Saturday, 30 September 2017

Re nationalisation - people aren't as stupid as Legatum make out.

Here's the summary of Legatum's opinion poll:

Commenting on the report, the Legatum Institute’s Matthew Elliott said:

“The findings of our polling are concerning for anyone committed to the principles of free enterprise. Competition entrepreneurship and free trade are all essential to achieving prosperity, not to simply generate profit for businesses, but to extend opportunity to all...

It is clear that those of us who believe passionately in free enterprise need to up our game. We need to redouble our effort in the battle of ideas, because populist thinking has a superficial attraction and we need to better articulate the case for free enterprise, which is the most effective path to prosperity.”

He's missed the point (probably deliberately), as has Jeremy Corbyn (probably supidly) and most other commentators, right or left. The point is that people seem to realise that there is a big difference between monopolies and competitive industries, and are more likely to want to see nationalisation of monopolies. That is not a straight neo-liberal vs socialist thing, it is far more nuanced.

One the second half of the list, there's ship building, food, cars and travel agents, these are competitive industries not monopolies, so only a minority are in favour of nationalisation. I assume 'travel agents' was a trick question to identify the base level of socialist nutters who want to nationalise everything.

Mobile phone companies are very competitive (switching is easy and prices are ever cheaper for ever better services) and they pay for the value of their radio spectrum. We've tried nationalising airlines and it never works, although - unlike mobile phone companies - they do not pay for the value of their landing slot privileges.

Happily, the majority agree with this overall analysis, probably intuitively.

Going down the list of things where a majority is in favour of nationalisation, they are all monopolies in some way...

1. Mains water supply is a natural monopoly, there is simply no point laying parallels set of pipes and drains.

2. Electricity generation can be done perfectly well by private businesses and historically was. It is the national grid which is a natural monopoly, and it only exists because the UK government forced it through in the 1920s and 1930s to hook up all the existing competing electricity generators - thus enabling more competition in the first place.

3. The same sort of logic applies to gas as it does to water or the national grid.

4. People have strong views for or against rail nationalisation, it's not something I'm overly bothered about, suffice to say Transport for London does a great job, it runs the Tube network itself and co-ordinates all the private bus and train companies to provide a pretty seamless service - you can use an Oyster card on just about any mode of transport in Greater London, for example. In most other large towns, public transport is a complete mess.

5. Defence spending is largely a slush fund for a few large manufacturers, it's a heavily subsidised cartel rather than a monopoly.

6. Banking is also a cartel. Banks are brilliant at the day to day stuff, like direct debits, debit cards, online banking and so on, there is no doubt in my mind that if we had only ever had a single, government-run bank it would be really primitive in comparison. So hooray to all that. The problem is that 80% of their lending is mortgages on land so they are behind all the land price/credit bubbles and inevitable land price/credit busts.

'Nationalisation' is only one way of dealing with monopolies and is not always the best. As I said before, there are various ways of dealing with them (items 1 to 6 at the end of that post), you have to decide on a case-by-case basis what to do and try and get the best of both worlds (private provision and public rent collection) in each specific case.

This is not a 'mixed economy' approach, that is far too vague a term, but in an ideal world, the government builds the road network and private businesses make the cars (in a literal sense, but the logic applies to everything else as well). Consider the opposite - driving British Leyland cars on a network of private toll roads...?

Friday, 29 September 2017

President Macron has vaguely good idea - shock

From The Daily Mail:

France needs it's [sic] new lower tax on wealth in order to stem its exodus of millionaires, the country's Prime Minister has warned.

Edouard Philippe defended President Emmanuel Macrons' economic reforms, which have seen thousands take to the street this week, saying they are needed to make France attractive [to] the wealthy again... The annual millionaire's migration report by New World Wealth found that around 10,000 millionaires left France for other countries in 2015...

France's wealth tax currently applies to personal assets of more than 1.3 million euros, but as of Macron's new budget, it will only apply to real estate. Any other forms of wealth, such as shareholdings, will be exempt as of 2018, the government announced this week.

Bravo! An annual recurring 'wealth tax' which only applies to land and buildings is pretty damn' close to Land Value Tax. And a general 'wealth tax' is a stupid idea for various reasons, not least the practicalities of it.

Caveat: it ought to apply to all land and buildings in France, however much or little it is worth, whoever own it and wherever they are tax resident. They can make this look more like a 'wealth tax' by introducing a personal annual exempt allowance for French residents. Admittedly, that is probably against EU law, so residents of other EU member states would also have to get the personal allowance as well. I once did this for real, and the higher charge for a UK resident was waived in the end.

The Disappearing Homes Conundrum

I know that the hard-core Homeys like to play the "disappearing homes" card, but Shelter really ought to know better:

But the evidence, summarised in the table below, suggests that old fashioned controls – setting the rent, not just controlling the increase – would force a significant number of landlords to sell their home, as they could make more money that way.

Now, that might be good for middle earners – a glut of homes suddenly for sale might become available.

But this is where the risk comes in for low earners. They can’t afford to buy and increasingly rely on the private rented sector. As landlords sell up, they would be left with fewer places to live. In the absence of a much larger supply of council and social housing, that risks pushing people into homelessness. This is probably not a gamble worth taking.


The number of homes available to rent will fall and the number of potential tenants will fall by a corresponding amount. Those remaining tenants will have lower incomes, so rents would fall naturally anyway. Logic and real life evidence tells us this.

Funny how the UK had rent controls of one form or another for most of the 20th century, and 'homelessness' (however defined) wasn't as acute as it is now. I refer the approach as Georgism Lite.
UPDATE JB, in the comments: I'm not claiming this has a significant effect, or is what Shelter has in mind; but could it be that some homes disappear when multiple-occupancy homes revert back to owner-occupier homes?

Fair point, and that did cross my mind - if former tenants, now first time buyers, buy a home which is larger than the one they were renting. I'd guess that this likely to be the case - people tend to rent the smallest/cheapest they can manage in, but when you buy, you tend to plan ahead a bit and get somewhere bigger for if/when they have children etc. In this case, the net supply of homes for rent would decrease by more than the fall in the number of tenants. But I'm sure the effect is marginal.

Thursday, 28 September 2017

YPP (London) meet-up, tomorrow Friday 29 September

We'll be at The Brewmaster nr Leicester Square tube station from 5.20 or so onwards - if you think you'll turn up later than 6.30, please get in touch 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.

