The Chicken or the Egg and Who Pays?

Infrastructure spending grows the economy, so they say. Well, maybe not.  I am not convinced. Observationally infrastructure spending occurs when the economy has already grown.   Consider this:-

The Causey Arch was commissioned and financed by the Grand Allies coal cartel to take coal to the growing Tyneside conurbation. That is the demand from Tyneside could not be met by the existing transport of packhorse trains and carts so the plateway was built to increase the supply of coal. Tyneside had already grown and the 'infrastructure' followed that growth.

The town where I gain my living has a traffic problem.  There are two roads one eastbound and one westbound round the dock area that carries all through traffic and acts as a local distributor.  Over the last 20 years or so I have watched as this gyratory system has got more and more clogged as the Town has grown and developed. Economic growth has already happened.  

As you will have realised the traffic has a negative externality. Land prices are probably depressed by this, or more likely removing the traffic would increase the attractiveness of locations in the area. You should note that there are a number of partially- and un-developed sites in the location, a couple of which were bought out of receivership.

There is a plan to solve all this and at the same time provide access to an island site in the Wet Dock to make it suitable for development. From memory the budget is £70m or so.  You will notice that the plan gaily admits that spending this money will make the Island Site valuable. And of course 'drive economic growth'.

Three points.

One clearly Ipswich has already grown. This new infrastructure is being built to relieve the traffic problems created by this growth.

Two. Spending this £70m of other peoples money will hand windfall gains to all the landowners around the gyratory system and a handsome uplift in the value of the Island Site which will accrue to its owners, Associated British Ports.  Why is everyone else paying to finance these windfall gains to a small number of landlords?

Three. Motorists are not paying the costs of their pollution.  Why are they being gifted an improved route? 

The thing is there are only four ways that such infrastructure can be financed, and three of them are flawed.

One,  finance can be raised by taxation. This is taking money out of the economy. It's a zero sum.

Two. The government can borrow money in the market.  This makes less finance available for private investment.

Three.  It can print the money.  Which is a form of taxation.

Or...

Four.  LVT could be applied to the landowners who would therefore pay in proportion to their gains and tolls could be levied on traffic using the crossing. 

I confess that this is a personal niggle that I need to get off my chest. And the fact that Ben Gummer (ex) local MP was in favour of it is enough to condemn it.

Fun Online Polls: The Finsbury Mosque attack; Homophobia

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

Are you surprised that somebody finally snapped and attacked a group of Muslims near a mosque?

No - 94%
Yes - 6%

Not much more to say on that.

Except, it was a good turnout with 128 votes. Unusually, eleven people shared the poll on Facebook and five Tweeted it (besides me), thanks to all those who took the few seconds to do that!
--------------------------
There have been a lot of headlines decrying our new co-overlords, the DUP as homophobes. Well, quite clearly they are, which is A Bad Thing IMHO. The outrage is mainly from the left. The right wingers who secretly agree with them are remaining tight lipped on the subject.

But why the panic? For sure there are 10 DUP MPs, but only 292,316 people voted for them. It's hardly a mass movement.

If you're worried about homophobia (which I am), what is rather more relevant is that there are about 13 Muslim MPs and just under 3 million Muslims in the UK, half of whom think homosexuality should be illegal and of whom 23,000 are 'potential radicals' and 3,000 are on watch lists.

(Somebody did a great graphic on Twitter suggesting that in many respects, the DUP and Islam have a lot of similarities, I can't find it now. But I can't remember the last time a DUP activist carried out a terrorist attack.)

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

"Who is more homophobic: the DUP/their voters or Islam/Muslims?"

Vote here or use the widget in the sidebar.

Socialism / Not Socialism

We (or maybe just me?) got ourselves into a long discussion on an earlier post that rather lost its way.  So I thought I'd try to make a bit clearer the point I was trying to make.  First of all I would expect that all of you know about the Nolan Chart? (I accept that it is a simplification).

 

 

Top = Liberty and Personal Responsibility

 

 

Bottom = Slavery and Personal Irresponsibility 

 

Now, the key point today is that I maintain the left v right is passé.  It's old hat.  What we really need to be talking about is top v bottom.  I do not consider myself either left or right.  All the evidence tells me that the left - aka socialism - does not work.  In fact cannot work.  And similarly the Right 'conservative' does not work. And in fact cannot work.

 

If you look at the history of conservatism in the UK it is exemplified by its ability to gain power by accepting the changes made by the Left.  It has 'conserved' things that were not previously thought of as Right wing or conservative.  And it tends to be authoritarian. Witness the way Osborne handed Draconian and arbitrary power to HMRC or the constant attempts to 'control' the internet. Finally by definition Toryism grew out of land ownership - i.e. rent seeking.

 

On the left the constant failures of economic rationing by bureaucrats, and because of the skewed incentives of those bureaucrats, will tend to lead to more and more regulationism and less and less economic freedom. The left defined itself by mis-defining 'capitalism'. It looked horizontally across the Nolan Chart.  It should have been looking upwards. It decided that on the evidence of that horizontal view markets were not good enough and that central planning by wise bureaucrats was much better. Keynes did not look up either.

