they always cave in and pay asking price.

Stage 3. Finally, there are always some bits and pieces like a bumper or some trim which need to be replaced with original parts. The monopoly boot is now on the other foot with a vengeance. The stockist who happens to have an original bumper for exactly that model is in no hurry to sell, it's been on a shelf for years and could stay there indefinitely; but the stockist knows that his bumper is the only one available.

Mike sells cars to purists for top whack, but he can't sell the car to a purist without the pukka original matching bumper. Without a non-original bumper, he can sell for £10,000; with the bumper he can sell for £15,000, so the stockist who happens to have it can take a large chunk of the £5,000 uplift.

If you broke the car down into all its components and apportioned the £15,000, the bumper would be worth nowhere near £5,000 of course, more like £150, although he can easily sell it to Mike for £1,000.

Something for LVT Man to sort out...

A goodly mixture of economic myths and dog-whistling in this clip, but nothing that LVT wouldn't sort out. If all those super-rich were paying super-high LVT on their "investments" either they'd sell up (not that that would make much difference, except to those who don't like having super-rich foreigners living in the UK) or they'd pay their LVT and then, who cares (apart from the aforementioned...)?

As one commenter points out, this problem is nothing new in places like Cornwall, but no-one takes any notice until it begins to bite in London, probably because, in Cornwall, those super-rich "foreigners" are the same Londoners who are now squealing about high prices. Also because, as this clip amply demonstrates, there is no understanding of the actual cause of the high prices, which is the increased buying power of the foreigners, instead ascribing it to lack of supply.

Thursday, 11 May 2017

Fox News

Having considered this article at great length, I have concluded that fox hunting is not an effective form of pest control. According to a BBC study here, there are only about 10 deaths a year attributed to equine related accidents in the UK. Even assuming all these accidents were related to fox hunting, the best available data suggests that we will not be rid of land owners and assorted bankers for many thousands of years by this control method. Surely there has to be a better way of humanely disposing of these pests; than requiring they learn to ride, dress-up, then jump farmer’s hedges Sunday mornings: hoping they fail to land on the other side? This mechanism is clearly a dated, inhumane method of pest control. So please do not give your support to May's flagship policy. Think of the poor horses!

YPP's three candidates in the 2017 General Election

Now confirmed:

Thomas Hall - Epping Forest (west Essex).

Ben Weenen - Cities of London & Westminster.

Jon Collings - City of Durham.

If you live in or near any of those places and have time, energy and/or money to contribute, please get in touch.

Wednesday, 10 May 2017

Killer Arguments Against LVT, Not (413)

Just when you thought he couldn't possibly trump that for stupidity (click to enlarge)...

Tuesday, 9 May 2017

Fun Online Polls: Bank Holiday Monday weather & refundable deposits

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

Is it fair to say that it normally rains on a Bank Holiday Monday?

Yes - 69%
No - 31%

I dislike these superstitions and rules of thumb, but I have to same I'm with the majority on this one.

Sicking with the weather, The Next Ice Age Cometh (full Telegraph article here, but behind paywall).

Faced with the choice, I'd prefer Global Warming.
A pressure group* called Surfers Against Sewage are now campaigning for deposits on plastic drinks bottles.

* A quick squizz at the Charity Commission website tells us that as worthy as all this sounds, they do get a small share of their total income from government bodies and I know this is mission creep, but hey, let's give them the benefit of the doubt.

This seems like a good idea to me, so that's this week's Fun Online Poll. I'm old enough to remember deposit bottles or getting cash for bringing aluminium cans to a recycling centre (a valuable source of income for tramps, as well). In some countries they have systems to encourage you to recycle valuable materials. In Denmark, you put your empty drinks cans in a machine near the shop and it spits out a few coins.

Vote here or use the widget in the sidebar.

Monday, 8 May 2017

"Labour tax to hammer workers on £80,000"

... wails The Telegraph, despite not knowing how much tax Labour would make them pay if they get elected, which they won't.

Funny, The Telegraph's response was much more muted when Georgon Osbrown "hammered" families with children where one parent happens to earn a rather more modest £50,000 or more a year.

Pots, kettles. They are as bad as each other.