Killer Arguments Against LVT, Not (423)

Somewhere in this thread (BenJamin' and others on top form!) is the standard fare argument along the following lines:

Under the current system with high taxation of incomes and output and light taxation of land, you at least have the knowledge that once you've paid off the mortgage, then you won't lose your home even if you lose your job.

That's clearly a non-argument in real life:
- it ignores people paying rent or paying off a mortgage, who are expected to pay income tax for the unemployed home-owner;
- it is a dwindingly small number of people;
- it ignore the fact that although that person might be 'safe' in his home, he still has to eat and heat;
- we also have welfare systems that can deal with unemployment (like giving time limited LVT exemptions to people who've lost their job);
- the risk of losing your job is of course much higher under a system that taxes incomes and output;
- and so on.

But let's look at the more fundamental issue.

The point is, when people organise themselves and agree rules of behaviour, there is a Laffer Curve of Liberty, and we ought to organise our rules to maximise liberty (or minimise impositions thereon). With some things, it's a straight line 0% to 100% (like banning drugs or prostitution, that is a straight reduction in some people's liberty without enhancing anybody else's), but usually it is not a straight line from 0% to 100% and there are trade offs.

To give an extreme example, most would agree that banning slavery increases overall liberty; the flip side is that it reduces the liberty of people to own slaves. On a more mundane level, there are speed limits in residential areas, which reduce the liberty of motorists but protect the liberty of pedestrians and residents.

For sure, taxation reduces some people's liberty and increases others' liberty. A net transfer of liberty is a reduction in overall liberty (like transferring liberty from slaves to slave owners). The key is to reduce the net transfer/overall burden as far as possible in total e.g. by spreading it as equitably as possible.

Let's go back to the Faux Libertarians' parable about splitting the restaurant bill. If the total bill is split equally, regardless what anybody ate, that's a Poll Tax* (authoritarian hard right); if we split the bill so that higher earners pay more, regardless of how much they ate, that's income tax (socialist). Both of those encourage over-eating, are objectively unfair and reduce the liberty of those paying for more than the cost of their own meal.

(* Baffles me why so many Homeys think that a Poll Tax is somehow better than LVT. Try substituting Poll Tax for LVT in the original argument: "Under the current system with [a high Poll Tax], you at least have the knowledge that once you've paid off the mortgage, then you won't lose your home even if you lose your job." That's clearly bollocks.)

What's wrong with everybody just paying for their own meal (Georgist)? That's land value tax, and doesn't impose on anybody's liberty. The greedy people will complain that they are worse off than they were under a Poll Tax; the low earners will complain that they are worse off than under income tax. Tough, past wrongs don't justify future wrongs.

It gets worse, of course. With a restaurant, it is the owner and his employees doing the cooking, so they expect to be paid (or else they wouldn't do it), however the bill is split. Land values are created by everybody and nobody, so by default ought to be shared between everybody equally (unlike earned income, which ought be retained by the earners), but under current rules, a minority own most of the land value (Pareto's 80/20 split).

So basically, income tax payers (residents) are paying for the meals to be cooked (obeying common rules and restrictions and thereby creating the land value in the first place) instead of being paid to do so. This does not even entitle them to a meal (land), they have to pay extra (rent or mortgage) if they want some food (somewhere to live).

And land owners (collectively) on the on the other hand are charging people for the cost of the meals, even though they did not provide ingredients or cook them. For sure, most people 'paid for' their land, but that is a transfer between past and present landowners, and is no consolation to the landless (considerably more than half of people alive and most of those not yet born).

This looks like a massive transfer of liberty from the landless to landowners, and as such is a reduction in overall liberty.

Getting back to the topic, that small loss of liberty for a few middle-aged homeowners who've paid off the mortgage and then lose their jobs would be but a drop in the ocean compared to the massive increase in liberty for most other people.

Let's hear it for the donkey!

Says Graeme, who spotted this story:

A peckish donkey caused thousands of euros worth of damage and landed his owner in court after confusing an orange-coloured supercar for a carrot, a German court has heard...

Despite not holding a grudge against the donkey, the businessman is seeking compensation from the donkey owner’s insurer to cover the cost. However, the insurance company have refused to pay out, arguing he should have chosen a better parking spot.

Reminding us that life copies satire. From Newsthump (July 2017):

Local resident Simon Williams told us,”First of all the car is orange. Orange.

“What sort of attention-seeking prick drives around in an orange sports car. I’ll tell you the sort, the sort that is crying out to have the piss taken out of him when he inevitably destroys the thing because he’s a shit driver.

“So we have a prick driving too fast in a bright orange car that costs more than a first home and we’re surprised that public sympathy for his predicament is non-existent. Yeah, I’ve got to be honest, I’m not all that sympathetic.

Wednesday, 27 September 2017

Fun Online Polls: Central heating; Crash for cash

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

Have you turned on the central heating yet?

Yes - 46%
Not yet - 45%
We don't have central heating - 9%

Thanks to all 87 who took part. Looks like we are exactly on the cusp of than half of us having turned it on (to the extent that we have central heating).

JQ: Can't vote because there is no "no" or "other please specify". I do have central heating but "Not yet" implies that I will turn it on. I probably won't unless the winter is exceptionally cold. I didn't turn it on last year at all.

I'd count that as a "not yet" myself. But well done for making it through last winter unaided!
Mr Yan: Next poll should be on this -

"We don't know the exact reason Birmingham features so heavily in these surveys,"

I think a poll on what factor causes this in Birmingham, Bradford, London and Oldham would be illuminating.

The same question occurred to me when I saw the article. Full list from here.

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

Certain parts of Birmingham, Bradford, Manchester and Oldham topped the league for Crash for Cash. Do these areas have anything else in common?

Vote here or use the widget in the sidebar.

Sunday, 24 September 2017

'My little China Girl, she run my assembly plant.... She rule the world'

I found this article linked to Ralph Musgrave's blog. It is certainly a very striking example of capitalism from China.Tim Worstall explains that:
One academic survey found more than 80 per cent of Chinese “elites” (those with income at least 12 times higher than the average in their area) are descended from the pre-1949 elite.

I do not dispute the findings and to his credit Worstall does not descend into arguments about a 'capitalist gene' or such silliness. And I am certainly open to the idea of 'family' as the basic unit in capitalism and capitalist reproduction rather than the individual. I think Schumpeter went down this route in arguing about the families that mattered in the USA. But I wonder if the data actually demonstrates what the author concludes in such a clear cut manner?