 

In short both left and right will tend to trend downwards over time to the bottom. They will both end up as totalitarian regimes. (Witness Corbyn's threat to requisition houses).

 

The chart implies something else.  Without both economic and personal liberty there can be no Liberty.  Property rights (including sound money which is a form of property right) are fundamental to liberty. And this is why the Left can never embrace liberty.

 

But given that the Nation State is a Good Idea what is the least worst way of paying for it that does not erode liberty and economic freedom and uses the least possible coercion?  Enter Georgism.

 

To my mind Georgism achieves two things.  One, It raises tax income in an equitable and efficient way and two, if done properly increases liberty by removing the ability of the few rent seekers to suck the wealth away from the productive in 'economic rent'.  I see no contradiction between Georgism and Liberty. But then I am not an anarcho libertarian.

 

There is a lot more than can be said about this, but I wanted to be as brief as possible and to promote discussion.

 

So what do you think?

Reader's Letter Of The Day

From today's Times:

A NEW PARTY

Sir, We do not want a new centrist party that is a compromise between socialism and neoliberalism (“Now is the moment to launch a new party”, Comment, June 23, and letters, June 24). We want a party that thinks outside the box. It could be Georgist, which has a clear set of principles, or the thoughtful manifesto of the Young People’s Party (UK), as set out on their website.

Richard Ling

Nobody move or the German car makers get it!

Via MBK, from The Times, still working on Project Fear. (Didn't they get the memo? The Referendum was held a year ago and they lost):

A hard Brexit will put up to 18,000 jobs in the German car industry in danger because vehicles will become “significantly more expensive” for British consumers, analysts said yesterday.

The knock-on effects of border duties imposed between Britain and the EU at basic World Trade Organisation levels could mean sales of European-made cars will plummet by one fifth in the UK, Deloitte forecast.

A hard Brexit — defined by the report as leaving the EU single market and falling back on WTO trading rules — would mean a 21 per cent price increase for British consumers, Deloitte said, with the cumulative impact of the drop in the pound and extra trade costs.

The car industry would be one of the sectors that suffers the most because tariffs of 10 per cent for finished vehicles are higher than the WTO average for all goods. It has also come to rely on “just-in-time” supply chains which are highly responsive to demand and would be badly interrupted by the need for customs verification checks at either UK or EU border control posts.

1. WTO rules do not say anywhere that you have to impose a 10% tariff on cars.

2. Where did they get that "10% duty on imported cars" figure from? Funny you should ask, that happens to be the common tariff which EU Member States have to apply to cars imported from e.g. Japan.

3. If the EU want to play silly buggers and apply this 10% tariff to cars made in the UK, there's not much we can do to stop them. It is entirely up to the UK what sort of tariff we impose on imported cars, whereby the ideal tariff is of course precisely zero. On everything. That's good for UK consumers, good for UK producers in the medium and long term and will play well on the world stage.

4. Even if the UK were stupid enough to maintain the standard 10% tariff on cars and 3% - 4% on car parts, it would make naff all difference to most buyers. It would make no difference to people who buy cars made in Japan. Expensive German cars would get a bit more expensive in relative terms, but as we know, showroom prices in £££ are surprisingly stable and largely unaffected by exchange rates or tariffs. And hence the number of cars imported from Germany would fall be nowhere near one-fifth as stated in the article.

5. As per usual, the article fails to distinguish between the impact of tariffs imposed by the UK and those imposed by other countries, both are bad, but to some extent the damage cancels itself out, the effect is not cumulative. (In the same way that taxes and subsidies cancel each other out to some extent).

6. Even if the article is correct and we end up with fewer Audi and BMW drivers behaving like arseholes in the fast lanes of our wonderful motorways, is that really A Bad Thing?

Stupid Criminal Of The Week

Headline from The Daily Mail:

Nanny caught stealing 68 PUNNETS of 'expensive' cherry tomatoes from Coles after her doctor told her to eat more vegetables for health reasons

Tomatoes are of course fruit, not vegetables. Duh.

Sadly, the article does not say how much the house where she works as a nanny is worth, which would have helped to put it all in perspective.

Let's all weep.

The Torygraph has yet another bit of wailing about landlords being unfairly hit by tax changes.

Of course, being the Torygraph, they couldn't resist quoting a few myths:

"This could mean landlords opting to come out of the private rented sector, creating reduced supply or increased costs which could again mean an increase in rents." and

"The more average rents rise, the more ownership figures fall. This is a bad decision which will affect not only landlords but renters, first time buyers and second steppers.”

How does he work that out? Answers on a postcard, please.

YPP (London) brief meet-up tomorrow Friday 23 June

We'll be at The Brewmaster nr Leicester Square from 5.20 or so onwards - if you think you'll turn up later than 6.30, please get in touch gmwadsworth@gmail.com or 07954 59 07 44.

Leicester Square Tube Exit 1, turn left and left again into the alleyway (St Martin's Court). We put a yellow YPP leaflet on the table so that you can find us.

I have to leave 7-ish to cook dinner.