Sunday, 7 May 2017

Killer Arguments Against LVT, Not (412)

I like it when we get a pair of matching opposites, two arguments, at least one of which is fundamentally flawed and which neatly cancel each other out:

KLN 1: "Rich people won't pay the LVT, they will all just move abroad or move to small flat in the cheapest areas where the LVT is next to nothing."

KLN 2: "LVT is a stream of future annual payments, so will depress the selling price of land by the net present value of the LVT. Therefore LVT is a one-off hit on whoever owns land at the time it is introduced (or looks very likely to be introduced)."

KLN 2 completely cancels out KLN 1. Today's "land rich" will pay the tax in full, they can't evade it by selling up and moving abroad or to a cheap area because they have already paid it in advance by accepting a lower selling price.

But Homey DoubleThink being what it is, I am sure they are capable of believing both simultaneously.
On closer inspection...

KLN 1 is in itself nonsense of course. That's like saying "If private landlords charge high rents for nice homes in nice areas, rich people will move to wherever it's cheapest" or "If parents can send their kids to a state schools for 'free' but pay fees to send them to private school, they will send them to state schools."

KLN 2 is logically accurate, but I don't see why that's an argument against.

a) If other taxes on 'wealth' in the wider sense and land and buildings in the narrower sense are eliminated as a quid pro quo for introducing a low level LVT that raises the same amount, there is no "hit" whatsoever.

b) If a higher level LVT is introduced and taxes on output and employment are reduced, then the amount of rent (or mortgage) which tenants and buyers can pay increases buy the same amount and the overall impact on actual net rents collected by landlords (after paying LVT) or on selling prices will be surprisingly little. In other words, the net present value of the extra LVT is matched by an increase in the net present value of people's future earnings or earned profits.

c) If LVT is a one-off hit to current values, then the people who actually pay it in cash aren't really paying any tax at all, that has all been swallowed by the current owner. So after that, we are in a much lower-tax environment. So in future, high earners won't be paying any extra tax, and neither will low earners, middle earners or anybody else.

d) The bulk (i.e. 95%) of today's land rich paid pennies for their land decades or centuries ago, they've had their money back several times over, and so the tax merely partly reinstates the status quo as it should be. Some poor saps have taken out large mortgages in recent years, if they have to pay mortgages and LVT on the same land, that is indeed a double hit and superficially unfair, but most of these people will win more on the tax cut swing than they lose on the LVT roundabout, and further, we can shift some of their LVT liability to the bank and everybody's happy.

Saturday, 6 May 2017

Fun with numbers/FPTP

From the BBC:

According to analysis by polling expert John Curtice, if the results of Thursday's polls in Wales, Scotland and 32 county councils in England were repeated nationally, the Conservatives would be on 38%, Labour 27%, the Lib Dems 18% and UKIP 5%.

With some form of PR, the best being probably multi-member constituencies, there'd probably be a slight left/centre-left majority in the House of Commons, which is the opposite of the slight Leave majority in last year's Referendum.

Not sure who'd get the missing 12% of the votes, presumably the regional/nationalist parties, SNP, Plaid Cymru and so on, who tend to be (seen as) more on the left.

Friday, 5 May 2017

The revolving door

From House of Commons Committee of Public Accounts, Tax avoidance: the role of large accountancy firms, 2013 (page 14)

HM Treasury’s Office of Tax Simplification was established to provide the government with independent advice on how to simplify the UK tax system.

Deloitte and PwC told us that they have seconded staff to work at the Office of Tax Simplification.

From The Daily Mirror:

George Osborne will have trousered more than £1million from part-time jobs before stepping down as an MP, it emerged today.

The ex-Chancellor's earnings from speeches alone are due to total £1.14million in the 10 months between being sacked by Theresa May and leaving Parliament...

And £65,901 is expected from seven hours' work speaking to accounting firm PriceWaterhouseCoopers in Dublin.

Thursday, 4 May 2017

"Impact of Brexit on Businesses in the UK" NOT

A delightfully misinformed and illogical bit of fear-mongering from Market Inspector:

There are Brexit campaigners who have optimistic predictions for Britain and its businesses. But there are still many sceptics who predict that this has been a big mistake for Britain, and that it will be seriously impacted by multiple factors.