Anyway, in other news, despite the horrific war, the total destruction of the country and its industry, the Nuremberg trials, occupation of the country by the allied victors, and a new democratic political order, the 1,000 families who ran German industry during the 1930s and 40s, were back running them all again by 1955. I know, not as impressive as the example above, but the Swiss border and Hong Kong (and their banks) have a lot in common perhaps?

Daily Mail on top form

From The Daily Mail:

*Anthea Turner could be raided by bailiffs after failing to settle a debt claim

*She is being sued by company executive Amanda Cavill de Zaveley

*The case revolves around more than £5,000 in missed rent payments

*They were racked up by Miss Turner's sister Wendy Turner Webster when she was living in Mrs Cavill de Zaveley’s £850,000 home in West London

Saturday, 23 September 2017

Steve Keen on top form.

Spotted by Lola at Open Democracy:

For a while, this bargain felt win-win for both sides: as the Bank of England recently acknowledged, bank lending creates money at the same time as it creates debt (McLeay, Radia et al. 2014). This money is then spent, either to buy assets, or goods and services. It therefore adds to total demand, and to incomes and capital gains. So, as banks created “money from nothing”, and the UK private sector spent that money that it got for doing nothing, prosperity seemed to abound… [statement 1]

But you can’t have very high levels of credit-based demand without the corollary of an ever-increasing level of debt relative to income. More and more of income is required to service this debt, cutting into spending on goods and services. The turnover of existing money slows down, reducing aggregate demand from actual work [statement 2], while increasing the dependence on credit.

Don't statements 1 and 2 contradict each other? Either credit/debt increases GDP or it reduces it.

As a matter of fact, in the real world it does neither to any great degree.

1. Most of the (increase in) debt is mortgages, which is just an alternative to paying rent. The inevitable transfer of spending power from tenant/borrower to landlord/depositor is pretty much unchanged. This is A Bad Thing either way.

2. A small part of (the increase in) overall household debts (maybe one-eighth?) is credit cards and personal loans used for buying other stuff. This merely brings forward spending a few months or years. Somebody who wants a new car can save up for a few years or he can buy one on HP, take out finance lease, personal contract payment etc (these are all pretty much the same in economic terms). But that person will probably never own more then one car at any one time. Most of that net-extra spending is in the past - the bloke who bought a car on HP two or three years ago is spending less of his current income on other stuff because he is still paying off the HP instalments.

3. It all averages out anyway, yes, increasing levels of debt seem to go hand in hand with extra GDP, until the credit bubble pops, and then we lose GDP. Chances are, the overall long term trend would be much the same if mortgages and house prices were capped somehow (although that would be a good thing in and of itself).

Clearly, Keen's overall point that the whole economy has been hijacked by the banks is correct, he's just very vague on the details.

Friday, 22 September 2017

Daily Mail on top form

Haunting video shows tragic French nanny, 21, giggling with son of Boyzone founder months before her burned body was discovered at £1m home as boy's mother is charged with her murder

"Uber London loses licence to operate"

Same old, same old, one bunch of monopolists fighting another.

I use public transport in London (which is excellent and far faster than cabs), so I'm not too bothered, but on behalf of all the people who like using Uber (and all the drivers who have registered with them) I hope that Uber can bounce back from this - like they always seem to do.

The interesting bit in the original version of the article (since removed) was a reference to TfL's recent changes to licensing fees.

TfL explain here:

The Capital's private hire industry has grown dramatically, from 65,000 licensed drivers in 2013/14, to more than 116,000 today. The number of vehicles has increased from 50,000 to 88,000 over the same period. With this growth, there has been a substantial increase in the cost of ensuring private hire operators fulfil their licensing obligations and in tackling illegal activity to keep passengers safe...

The total projected cost for licensing, enforcement and compliance for the taxi and private hire trades over the next five years is £209m. The law allows the recovery of costs incurred for licensing, regulatory and enforcement activity through the licence fee process. All money generated through the process has to be spent on such activity...

Previously a 'small' operator, with no more than two vehicles, would pay £1,488 and a 'standard' operator - those with more than two vehicles, regardless of the size of its fleet - would pay £2,826 for a licence lasting five years.

The new fee structure, approved by the TfL Finance Committee, will replace the existing two 'tiers' with eight; with charges ranging from around £2,000 for a five year licence for those with 10 vehicles or fewer, to £464,000 per year for the largest operator. This would ensure the licence fee structure for private hire operators reflects the costs of compliance activity according to the scale of each operator.

Point 1. How inefficient is TfL? They've got to do about 204,000 checks a year (total drivers plus cars). £209 million ÷ by 5 years ÷ 204,000 checks = £200 per check. How long can it take to check that a car has MOT, is taxed and insured? How long can it take to do check that a driver doesn't have a criminal conviction for a violent offence (about the only thing that can possibly be relevant)? How does that cost £200 a pop?

Point 2. What sort of maniac designed the charges to be a barrier to entry like that? A small operator pays a considerably higher fee per driver/per car than a large one. It's not quite as extreme under the new system as the old system, but what's wrong with a flat charge per car or per driver?

Point 3. If TfL wants money from taxi drivers, how about imposing a charge to reflect all the privileges they get, like parking in front of stations and being able to use bus lanes?

Final point, and I've no hard evidence for this, but I've noticed that if you see a London taxi going at full tilt, it is usually empty; if you see one dawdling along, it is usually carrying passengers. Could this be because they can charge for time spent (in addition to charging for distance)? They've every incentive to behave like this i.e. provide a poorer service.

"Why a consumption tax may not make any sense at all"

A splendid article, spotted by BenJamin' in the Nigerian Government & Business Journal (but equally applicable to all countries):

The devil in the (accounting) details – and the economic effects: You often hear calls out there — mostly from Right economists but also from some on the Left — for a consumption tax in the U.S. As presented, it’s a super-simple idea: tally your income, subtract your saving, and what’s left is your consumption. You pay taxes on that.

We want to encourage thrifty saving and discourage profligate consumption, so what’s not to like?


Worth a read in full. No point trying to summarise but he points out that the measurement, administration and enforcement will be a nightmare; "the empirics over many decades bear that out: higher saving rates have pretty much nothing to do with investment rates"* and finishes off by explaining why such taxes (for example VAT) are a huge drag on the real economy.