"Psst, we're having trouble shifting these pricey new flats..."

"Not to worry, we can sort you out with taxpayers' money while appearing to help out the little guys..."

Mark Carney says time will never be right for interest rate rise.

From The BBC:

The time will never be right for an interest rate rise, Bank of England governor Mark Carney has confirmed in his Mansion House speech for the fourth year running...

Mr Carney said: "From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin that adjustment [rate rises].

"You see, there's good inflation - house prices, and bad inflation - wage growth. We'd do what we can to stifle the latter, in the unlikely event it ever happens, but we are relaxed about good inflation.

"In the coming months, I would like to see the extent to which weaker consumption growth is offset by other components of demand, whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations.

"The Brexit negotiations will drag on for a few years, so that gives me a breathing space for the remaining four years of my tenure at The Bank of England. Waiting to see what the long term impacts of Brexit are should tide over my successor for the next few years after that.

"If the worst comes to the worst, we'll admit that inflation is through the roof and savers are losing money, but at that stage our main concern will be young families who might be pushed into negative equity.

"Come on guys, you know how it works."

Following Mr Carney's comments, the pound fell about 0.4% against the dollar to trade at $0.6682.

Fun Online Polls: Brexit delaying tactics; The attack near Finsbury mosque

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

The major political parties deliberately messed up the election so that they can sideline or delay Brexit.

Probably true - 51%
Probably not true - 49%

So pretty evenly split. I voted 'probably true', although I must caveat that, I'm not sure it was deliberately deliberateor whether there was just a blatant disregard bordering on negligence or even recklessnes; certainly on the part of Mrs T May who basically threw it away. I'm no fan of the Tories in any way shape or form, but this is one thing which they appeared better equipped to sort out.
-----------------------------------------------------
This week's hot topic appears to be the attack near Finsbury Mosque.

If you ask me, this sort of thing was going to happen sooner or later, to paraphrase apologist Sadiq Khan circa 2016, this is just part and parcel of attending what is or was believed to be a radicalising mosque.

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

"Are you surprised that somebody finally snapped and attacked a group of Muslims near a mosque?"

Vote here or use the widget in the sidebar.

If the usual suspects want to pile in and call me a racist for my casual disregard of the issues, feel free, but please note you are missing the point.

I am a modern, west European liberal who believes in equality between people of whatever colour skin and wherever they are from (provided they are here legally); equality between men and women; equality between straight and gay/lesbian; freedom of religion and more importantly freedom to be atheist; respects democracy; likes a booze-up; and who opposes violence and corporal/capital punishment. I've a downer on any movement which takes the opposite view on such matters.

Roaming charge fun.

From the BBC:

A European Union (EU) law to abolish roaming charges for people using mobile phones abroad comes into force today [15 June 2017]. The new rules mean that citizens travelling within the EU will be able to call, text and browse the internet on mobile devices at the same price they pay at home.

I'm always wary about govt intervention in such matters, but in this instance, fair play to the EU, I can't see a downside.

We know that the price which people are willing to pay exceeds the actual cost of the satellites, or else mobile companies would not be prepared to pay such huge amounts of money for the radio spectrum. The surplus is 'unearned' income or rent. The question is, who gets the surplus - best is the government (as licence fees, quasi LVT); next best is the consumer (via capped prices) and worst is letting private companies collect it.

This has been a long time coming, from The Guardian, three years ago:

Roaming charges for using a mobile phone abroad will be abolished from December 2015 in proposals expected to be voted through the European parliament on Tuesday, but operators have warned that bills could rise domestically to pay for the change...

... a coalition of networks representing 45m consumers has warned that the legislation is so badly designed that the cost of domestic calls could rise to pay for it.

"There is a risk that domestic tariffs for European consumers will increase," according to the roaming coalition. "Roaming might not be subject to surcharges anymore, but the overall level of tariffs would increase, and non-roaming customers might effectively foot the bill for roaming customers."

Yeah right. We've covered that - prices are set by what consumer is willing to pay, not by costs. Domestic users are prepared to pay £x and not a penny more. They don't care what other people pay and for what.

The mobile companies have had years advance warning that this would happen, so if they are right, they would have been nudging up prices in anticipation. Have they?

Nope. Prices have been drifting downwards for years, see recent Ofcom report.

Disclaimer - I've no downer on mobile phones and mobile phone companies, they are brilliant. While they share a monopoly, between themselves they appear to be highly competitive. It's the landline people who take the piss.

Another of those "have I gone mad or have they" moments...

From the BBC:

UK to agree Brexit divorce bill before trade talks - EU sources

The UK has agreed to sort out its EU "divorce bill" and citizens' residence rights before starting Brexit trade talks, EU sources have told the BBC.

But the UK's Brexit department has insisted a trade deal must be agreed at the same time.

Killer Arguments Against LVT, Not (416)

I haven't done a KLN for a while and a couple of LVT supporters have said to me recently that we really have to address the 'negative equity' issue and have our answers ready.

So let's dip into a recent article in the Daily Express. The comments section is a hoot, our BenJamin' goes into bat and is roundly derided as a Marxist. Plenty of disappearing homes etc.