So, how can Brexit affect businesses in the UK? You may be doing business in the UK, but most of your raw materials come from, let’s say Germany, for example. Since free trade between UK and EU will no longer be prevalent, the costs of your supplies hike up...

Only if the UK imposes tariffs, and let's hope it doesn't. Germany doesn't sell much in the way of raw materials, it sells high-end and finished products so that's a non-example. Of course, even with low-ish tariffs, the cost of goods from the rest of the world will go down, so that's a win for manufacturers overall.

According to statistics, in 2015, the UK exported £133 billion worth of goods to the rest of the EU, which is almost equal to half of global goods exports. It is predicted that the UK will experience a loss of at least £4.5 billion a year, if they leave the EU without negotiating a new trade agreement with the EU.

Let's go with that estimate, will UK exports to EU fall by three or four percent? Seem plausible. The key is to make up the difference be selling more to the rest of the world, GBP has fallen since last year which will help UK exporters achieve that.

This could take a major hit on export businesses in the UK, as their costs will hike up with the increased tariffs.

It is up to the UK to impose import tariffs, which would be pretty stupid (i.e. the UK government will probably do it, but we can't blame that on the EU).

It will result in UK businesses being less competitive in the EU markets and globally, as well.

Where does that come from? It's difficult to criticise something that is wrong on so many levels, first of all we'd have to guess what his trail of logic is. Surely, our trade with the rest of the world will not be affected in the slightest? Imagine Malaysia left ASEAN, would we even notice?

The European Free Trade Association (EFTA) was formed in 1960, which the UK was a founding member. If the EU decides to change policies after brexit, it could mean that the UK will lose its access to the single market.

Not sure what EFTA has to do with it. What's all this about losing "access to the Single Market"? A bit like the Chinese, Japanese and all those other major economies with whom the EU has no 'free trade agreements' (yes. it's an oxymoron)?

In a period of 2 years between the Brexit decision and the actual exit of the UK from the EU, the UK must negotiate free trade agreements with the EU and other countries globally.

No it doesn't have to, it's not going to happen in two years if it ever does, we don't need 'free trade agreements' to trade with people, look at the bloody map! And FWIW under normal grandfathering rules, the UK will almost automatically enter into new free trade agreements with South Africa, Mexico and Chile (the only ones of note, Greenland, FFS) on the same terms and conditions.

Economists estimate that Britain will be at a loss equating £75 billion, if they are excluded from the single market.

The first estimate of £4.5 billion lost trade seems uncontentious, the French will see to that. All of a sudden, they've multiplied it up by a factor of twenty. How? Why?

Wednesday, 3 May 2017

Killer Arguments Against LVT, Not (411)

Emailed in by BenJamin' from Reddit:

Brokenladder: You go to some financial entity who agrees to pay the LVT in perpetuity in exchange for 1M$ in cash.

green_meklar: I'm not clear on why any financial entity would write up such a contract, or at least be able to actually fulfill it. Where is this perpetual payment coming from?

Brokenladder: Just imagine Bob and Alice start off equally wealthy, and Bob buys some land. The LVT goes into effect and suddenly Bob is much poorer, while Alice is unscathed. This is clearly arbitrary and wrong.

green_meklar: Just imagine Bob and Alice start off equally wealthy, and Bob buys a slave. Then emancipation goes into effect and suddenly Bob is much poorer, while Alice is unscathed. This is clearly arbitrary and wrong.

No it fucking isn't. It was the slavery that was arbitrary and wrong. Bob is just paying the price for his investment in economic injustice. Economic injustice can be incredibly lucrative, but those who invest in it should do so with the full understanding that if society chooses to enforce economic justice in the future, that investment could be lost. It is not up to the rest of us to protect the investments of those who invest in evil. They had their chance.

The thread is very long, Brokenladder rots out on inconsistency after another, contradicting himself several times over to the exasperation of the Georgists who tried to point out his mistakes.

Tuesday, 2 May 2017

Self-defeating argument of the day

Emailed in by MBK, from the comments in The Times:

Simon Shinerock:

OMG, will we never learn! Rent controls are proven not to work, forget theory, they dont work, they spell the end of the PRS.