When people promote this idea I always try to make the very same points but they are just brushed aside.

* As I have explained before, household "saving" and business "investment" are two more or less completely different things, one has very little to do with the other.

Daily Mail on top form

Pop star's ex-girlfriend, 34, is held on suspicion of killing 21-year-old French au pair and 'burning her body in garden of £1m Edwardian home'

Thursday, 21 September 2017

We did basic logic at school.

Me, a few days ago:

Rather counter-intuitively, government issued 'money' does not require any asset-backing whatsoever, all the government needs is a system of whereby people HAVE TO hand those notes back to the government which effectively 'unprints' them again. The mistake that the Weimar Republic et al made was not taxing enough.

There followed a lively discussion where people desperately tried to disprove this truism by giving examples of lots of other things that are used as money.

Bayard finished with this supposed killer counter-argument:

For a currency to have value, it simply has to be generally accepted for the payment of debts.


The government doesn't have to be involved.


There are loads of examples of this: cowrie shells, cigarettes, Maria Theresa dollars, LETS, C18th private currencies, the ones previously mentioned, etc etc.

Correct. But so what?

We did basic logic at school, as well as Venn diagrams. I remember the teacher saying things like "Milk is a drink. But not all drinks are milk. And milk isn't always used for drinking."

In other words, you can't disprove that milk is a drink by saying that whiskey is a drink. And just because people drink milk doesn't mean it can't be used for other things (like making other dairy products).

So let's go back to Bayard's argument part 1:

For a currency to have value, it simply has to be generally accepted for the payment of debts.

Government printed money (be it paper or electronic) has value because it can be used for payment of tax debts. This is why it has value, which is exactly what I said. Those other things are also used as money for various reasons entirely irrelevant to the discussion.

Take a Bond Bug, they are truly shit cars, but you have to pay about £8,000 for one in good nick. Or you could buy a brand new one of these for about £8,000.

So we have two "cars", both worth about £8,000. The Bond Bug has scarcity/sentimental/novelty value. The other has four seats, airbags and a decent stereo. Same basic thing, same value/price, but for totally different reasons. You can't disprove that Bond Bugs sell for about £8,000 by comparing them with a brand new Kia Picanto or vice versa.

Wednesday, 20 September 2017

"We didn't waste all our money on mobile 'phones. We rolled up our sleeves and paid off the mortgage."

From the Resolution Foundation report, emailed in by OnTheOtherHand:

Crucially, we show how barriers to entry have increased dramatically, not least from rising house prices: with the average young family today having to save for 19 years to accumulate enough for a typical deposit compared to just 3 years a generation ago, it is small wonder that home ownership rates have tumbled...

On average millennials spend 23 per cent of their income on housing compared to the 17 per cent baby boomers spent at the same age, and the 8 per cent of the silent generation [those born between 1926 and 1945].

The dig about mobile 'phones is stupid anyway. They keep inventing new stuff and making stuff cheaper, and people keep spending money on what's now available/affordable. From our grandparents or great-grandparents' point of view, the generations after them "wasted" their money on televisions, washing machines, fridges, cars, holidays abroad etc.

Tuesday, 19 September 2017

Another one of those "cow attacks dog-walker" incidents

From Cornwall Live:

A mum-of-two said she thought she was going to die as a cow charged at and then repeatedly stamped on her.

Sharyn Partridge is now urging people to be on their guard after she was “battered” by the animal in Clearbrook, near Yelverton, on Saturday afternoon. Sharyn was left with significant bruising and said that a stranger called Dave, who scared the animal away when he pulled up in his van, saved her life..

And what triggered the attack..?

Tesco worker Miss Partridge, from Barne Barton, was returning to her car after taking her 12-year-old Jack Russell Suki for a walk when the drama unfolded...

“On the other side of the road I could see this black and white cow and a baby black cow coming up. They were trailing behind the others. She was making a noise and then a brown cow turned up. She was obviously calling the other cows. I thought I should just stand still with the dog.”

A few seconds later, the cow charged towards the helpless mum...

Monday, 18 September 2017

Daily Mail on top form

From The Daily Mail:

Man, 25, charged with murder after brutally stabbing his MOTHER, 50, to death in supermodel Gemma Ward's Sydney house - as police investigate whether Ice was involved
* Lanell Latta's body was discovered at a home on Sydney's Northern Beaches
* Police were called to the home owned by supermodel Gemma Ward at 10.45am
* Neighbours of the woman recall hearing screams coming from the house
* Ms Latta's son, Joel Woszatka, 25, was arrested by police in a nearby street
* He has been charged with his mother's murder and assault causing bodily harm
* Home was purchased by Ms Ward for $1.6m last year and has been rented out

Fun Online Polls: Man-made climate change & Have you turned on the central heating yet?

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

Are this year's strong hurricanes and Indian monsoon evidence of man-made climate change?

Yes - 10%
No - 90%

Thanks to all 114 who took part and 8 who re-Tweeted. I'm with the majority on this. It'd be bloody embarrassing if it turned out to be true.

Rapscallion in the comments linked to this fine article.
Sticking with the weather, the Daily Mash republished their article on central heating, as it seems to do this time every year*.

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

"Have you turned on the central heating yet?"

Vote here or use the widget in the sidebar.

* One recurring article we haven't seen this year is Ryanair switching to its winter schedule and blaming the reduction in the number of flights on high airport taxes. They've got themselves in to a whole different mess this year.

Sunday, 17 September 2017

Hard Cheese

More from Project Fear here: now it's cheese that is threatened by Brexit.

...the British Retail Consortium ... has just issued a report warning that, whatever the settlement, food shortages should be expected, and prices will rise across the board. Little wonder: four fifths of food imported to UK shops comes from Europe. There's good reason to believe that cheese will be a chief casualty during Brexit

Well, it's over a year since the pound plummeted after the Brexit vote, so any cost increases due to that should already have happened. In any case, the weaker pound should help our exports, but no, there can be no advantages to Brexit, when you are part of Project Fear.

But if exports have seen short-term benefits owing to a weaker pound, says buyer Bronwen Percival, this won’t last.

In fact, the true culprit is not Brexit at all. As the strapline points out, "Amid ongoing uncertainty, London’s cheesemongers fear the worst", the problem lies in the increasingly botched implementation of it. However "incompetent politicians make life hard for small businesses" is hardly news, is it?