(It also includes the ultimate distillation of all KLNs: "I don't like LVT because I am scared of hard work". This is paraphrased by May Jam thusly: "There are two kinds of people in society. Those who want to be left alone (independence) and those who won't leave them alone (the Left). Land ownership is just one small aspect of achieving independence." What he or she means is "I don't want to have to work to earn a living, I want to buy my home, retire early and let everybody else get on with paying for public services and looking after me.")

But I digress, returning to the article...

Families face plunging home values and potential negative equity if Jeremy Corbyn slaps a Land Value Tax (LVT) on properties, as promised, according to the Labour Land Campaign (LLC).

The levy would replace council tax and business rates and will result in the "collateral benefit" of knocking house prices, the group gleefully told Labour members.

Falling values may even lead to another banking crisis, the group incredibly hinted.

I look at it this way:

A. Prices are unlikely to fall...

1. Going by what real data we have, a 1% tax on land and buildings appears to reduce selling prices by about 17%. But the UK already has taxes on housing which average out at about 1% a year (all the minor ones - council tax, SDLT, inheritance tax, CGT, ATED charge, TV licence fee, Insurance Premium Tax etc). A straight swap would have little impact. The houses most likely to fall in value are those which have risen most over the past few years, easy come, easy go. My house would have to fall 75% in value before I can really say I lost money on it (glossing over 25 years of largely living rent-free).

2. Having LVT as an additional tax on top of what we've already got is a stupid idea and nobody has recommended it, so we don't need to address that.

3. All LVTers are agreed that LVT could and should reduce/replace the BIG taxes on output, employment and earnings as well. If it's a £ for £ swap, there's no reason to assume that prices would change much. Some people (first time buyers and second-steppers) will have a lot more disposable income and will bid up prices; the semi-retired might decide to trade down, pushing down prices for larger/family homes etc but it all largely cancels out.

B Even if prices were to fall...

4. The LVT is like an interest rate hike of a percent or two, people who take out mortgages ought to reckon with the fact that interest rates might go up a percent or two. Aren't the Homeys always criticising the under-40s for being addicted to debt? Don't they always boast about having paid 15% interest on their mortgages and survived? Why do they have so much sympathy all of a sudden? Presumably because they are two-faced gits.

5. Nequity is largely a psychological problem, it's not pleasant but it only really affects people who want to move.

6. The number of people in nequity depends on how large their mortgage is. It is only people with high loan-to-value who will be affected, this is mainly recent purchasers.

Put 5 and 6 together and ask yourself: how many recent purchasers suddenly want to move? Why did they buy somewhere recently and now want to move?

7. If we do a proper tax shift and reduce VAT and NIC, then while some people with large mortgages (our recent purchasers from 6) go into nequity, they are the ones who make the biggest tax savings, call it £10,000 a year on average. Are they really worse off? They can now pay off the nequity in a few years, from there on in they are cruising.

C There are various ways of fudging this and sharing the apparent loss (it's not a real loss, the real value of the houses is unchanged)...

8. If people want to move, we can just introduce rules saying that they can transfer their existing mortgage on the same terms and conditions to the new place, and pay off the shortfall at their leisure. Those who are trading up will end up in the next house they wanted with a smaller total mortgage than otherwise.

9. We can write down mortgages to the new lower value, but keep monthly repayments the same by upping the interest rate.

10. If banks take losses, they can do debt-for-equity swaps. That looks like a "banking crisis" but it is a one-off transitional thing. If mortgages are smaller/more affordable in future, future banking crises will be very much muted (like they were during the post-war decades when Georgism Lite kept house prices down).

11. We could adjust LVT bills down for a) people who took out mortgages before LVT is introduced and/or b) give recent purchasers a credit for the SDLT they paid (borne by the vendor, of course, but not much consolation to those who sold and bought recently).

So somehow or other, the apparent loss can be shared between borrowers, banks and the taxpayer generally, it is not a huge number to start with, split it three ways and spread it over a number of years, it's chump change.

I'm sure you can think of more reasons why this is no Big Deal but I've got to get back to work :-)

That's how democracy works.

From The Daily Mail:

A major Tory donor who backs Boris Johnson to be the next Prime Minister has demanded Theresa May overhaul the party agenda and slash tuition fees.

Ukrainian-born Alexander Temerko said the party faced losing the youth vote for good against a Labour Party committed to scrapping university charges.

The comments section is full of the usual bile, all the Boomers who had 'free' higher education and student grants; who bought their houses back in the day when UK government policy was to keep prices down and are now getting taxpayer-funded house price increases most years, all the pensioners who are getting far more out of the welfare state than they ever paid in etc.

As I have been saying for ages, the key is to get out and vote. Pensioners are treated so favourably because they all go out and vote for whichever party they think is likely to give them higher pensions and subsidise their house prices etc. A million votes once every five years achieves far more than a million people attending a protest march and is a lot less effort. But you have to have something to vote for.

That's why we set up YPP five years ago. We're into Georgism (lite or otherwise) for its own sake, but it is easiest to sell to the non-Homeys, non-Boomers and non-pensioners (i.e. the under-40s) because they would benefit most immediately, hence the tongue-in-cheek name.