The only thing that will solve the housing crisis is, and I know how hard this is for social scientists to grasp, to build more homes. Persecuting and demonising private landlords might be fun for some and distracting for many but it's not the solution.

The whole point of rent controls is to 'encourage' landlords to sell up to sitting tenants, hey presto, rapid increases in owner-occupation rates, that's what the UK did for most of the 20th century and it worked a treat.

Whether you see this as Commie landlord-bashing or achieving the Conservative vision of a nation of homeowners is up to you, the means and the end are the same. You simply can't have more owner-occupiers without having fewer landlords, it's very basic maths.

What is the point of building more homes? There's no evidence that it reduces rents or prices - and if it did, that could also be construed as "persecuting landlords" - or that it increases the number of owner-occupiers, as disproportionately many new homes are snapped up by landlords.

SS unfortunately does not say whether he is an owner-occupier, if he bought his house more than twenty years ago, he benefitted from rent controls etc, if he's a landlord he's a fucking self-serving hypocrite. Either way, he is an idiot.

Top tips on negotiating with the EU

From The Daily Express:

YANIS Varoufakis has urged Britain not to get caught up with EU negotiations in a stark warning to the Prime Minister.

Speaking to the Telegraph, the former finance minister of Greece said: “My advice to Theresa May is to avoid negotiation at all costs. If she doesn’t do that she will fall into the trap of [Greek PM] Alexis Tsipras, and it will end in capitulation.”

Said is said, he knows more about this than most people.

From ITV News:

[Jeremy] said a Labour government would approach the negotiations with "respect and sense".

"She (Mrs May) seems to be sending rather mixed messages. To start negotiations by threatening to walk away with no deal and set up a low tax economy on the shores of Europe is not a very sensible way of approaching people with whom half of our trade is done at the present time."

Correct, nobody should ever 'threaten' anybody, that implies that it is something you don't really want to do, leads to all sorts of confusion and might harm your own position*. You start off by saying what you actually intend to do, i.e. "set up a low tax economy on the shores of Europe". If the EU objects to this, they are perfectly entitled to say so and request politely that you do something else in exchange for concession X, Y or Z on their part.

* Some sick bastards kill people because they enjoy doing it. A kidnapper usually has no interest in actually killing the hostage. What he wants is the ransom money and to leave as little evidence as possible, not a corpse to hide and a murder charge hanging over his head.

Monday, 1 May 2017

Complete Lack of Self Awareness.

Mr Juncker suggested that this timetable was "too optimistic", pulling out of his bag "two piles of paper" - Croatia's EU entry deal and Canada's free trade deal - to highlight how complex talks are likely to become.

Of course, what these 'piles of paper' really demonstrates is the utter failure of bureaucrats like Juncker. That is these 'piles of paper' are clear demonstrations as to how, if you put bureaucrats in charge of anything, their incentives are entirely satisfied by the own self serving self interest to string the job out and create lots of pointless rules and regulations.

I estimate that you could probably draft an entirely suitable 'free trade agreement' (an oxymoron in itself) on about 8 pages of A4, double spaced 12pt Arial.

Fun Online Polls: The French presidential election & Bank Holiday Monday weather

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

If you were voting in the French presidential election:

Macron - the Europhile, Goldman Sachs-funded former Rothschilds banker and Socialist minister - 7%
LePen - the other one - 93%

I wasn't expecting the result to be nigh unanimous. Perhaps it's partly to do with how I phrased the question. Perhaps it wasn't value neutral enough?

It appears to me that Le Pen is rather more sympathetic towards Brexit, which is why I voted for her. Whether she will be better or worse for France (from the point of view of the French) than the Establishment candidate is not really my concern and I have no strong opinion either way.

A good turnout, thanks to all 129 who took part.
When I was agreeing with Mrs W what to do over the Bank Holiday, she said we're not pencilling in any trips for Monday as it always rains on a Bank Holiday Monday.

Sure enough, it was lovely at the weekend (when we did our outdoor stuff)  and is now chucking it down here.

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

"Is it fair to say that it normally rains on a Bank Holiday Monday?"

Vote here or use the widget in the side bar.