Friday, 15 September 2017

"A short distance away"

From The Guardian:

The discrepancy was condemned by the Booksellers Association’s Giles Clifton, head of corporate affairs. “The BA has already highlighted the unequal treatment meted out by the business-rates system to British booksellers, the staggering 17 times differential between what the Waterstones on Bedford High Street pays in comparison with the Amazon business unit a short distance away,” said Clifton.

A short distance away?

Waterstone's have got a prime site in the middle of the shopping district in Bedford. The nearest Amazon warehouse I can find is five miles out of town in the middle of some fields, near Junction 13 of the M1 (rather conveniently). In location value terms, those are opposite ends of the spectrum.

On a per square foot basis, we'd expect the ratio to be something like 17 to 1, ergo the Business Rates should be about 17 times as much. (If he means that the total rates for the bookshop is 17 times as much as the total rates for Amazon's huge warehouse, then that is slightly more worrying).

Of course, if Waterstone's in Bedford thought that they could sell more profit by relocating to a large warehouse near Junction 13 of the M1, they'd do it. Fact is they can't, that's why they are where they are. They make more money by simply being where they are, and that extra money is what the Business Rates is a tax on (albeit in a very crude fashion).

This bit is a hoot as well:

CEBR director Oliver Hogan said that bricks-and-mortar bookshops had a range of advantages that Amazon did not offer, from involvement “with more reluctant readers, helping them to find books they might enjoy”, to the events they put on and the “physical interface” that “can trigger different and unpredictable exploration of themes and topics beyond what was intended”.

No disrespect to bookshops and the people who work there, but you stumble across a load more random stuff by mucking about on the internet than by browsing in a bookshop.

Thursday, 14 September 2017

YPP (London) meet-up, tomorrow Friday 15 September

We'll be at The Brewmaster nr Leicester Square tube station from 5.20 or so onwards - if you think you'll turn up later than 6.30, please get in touch 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.

Reader's Letter Of The Day

From today's Evening Standard:

You have recently highlighted the issue of 'modern slavery' but this is only the tip of the iceberg.

In economic and historic terms, a slave owner is usually a landowner who takes the bulk of the value which slaves create, leaving them just enough to live on. In those terms, there are tens of millions of economic slaves in this country - all those whose rent or mortgage bills leaves them just enough to live on.

Although nominally free, if tenants or mortgage borrowers move to a higher wage area to get a better paying job, they will find that the bulk of their extra wages is taken in higher rents or mortgage repayments. So landlords and banks act are scarcely better than slave owners - they contribute nothing to the process of wealth creation but collect a large chunk of it anyway.

Mark Wadsworth
Young People's Party

Read it and weep

From The Daily Mail:

Last orders for the traditional boozer? A third of British pubs have now closed since the 1970s thanks to rising business rates and beer taxes...

Yes, it is very sad, but it was the smoking ban wot dunnit, as a pub landlord tries to explain in the comments (and is roundly shouted down).

It's not the beer duty (42p per pint) it is the VAT - one-sixth of the average price of pint £3.60 is 60p. That's more than the beer duty FFS. If a pint of canned in the supermarket costs £1, the beer duty is also 42p but the VAT is only 17p. That's what makes the difference.

It's not the business rates either, here's some total fuckwittery from The Daily Star:

A massive 19% rise in business rates is set to hit 17,000 pubs across the UK – forcing them to whack a 5p price rise on each beer.

A pub can't pass on a property tax or rent anyway but what are the numbers..?

From The British Beer & Pub Association:

Pubs and bars pay 2.8 per cent of total business rates, yet account for just 0.5 per cent of total business turnover.

OK, that means about £800 million in Business Rates each year. But what's their total turnover..? The Morning Advertiser says it's £22 billion.

So the 0.5% is complete shite, multiply £22 billion by 200 and that means UK "total business turnover" is £4.4 trillion, two or three times total GDP.

Divide £800 million rates by £22 billion turnover, that's 3.6% of turnover, about 13p per pint. A quarter of the VAT and one third of the beer duty. Pretty much naff all in other words.

If Rates bills increase by 19% (no reason to assume this is true, but let's run with it), that means 2.5p more per pint, not 5p. But nice try.

As ever, you wonder, are these people corrupt or stupid? At least Tim Martin bangs on about VAT and troubles himself less with beer duty and Business Rates.

Wednesday, 13 September 2017

"Pay outpaces house prices in many areas". Or not, as the case may be

From the BBC:

More than half of Britain has seen wages rise faster than house prices in the last 10 years, research by a mortgage lender has suggested...

"While some northern cities, such as Manchester, are less affordable than they were in 2007, in much of the north of England, Scotland and Wales, the gap between earnings and house prices is around a third of the average for London..."

In Scotland, wages rose faster - with the current house price five times the size of typical average earnings in Scotland, compared with 6.2 times in 2007. The same was true in Wales where the ratio has changed from 6.9 times earnings in 2007 to 5.7 times now.

This looks like good news for most of the country if you look at it this way round. Actually it's nothing of the sort.

You have to understand the Law(s) of Rent. The amount that people are prepared to pay in rent is their net wages minus the basic cost of living. The basic cost of living is the same everywhere in the country, but (average) wages differ markedly. The amount people are prepared to pay in mortgage repayments is broadly similar to local rents; you just multiply the rent by thirty-two (the inverse of just under 3% interest rates).

Let's take a baseline of net wages = £20,000, basic cost of living = £15,000, so rent is £5,000. Houses cost 32 x £5,000 = £160,000 = a price-earnings ratio of 8, which the article says is typical for England.

In London (upper extreme) average net wages are £35,000, living costs are the same so rent is £20,000. Times that by 32, houses cost £640,000, a ratio of 18 (like it says in the article).

That's why Scotland and Wales are more 'affordable'. Stick net wages of £17,800 for Scotland into the formula and hey presto, the ratio comes out at 5.0.

Further, the main reason why Scotland and Wales have become more 'affordable' since 2007 is because the basic cost of living has increased faster than net wages in those areas, so the amount going to rent has also fallen, ditto house prices and hence the ratio. That's not good news, it's bad news (especially for landlords, but that's another topic).

"It's different this time"

From City AM:

British banking is an “accident waiting to happen”, according to a new report from think tank the Adam Smith Institute marking the 10-year anniversary of the Northern Rock crash.

Today’s paper, authored by Durham University finance and economics professor Kevin Dowd, also claims the Bank of England’s stress tests are “seriously flawed” and that banks are still too highly leveraged...