The lesson to learn from the Greens and UKIP is that it doesn't matter too much if you never get (m)any MPs. Once they hit a certain threshold, the major parties started merrily nicking Green/UKIP policies to try and shore up their own vote, thus doing (some of) the Greens'/UKIP's work for them.

So while YPP doesn't seriously expect to have any elected representatives any time soon, that doesn't matter (I personally wouldn't want to be an MP, I've got a perfectly interesting and well paid job, thanks).

Problem is that Labour has drawn similar electoral calculations and decided to grab the under-40s vote by nicking one of YPP's less important policies - reducing tuition fees/student loan repayments. In reality, there are no student loans, it's a graduate tax on higher earners but for some reason they don't call it that - didn't Labour say they were in favour of higher taxes on higher earners?

And some more cynical Tories now want to adopt this in retaliation, entirely as expected.

Labour also appear to have stumbled across our main policies and mumbled something along the lines of shifting taxes to Land Value Tax and reducing VAT, but they appear to have done this on general principles without realising that these are The Big Ones, do it properly and this would save the under-40s five times as much as diddling about with tuition fees/student loan repayments.

Ah well.

Hopefully the under-40s will realise that Labour are trying to buy them off with token concessions and that there is a real alternative to the socialist/neo-liberal/Home-Owner-Ist see-saw.

Daily Mail On Top Form

From The Daily Mail:

The fire that swept through a 27-storey west London tower block in just 15 minutes after a faulty fridge exploded could be one of the worst in British history amid fears nobody on its top three floors survived.

Twelve people are known to have died after fire engulfed Grenfell Tower in White City after 1am today - but Scotland Yard expects the death toll to rise and there are claims the true number could be 'more than 50' or even higher...

Grenfell Tower is council-owned but the management of the building is down to an independent company - the Kensington and Chelsea Tenant Management Organisation (KCTMO) - whose stock consists of 6,900 rentable homes and 2,500 leasehold properties having been handed a contract in 1996...

Robert Black is the company's Chief Executive Officer and he took office in 2009 having previously worked as Executive Director of Service at Circle Anglia for five years where he was responsible for services for 45,000 homes across seven companies including asset management. He is a father of [an unspecified number of children] who lives in a £1 million house in South East London with his wife of almost 20 years.

In an unusual display of respect for the bereaved, the Mail resisted the temptation to point out that flats in the block changed hands for about £500,000 £160,000.

Diagonal comparisons: Corbyn edition

From City AM Forum:

One part of Labour’s economic offer which really did strike a chord with the electorate was the promise to nationalise industries such as rail and water. To anyone with direct experience of the old British Rail or the Post Office (which made you wait six months to get a phone installed) this almost defies belief. But only those over 55 can remember...

What on earth do rail and water companies have to do with installing telephones? Corbyn might possibly have said re-nationalise the Post Office, this is now a quite distinct body to BT, the one which does the telephones and competes on a pretty level playing field with lots of private businesses. As anybody under 55 understands perfectly well.

(Both Corbyn and May both accused mobile phone companies of market abuse or something IIRC, which seems a bit off piste to me, they do a great job all in all. It's the internet providers who insist you pay top dollar for a landline you will hardly use if you want broadband who are taking the piss).

Prior to rail privatisation just after the 1992 election, the peak number of passenger journeys made each year was some 1.1bn in the mid-1950s. Faced with rapidly rising road competition, the rail industry saw journeys fall steadily, to a trough of around 750m in the mid-1990s.

After privatisation, massive investment programmes have been carried out and, in the form of the train operating companies, there is now a distinct part of the industry whose priority is the consumer. Journey numbers rose, passing the 1bn mark in 2003, to the current level of 1.7bn, a figure not seen since the early 1920s, when road competition was weak.

So the revealed preference of consumers seems to be that they rather like the current structure. They actively choose to use rail in massive numbers.

We've done that one. Yes, the number of passenger journeys on private rail has doubled in the last twenty years - but so has the number of journeys on the government-run, union-controlled, highly regulated etc London Underground network, so that proves nothing. Rail passengers couldn't care less who owns it or runs it, they just want a reliable service.

Embedded rents

Continuing my occasional series, from The Daily Mail:

Retailer WH Smith has reported a two per cent sales increase in the first quarter of this year due to the success of its shops in airports, train stations and motorway services.

Sales across the newsagent's 750 outlets at transport hubs rose eight percent, including a two per cent boost from the weak pound on revenues at overseas stores.

This offset falling sales on the high street as same-store sales fell four per cent from March 1 to June 10, leaving like-for-like sales flat.

Which is the general trend - at airports, stations and so on you have a captive audience and can charge higher prices. The more mobile people are, the more potential customers you have. The selling price of consumer goods generally is fairly flat wherever you buy them, and the mail order internet companies are gently pushing down the base line price of normal consumer goods.

This applies to consumer goods that can be transported but not for services/goods consumed on the spot...

The wife and I watched Supershoppers on the telly yesterday.