“It is disturbing that 10 years on from Northern Rock, the best measures of leverage – those based on market values – indicate that UK banks are even more leveraged than they were then. The biggest risk facing the UK banking system now is the Bank of England’s own complacency...”

The findings of the report have drawn criticism from a number of figures, including Jayne-Anne Gadhia, chief executive of Virgin Money, which now owns the “good” assets of Northern Rock.

“My experience, and the objective data, say to me that the interventions that have been made since Northern Rock crashed mean that a crash of that type, in my view, could not happen again,” she told City A.M.


There's a credit crunch/land price bust every eighteen years, no amount of banking regulation will prevent that, you've got to change the tax system (or adopt other measures to depress land prices).

Even if that were fixed, banks are run by criminals. There's another scandal every couple of years. There's a good list here. Libor fixing, PPI mis-selling, totally unnecessary interest rate swaps, money laundering/assisting with tax evasion, and rigging exchange rates. Not to mention the usual background insider trading, market rigging, overcharging etc. And that's just UK banks. I once found a longer list going back decades and all of it seemed rather familiar.

Tuesday, 12 September 2017

Cattle news

From The Daily Mail:

This is the bizarre moment a herd of forty cows came charging through a Cheshire village.

The marauding cattle stampeded through Bollington near Macclesfield around 9am last Sunday morning, destroying flowerbeds and soiling driveways. Villager Janis Wilson, 61, took photos of the animals filling her street after hearing 'mooing' outside [etc etc].

I don't think two cows can copulate, as that requires a bull and a cow, but details, details.

Sadly, they have corrected the typo which you can still see in the url and they do not mention what the house prices on that street are, but hey.

Nice turn of phrase

From yesterday's Evening Standard:

So began the conversation — me stretching out my German, him rallying back in perfect English, in a Berlin bar last week at midnight, with the windows steamed up and people inside smoking like it was coming back into fashion.

Monday, 11 September 2017

Fun Online Polls: Student immigration numbers, hurricanes and man-made climate change.

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

Should students from overseas be included in the UK's maximum immigration target?

Yes - 58%
No - 21%
We shouldn't have a maximum immigration target - 8%
I'm heartily indifferent to the whole topic - 12%
Other, please specify - 2%

That answers that question, I suppose. But as the official target is a made-up number which the UK government cannot achieve and has no intention of achieving anyway (it's an 'aspiration' rather than a 'target) and the net number of overseas students who overstay is apparently quiet small, I don't suppose it matters.
It's hurricane season again. It's been pretty bad this year in the Caribbean/Gulf of Mexico and this year's monsoon was pretty hefty in India.

I'm pleasantly surprised to see that many (possibly most) BBC articles or news bulletins don't contain the solemn statement that the severity of hurricanes has increased because of man-made climate change.

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

Are this year's strong hurricanes and Indian monsoon evidence of man-made climate change?

Vote here or use the widget in the sidebar.

Economic Myths: The BBC's brief history of paper money

It's all fine and dandy until this bit:

But the government soon moved stealthily to a fiat system, maintaining the principle but abandoning the practice of redeeming jiaozi for metal. Bring an old jiaozi in to the government treasury to be redeemed, and you would receive a crisp new jiaozi.

That was a very modern step. The money we use today all over the world is created by central banks and it's backed by nothing in particular except the promises to replace old notes with fresh ones.


Rather counter-intuitively, government issued 'money' does not require any asset-backing whatsoever, all the government needs is a system of whereby people HAVE TO hand those notes back to the government which effectively 'unprints' them again. The mistake that the Weimar Republic et al made was not taxing enough.

This is most easily explained with rationing vouchers. The vouchers had virtually zero cost of production to the government, were handed out as a kind of universal welfare entitlement and people HAD TO hand them over when they bought food or petrol. The government played little or no part in supplying food or petrol so they were not 'asset backed'.

Some people did not use all their vouchers and other people wanted to buy more food or petrol than their official ration, so would pay for them. That's where the value comes from.

On the day rationing was abolished, all the spare vouchers people had accumulated became worthless. Similarly, if the government had printed far more vouchers than there was food or petrol available, the vouchers would have significantly fallen in value.

It's the same with governments printing money (or its electronic equivalent). For every 'real £' of value you create, collect or spend, the government demands that you also pay X% of that value in 'government £' to the government.

Everybody needs to earn (by producing or collecting rent) and to consume goods and services. So you HAVE TO somehow obtain the permission slips to do in 'government £' from the government (or from beneficiaries of government spending). That's what gives them their value.

So the real economy works backwards from the answer and for convenience, denominates its transactions in whatever the national currency is. It wouldn't matter what 'currency' is used in the real economy (like BitCoin), the government simply converts your BitCoin earnings/spending to its 'government £' equivalent and charges you tax accordingly.

The thought experiment works just as well with any tax, including Land Value Tax. It's basic Modern Monetary Theory.

Sunday, 10 September 2017

Idiotic attention seeking of the week

From The Evening Standard:

With London’s population set to explode over the next decade, the Evening Standard and agri-science firm Syngenta are investigating the potential impact — and how innovation in farming could help reduce it.

Extra farmland more than one and a half times the size of London will have to be cultivated to grow the food needed for the capital’s booming population by 2031, according to new analysis... On current trends, over the next quarter of a century an area of fields three times the size of Camden will have to be cultivated with wheat. Land the size of Lewisham will be required for the extra potatoes consumed by Londoners, the research reveals.

Gary Mills-Thomas, Syngenta’s UK and Ireland head, said: “We are extremely excited about this unique opportunity to raise awareness on the facts and figures behind food production and the vital role played by modern farming in ensuring the required food supplies in our societies. Also this event is giving us the opportunity to listen and take on board the opinions and concerns of the general public on these matters.

“At Syngenta we believe that an open and constructive relationship with society will strengthen our commitment to continuously invest in research and innovation in order to provide farmers with advanced solutions for a sustainable quality food production.”

The argument was challenged by Peter Melchett, policy director at the Soil Association, who said: “What Syngenta fails to mention is that we are required by UK law to cut greenhouse emissions from food and farming by 80 per cent by 2050. Scientists agree that the only way we can achieve this, and feed everyone a healthy diet by 2050, is to adopt agro-ecological farming systems such as organic, review diets, and do without most or all manufactured fertilisers."