It started with a good sequence on cinema ticket pricing, which illustrated all this. Cinemas charge more for films when they are first released than when they are near the end of their run; they charge more in the evening and at weekends and less during the week; they charge more in higher income areas than in low income areas (there's even a measurable difference between Richmond and Putney!); and finally, they charge more in the centre of large cities, so in London Leicester Square was nearly twice as much as in the Manchester Trafford Centre, which in turn was nearly twice as much as in Bristol.

The knock-on of this is that rents are correspondingly higher in areas where cinemas can charge large premiums. The higher rents don't lead to higher ticket prices; it's the other way round.

This is what I expected to happen... the greatest U turn of all time...

From the BBC:

Enthusiastic Remainers have been quick to jump on the election result as their latest opportunity to mould the UK's departure from the EU.

The various lobby groups, including former ministers still close to some in government, have been whirring with chatter and tactical planning about how to get their voices heard. There are ideas about commissions or "neddies" - groups of advisers from business and all political parties that met in years gone by.

Even senior Tories like the leader of the Scottish Conservatives, one of their few success stories at the moment, told us yesterday "it can't just be a Tory Brexit". On first hearing, that is a staggering thing to hear from Tory lips.

Fun Online Polls: Bank Holidays & Conspiracy Theory Of The Week

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

What would you prefer (assuming you are an employee)?

20 days annual leave and 8 statutory Bank Holidays - 24%
28 days annual leave - 76%

That seems pretty conclusive to me. I suppose the one-quarter who prefer fixed Bank Holidays can just take their extra days annual leave on certain fixed days, just for old times' sake.
---------------------------------
A few people have suggested to me recently that although both the big parties (and UKIP) said in their manifestos that they were committed to Brexit, they deliberately messed up the election in the hope that they can sideline or delay Brexit in the ensuing chaos.

See this BBC article for a good overview of their weasel tactics.

I doubt it was deliberate, but I do get the impression that the Bremainer elements in the establishment (which includes our strong and stable Prime Minister) are now doing their best to water down Brexit.

What do you think?

Vote here or use the widget in the sidebar.

"Woman escapes car swallowed by Florida sinkhole"

A splendid video over at ABC News.

Don't forget, car parks are like governments... they might look strong and stable, but...

Indian Bicycle Marketing* in Northern Ireland

From the comments at Coppola Comment, h/t @johnb78:

The reason for the polarisation was a cycle of one side aggravating the other and vice versa.

The DUP would say or do something obnoxious to spite SF, this would annoy Nationalists and make them more inclined to support SF. This in turn made Unionist voters angry that IRA members were getting support, so they would give more votes to the DUP to put the Shinners in their place.

After several cycles of this, the UUP and the SDLP were ground down. The Brexit vote opened up constitutional issues, which has turned every vote into a proxy border poll, which further incentivises people to vote for hardline parties.

A further structural incentive was the fact the largest party gets to be first minister. This was the result of a SF-DUP deal back in 2006. This lets the DUP prey on unionist fears of an SF FM to ensure that Unionists voted for them for fear of splitting the vote and letting SF slip through. Of course, this makes Nationalists angry and inclined to vote SF, in turn giving the DUP a boogeyman to get more votes.

SF are facilitating this polarisation so Catholics end up filled with resentment. SF are now an extremely powerful party within the context of NI, so this strategy was successful in narrow terms.

* Indian Bicycle Marketing is a tactic where competing producers of more or less identical products agree to carve up a market between themselves.

North Sea OIl - the eternal resilience of capitalism.

The Telegraph, 14 April 2015:

Britain's oil industry faces a deep and long-lasting crisis, according to the International Monetary Fund, which said the collapse in oil prices would stifle investment and hit production at a much faster pace than other countries.

Analysis by the IMF and Rystad Energy showed North Sea oil producers would be among the hardest hit by the slump in prices because huge operating costs meant they could not absorb the decline as easily as countries such as Kuwait, Iraq and Saudi Arabia... The fund’s oil industry analysis showed that UK producers faced the highest operating costs in the oil producing world, equating to an average of around $40 per barrel. By comparison, operating costs were less than $5 a barrel in Iraq and Kuwait, and about $6 on average in Russia. The figures will deal a further blow to the Scottish nationalists who have claimed North Sea revenues could help sustain an independent Scotland.

Oil prices have fallen from their June high of $115 a barrel to just $58 today. While this has led to a collapse in the use of oil rigs, most notably among US shale oil producers, the IMF said "significant efficiency gains" in the sector would help to limit falls in production.

CNBC, 16 May 2017:

North Sea oil output is expected to jump by a net 400,000 barrels per day (bpd) or about a fifth in the next two years, defying gloomy forecasts for the oldest deepwater basin that produces the world's benchmark crude price... The region is expected to report its third annual production rise in a row in 2017, reversing years of sliding output...

"The drop in the oil price forced everyone to focus even more than they were on (production) uptime and operating efficiencies which have risen dramatically over the last two years," Premier Chief Executive Tony Durrant told Reuters, "We've been at over 90 percent operating efficiency and a lot of the other players are very high as well. If you roll back to 2012-2013, then the North Sea had a shocking record of about 65 percent," he said.

Mark Thomas, BP's regional president for the North Sea, said in September that BP's cost of production had fallen to about $16 or $17 a barrel from above $30 in 2014.

For sure, there is a lot more to this than meets the eye and I have quoted selectively, but you get the general idea.

Daily Mail on top form

Man, 51, is charged with murder after his wife was found strangled in their £130,000 home

Daily Mail inadvertently hits the nail on the head.

I hope everybody is enjoying the strength and stability of the UK government as much as I am LOLZ.

Moving on to more important topics, the Daily Mail ran a cartoon to accompany a Homey rant article about the "Garden tax". I'm sure the irony of this will not be lost on people who actually know about this stuff:



The point is that this is a major attraction of Land Value Tax; people will only want to own/occupy what they actually need; land ownership will no longer be a magical money tree.

Daily Mail Election Day Special

From The Daily Mail:

* Peter Graham, 68, used both hands to twist Sara Wheeler's left arm during row

* She had boasted about sleeping with another man in the pair's marital bed

* It broke in three places at the £1.5million home they shared in London

I assume they mean her arm broke, not the bed, that would caught his attention straight away.

Testing my patience.

Dinero left a comment on Killer Arguments Against LVT, Not (415):

The land under gardens has a lower land value than the land under houses as it does not have planning permission and is to small to build a house on.

Me: Exactly. Two similar houses on the same street with different sized back gardens hardly differ in value.

Dinero: So there is an issue with existing houses where a tax on the land that is not big enough for housing and does not have planning permission for housing is at the same rate that land that does.

A terraced house with a strip of garden at the back would have three times the tax as next door with no garden.

Me: That would be a daft way of doing it.

Dinero: But don't you see that as a problem?

Me: If you have a stupid valuation system, of course it's a problem. So have one that reflects actual rental values. Duh.

Din: But that is the proposal , the proposal in the article is to tax the garden area at the same rate as the house area.

Me: That is NOT the proposal. The article is lies from start to finish.

Din: are you sure about that?

From the Labour Land Campaign website

"...First off, the value of every piece of land in this country should be assessed. By 'land' we mean the site alone, not counting any improvements on the site. Thus, the value of any buildings, crops, drainage or anything else which people have put on, or done to, the site would be ignored. Then, after the land has been valued, a tax should be fixed on the basis of that value..."

1. The LLC is not part of the Labour Party and does not dictate official Labour Party policy. That is just Tory propaganda, they thought, we can't criticise Labour's actual proposal (which was very timid) so we'll pretend that LLC's proposal is Labour's proposal and criticise that instead.

2. I am a member of the LLC committee, I help them do their policy proposals and so on and I know perfectly well what they mean. There's no point deliberately misunderstanding them and telling me we that proposed something else.

3. I trust we are agreed that "Two similar houses on the same street with different sized back gardens hardly differ in value." That is simply a true statement of fact.

If you went to the bother of assessing plots individually, then the LVT liabilities on these two houses would also "hardly differ".

Let's apply basic LLC principle to Dinero's hypothetical example of "A terraced house with a strip of garden at the back" vs "next door with no garden." First we would have to find out what the difference in rental value is.

At a guess, the one with the big garden can be rented for £10,000 a year and the one with no garden for £8,000 a year.

Knock off £4,000 bricks and mortar value, the site premium on the first is £6,000 a year and the site premium on the second is £4,000 a year. Whatever rate of LVT you set (nobody said it has to be 100% of assessed value), the LVT on the one with the big back garden would be one-and-a-half times as much as one the one with no garden. Clearly NOT three times as much.

Killer Arguments Against LVT, Not (415)

The Daily Mail does a hatchet job, as expected. The 3% figure is plucked out of the air (they are talking about something the Labour Land Campaign group proposed, Labour's actual manifesto was far more modest than that).

Even if The Daily Mail were right and the tax on an average home were £3,837 instead of just under £1,000 for Council Tax (or £1,000 under Labour's proposed Land Value Tax), so what?

The average motorist pays £1,500 in extra taxes on his car; the average smoker pays £1,500 on tobacco duty and VAT if he buys his smokes in the UK (2012-13 figures, by now it's a lot more); the average drinker pays £1,500 in booze duty and VAT.

I smoke, drive and drink (the last two not at the same time of course), tots up to £4,500 a year. Not to mention being fucked over for about £12,000 a year in VAT. Am I a victim of "Marxism"?
----------------------------------------------
But my favourite KLN is this one:

‘Either you are whacked with massive bills in places where property is dearer – or you’ll suffer a hike for living in a part of the country where there is more space for bigger gardens.’

The "either" bit is an outright lie. He conveniently forgets to complete that sentence by saying "... but of course, most of the majority of households who live in semi-detached houses, terraced houses or flats outside city centres will pay less."
--------------------------------
According to the last available figures from the BBC (2013), the national average prices paid by type of home were as follows:

Detached £329,600
Semi-detached £203,943
Terrace £202,972
Flat £250,101

Seems a little unexpected if you don't understand land/location values. Most people don't want to live in a flat; they only build them in larger cities where the extra convenience makes up for lack of space (and where higher land values mean higher densities etc).