Do either of them really expect anybody to take them seriously?

It is people how eat food, and they eat much the same amount of food wherever they live. If more people live in London then there will be fewer people living elsewhere, total amount of food consumed unchanged, it is a complete non-problem.

So Syngenta are just lobbying for permission to peddle their wares, as is the Soil Association, who appear to want to impose a system which will produce less food. Hooray for looking after the environment and so on, but if their way really were more productive, then farmers would be doing it anyway.

Saturday, 9 September 2017

It's that myth again

Nick Hubble, who generally has the right idea about a lot of things, contradicts himself here.

"Prices are controlled by supply and demand. But over time they tend to converge towards the cost of production, plus a small return. Otherwise profits of sellers are too high and competitors muscle in with lower prices. But housing is not like other goods."

So far so good, but

"Government controls both the supply and the demand. At least in the UK it does. Here in the UK, restrictions are enormous. Supply and demand can’t respond to prices. On the supply side you have government with its control over the supply of land and building types. The green belt around London is responsible for much of the unaffordability there. On the demand side you have the central bank fiddling with the cost of borrowing. And everyone needs to borrow to buy a house. Consequently, between the two, the housing market is in the grip of the government entirely."

OK, but given that planning policy hasn't really changed since the Town and Country Planning Act of 1947, how does Nick reconcile that with

"Being right is one thing, but timing is another, says Akhil Patel. He sees house prices as a purely cyclical phenomenon. In fact, both house prices and stockmarket prices are driven by the same cycle – the land price cycle. Understand that and you can predict everything. This current upswing is far from done according to Akhil at Cycles, Trends and Forecasts."

Akhil then steps up to the plate with

"If land is not made available for housing via the planning system then this restricts availability of sites and their price goes up. This feeds on itself because current owners of sites can hold them back in anticipation of further increases in the future."

but then goes on to say

"Economies exhibit a very regular pattern of boom and bust and this goes back to the late 18th century in the UK/US. This cycle is fundamentally driven by speculation in land, fuelled by bank-created credit (money).

Why speculation in land? Land captures all of the gain of economic development (law of economic rent – well understood by all of the classical economists like James Mill, Adam Smith and David Ricardo. It’s been lost to modern economics. But the law of economic rent is to economics what the law of gravity is to physics. This law makes land a unique vehicle for speculation (and collateral). The boom takes land prices unsustainably high, businesses and households get squeezed, and the whole thing comes crashing down, bringing the banking system with it. The rhythm is an average of 18 years and has surprisingly little variation."

If house prices are controlled by the supply of building land, then you expect the supply of building land to follow the same 18 year cycle, for which there is no evidence, indeed the reverse is true: the higher the price of building land, the keener people are to go to the bother of getting permission to build. Akhil Patel gives as neat a summary of the 18-year cycle as you could hope to read. Why then do he and Nick Hubble insist on trotting out the supply/ demand myth? It's almost as if it's an unquestionable article of faith something that just is, like the laws of thermodynamics.

Hurricanes used to arrive in alphabetical order...

Glorious bit of misreporting by The Daily Mail

They've really come up trumps this time:

Wetherspoons is set to slash prices on all of its food and drink for one day only in a bid to convince the Government to lower booze taxes. The pub chain is well known for its cheap pints but it is knocking off a further 7.5 per cent as part of the protest.

It is one of thousands of businesses across Britain supporting Tax Equality Day on Wednesday September 20th.

Under UK law pubs and restaurants are forced to charge 20 per cent VAT on food and drink - but supermarkets do not have to do the same. This allows Tesco and its rivals to sell alcohol at a much lower price, encouraging drinkers to stay at home to socialise with friends rather than go out.

Tim Martin is an astute bloke, and realised long ago that it's not booze duty that puts pubs/restaurants at a price disadvantage to supermarkets (because booze duty applies at the same rate per pint whether it is sold in pubs or supermarkets).

It is the VAT which really hurts pubs/restaurants, which being ad valorem, adds far more to the price of a pint in the pub (about as much again as booze duty) as it does to the price of supermarket booze.

VAT is also slapped on everything, i.e. all the food and soft drinks they sell (food in the supermarket is VAT zero-rated, not sure about soft drinks but the ad valorem point applies here too). I think this is one of the reasons he supported Leave - VAT is imposed by the EU.

For some reason The Mail assumes that supermarkets do not have to charge VAT on booze, which is addle pated nonsense of course, thus completely messing up the point which Tim Martin is trying to make.

Duncan does Car-Owner-Ism

By @duncanstott:

We could plan cars in the same way we plan houses. Roads are congested, so let's have a planning system to control the number of new cars.

Government would do an objectively assessed car need to set the maximum number of cars that should be built for the next fifteen years. Sadly it's hard to predict what the future holds, so it's likely that the government gets its objectively assessed car need wrong.

Now car builders no longer build as many cars as it can sell - it maximises the value of its car building permits by slowing production. A car shortage slowly emerges. The price of cars no longer depreciate with age. Instead the scarcity value of a car dominates its price.

The car loan industry does well from this. The scarcity value of cars they secure lending against means they offer bigger loans to buyers.

The majority of households are car owners, but the rising price of cars means younger people are really struggling to get on the car ladder. The government recognises more needs to be done to help young car buyers. So they launch a scheme called 'Help To Buy'.

Some older car owners can't understand why young people complain so much, because they managed car ownership through hard work and saving. But car owners also lobby against more new car permits being issued, because it will surely increase congestion [and hit their car value].

Meanwhile left-wing economists point out that plenty of car seats are left empty most of the day, so there isn't really a car shortage. 

What we really need is a quota of new car permits to be 'Affordable Cars', where cars are rented out at 80% of the market rate. No that's not radical enough. What we really need is for councils to be building low cost cars for socially deprived groups.

Anyway, back to the main car market. The most expensive cars are the best built old cars, which also have a vintage beauty. Everybody loves how there are still all these quaint vintage cars around, unlike the modern rubbish the car builders churn out these days.

Maybe if car builders were to build beautiful cars like they used to, there'd be more approval for more new car permits being issued?

Meanwhile, a period of low interest rates has made car loans more affordable, but this new debt sent car prices soaring. Unscrupulous lenders handed out car loans to families who couldn't really afford it, then repackaged the debt for the derivatives market.

Great minds think alike.

Friday, 8 September 2017

So is this a gigantic ponzi scheme or am I being cynical and simplistic?