The larger city, the more expensive the land in the inner areas; hence the larger the city the more flats. There are relatively flats in the largest and most expensive city (London) which pushes up the average so the average price paid for a flat is higher than the average price paid for a semi-detached or terraced house.

We therefore see that detached houses (usually in outer suburbs or rural areas) would pay more in LVT (biggest gardens), then people who live in flats (as they have the highest land/location value) and the majority of people who live in truly 'average' homes would pay less.

Even if the tax were 3% of the land value, that means it would cost about £2,400 a year more if you move from a semi-detached house or terraced house to a detached house. If you like having a really big garden, you are clearly prepared to pay £50 a week extra for it. Nobody's going to try and sell off part of their big back garden to save £50 a week.

Job done, move on.

Outbreak of common sense...

... in The Labour Party.

From The Guardian:

Labour will aim to help tens of millions of people who are struggling on lower incomes by cutting the rate of VAT if it wins the general election, the shadow chancellor John McDonnell has told the Observer...

... in a high-stakes move, he went further, saying his priority would be to deliver a “fair tax system” under which income tax rises for the highest earners would be followed by VAT reductions for all, when economic growth allows. Such a reduction, he said, would deliver the greatest proportionate benefits to those on low and middle incomes.

“The concept of fairness is at the heart of everything we do,” the shadow chancellor said. “When it comes to tax it will always be a fair tax policy. And if I can reduce the burden of taxation on middle and low earners I will do it as we grow the economy. I will do it.”

Asked what he had in mind, he added: “I think VAT is a real problem for many people. When we come out of Europe there is more flexibility on VAT, particularly in terms of the lower levels.”

There are statistics comparing the amount of VAT nominally paid by households with a) total income and b) total spending, taken together they show that VAT is a fairly flat tax. From Labour's point of view is A Bad Thing because they like "progressive" taxes. For some reason, lefties think that flat taxes are regressive; they are not, they are flat. Regressive taxes are regressive.

The point about VAT is not that low income people pay too much, but that it significantly reduces economic activity and hence causes business failure and unemployment - VAT is the reason that so many people are on low incomes in the first place.

This is the sort of reaction I expected...

The Sunderland Echo covered a Press Assocation write-up about YPP. It was a bit of a hatchet job and the fox hunting bit was taken completely out of context, but hey, all publicity is good publicity:

From the comments:

Tobster:

That's why the voting age should be raised to 21 or they bring back the property criterion. The latter means that only those who own property and therefore have a stake in society are allowed to vote.

Psychlops:

So as a renter, who couldn't afford to buy property... I'm to be denied a vote?

As a renter I don't have a stake in society?

Gee, thanks...

Schrödinger's Prime Minister

From The Metro:

THERESA MAY said she was too busy ‘talking to voters’ to take part in last night’s TV leaders’ debate... adding that she wanted to talk to the public. She said: ‘He ought to be paying a little more attention to thinking about Brexit negotiations. That’s what I’m doing.’

The third possibility is that was she busy talking to voters (from 8 'til 9 in the evening) while thinking about Brexit negotiations. And presumably you can talk to more voters by knocking on doors for two hours than by appearing on the telly, which is Diane Abbot style maths.

Fun Online Polls: Rhymes; Bank Holidays

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

The word "seam" rhymes with... (choose all that apply)
"Beam" - 43 votes
"Seem" - 29 votes
"Seam" (the word itself) - 27 votes

Total - 46 voters

I am deeply, deeply troubled by that. Clearly "seam" rhymes with "beam" and also "seem". For example:

"Things aren't always what they seem,
It's not a joist; it is a beam"

Is surely a perfectly acceptable rhyme? Three out of 46 think it isn't.

Similarly:

"Things aren't always what they seem,
It's not a zip; it is a seam"

Is also a perfectly acceptable rhyme. Why do over a third disagree?

As to words rhyming with themselves, that is an abhorrence. I challenge the 27 out of 46 who think that "seam" rhymes with "seam" to knock up a half way decent stanza.
---------------------------------------------------------
Here's someone who agrees with The Stigler on the topic of bank holidays:

I’m not a Gradgrind. I don’t want to stop workers seeing daylight. I just think they should choose their own holidays, instead of politicians choosing for them. Today, all UK workers have a right to 28 days’ paid annual holiday. Nobody has an automatic right to paid leave on public holidays, but in many sectors, it is the norm...

Why can’t we choose our own holidays? Why can’t Jews or Muslims take their own holidays instead of Christian ones they don’t recognise? Why should we be funnelled into traffic jams and overcrowded airports? Why can’t we take holidays when the weather’s likely to be better, rather than when politicians dictate?

Workers of the world dis-unite! Denationalise our holidays!

I can't remember exactly what The Stigler's Killer Argument was, but I have to agree. I know what we like clinging to tradition, even if that tradition is everybody is stuck in the same traffic jam on a rainy Money, but surely common sense/liberty should prevail?

Vote here or use the widget in the sidebar.