Blockchain data storage network Filecoin has officially completed its initial coin offering (ICO), raising more than $257 million over a month of activity.  Filecoin's ICO, which began on August 10, quickly garnered millions in investment via CoinList, a joint project between Filecoin developer Protocol Labs and startup investment platform AngelList. That launch day was notable both for the large influx of purchases of Simple Agreements for Future Tokens, or SAFTs (effectively claims on tokens once the Filecoin network goes live).
As I understand it, an ICO is where people pledge actual money and established cryptocurrencies like bitcoins for new, non-established cryptocurrencies or 'tokens' as they are sometimes called.  I'm told bitcoins can still actually be exchanged for cash, but I've never knowingly met anyone who has successfully done so.  One can buy and sell (but not sell short) these cryptocurrencies on unregulated exchanges like Bittrex, here's a screenshot:
There are about a couple of hundred cryptocurrencies / tokens one can trade / swap with likeminded counterparties now.  All the little ones can be traded like an fx pair against the more established bitcoin or ethereum.  If you would rather trade against the dollar you can, well kind of.  You see you can trade against the US Dollar Tether, here's the screen shot:
Tether is a cryptocurrency that is pegged to the US dollar, except the peg isn't actually guaranteed.  Tether Limited (based in Hong Kong) do guarantee that 'tethers' will be backed by an equal amount of US dollars, but they don't guarantee to exchange them for you should you want to 'cash out'.  Presumably the Hong Kong regulators keep a close eye on the activities of this unregulated firm trading predominately in the USA.  Bittrex appear to insist you play their markets using only cryptocurrencies, including the tether.
So it's kind of like a computer game then?  Users deposit their dollars or euros or yen, change it into their chosen token, then try to swap their tokens with other users with the aim of increasing the number of dollars (or tethers or bitcoins) in their account.  You can even remove your tokens and buy into an ICO with them.  As nobody can go short (and a few people who invented these cryptocurrencies or got in early have the bulk of chips) there really is no limit on how high the prices can get.  Even if a bitcoin is worth a million dollars, grotty students in their pjs can still buy in for ten bucks and receive 0.00001BTC.  It's just numbers on a screen that the players are bidding higher and higher.  Online Texas Hold-em is so last decade!
I think the price of a bitcoin - or any of these other cryptocurrencies - could very well go to a million dollars.  After all, it's just a closed system of folk (and 97% men apparently) trading imaginary tokens with one other and they all want the reference prices to increase.  I reckon as long as more actual money is flowing into cryptospace (and into that bank account in Hong Kong and into these ICO's) than out, the prices of bitcoin and other cryptocurrencies will continue to rise and increasingly the participants will become paper rich.  But what happens when a significant proportion of them become millionaires and can retire aged 24 or just rich enough to want to cash out some and buy a car or a house?  
Is this is an over-simplistic analysis?  Is it really cynical of me to suspect that the people on the other side of this trade (the people swapping the tokens for actual dollars and euros and yen) will decide they'd rather hang onto the cold hard cash thank you very much and switch off their exchanges?  The only alternative explanation I can see is that a massive revolution really is happening where so many people will change all their cash into bitcoins and refuse to take part in the consumer economy until the politicians, bankers and shops have no choice but to start accepting them?  Have I missed something?

Thursday, 7 September 2017

YPP (London) meet-up, tomorrow Friday 8 September

We'll be at The Brewmaster nr Leicester Square tube station from 5.20 or so onwards - if you think you'll turn up later than 6.30, please get in touch 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.

Fantastic* article

Spotted by Peter Smith (via FB) in What Mortgage:

Even tenants think the buy-to-let crackdown will reduce housing supply

Do they? All of them..?

One in five renters believes that the removal of mortgage interest tax relief on buy-to-let homes will reduce the supply of rented properties in their area...

Ah right, a small minority of them. Given the amount of propaganda hurled at them, that's a reassuringly low figure.

The research, commissioned by GoCompare Mortgages, also revealed that some tenants were concerned that they will face rent hikes as buy-to-let landlords pass on the higher costs, with 6% saying they had already seen a rise...

Ministers have argued that the move will level the playing field between landlords and homeowners. However, experts believe landlords will need to increase rents between 20% and 30% to cope with the extra cost of the tax hikes.

So far the experts have been proved resoundingly wrong. 6% saw a rise, but we do not know how many would have seen a rise anyway (most of them). What about the 92% who saw no rise or a fall..?

Most of the rest of the article is the Missing Homes Conundrum, a Homey belief that if a landlord sells up, the house disappears from the face of the earth and former tenants become homeless.

Affordability and access to mortgage loans were key reasons why many Brits rent. Half of the tenants surveyed live in rented accommodation because they can’t afford to buy their own home, while 11% were renting because they were currently unable to obtain a mortgage. Just 14% of those renting were doing so out of preference.

Banks love creating loans! From a risk point of view, a landlord is a better bet than an owner-occupier; if there are fewer landlords buying homes then banks will grit their teeth and lend to owner-occupiers i.e. better-earning former tenants instead.

* Using the word's original meaning of "delusional".

Redrow - not land banking in the slightest.

From page 26 of their accounts to 30 June 2017:


The Group added 5,419 plots with planning permission to our owned and contracted land bank in the year. This more than replaced the record 5,319 legal completions (excluding JV) and we ended the year with 26,100 plots in our owned and contracted land bank.

This was a small increase on the very strong closing position in the previous year and represents about five years output and a Gross Development Value, based on our 2017 average selling price of £8.2 billion.

Forward land again made a significant contribution, comprising over 60% of the 5,419 additions in the year across 22 sites. This included the important strategic 'Plasdwr' site - Cardiff's new Garden City.

Despite transferring 3,356 plots to the owned and contracted land bank, we still increased our forward land bank by a net 766 plots to 26,400 plots. Over 40% of these plots are allocated for housing in Local Authority plans.

To sum up, that's ten years' supply, with a book value/cost of £1.339 billion.

Wednesday, 6 September 2017

"Nor Hell a Fury, like a Woman scorn'd"

From The Daily Mail:

A farmer who wants to give travellers her land for free because she hates her neighbours was confronted by irate locals today and told: 'We are not up our own a****'...

Mrs Watson made her controversial offer after a local council turned down her application to building temporary accommodation for stable workers on her two and a half acre plot.

She insists that travellers would have better luck making a similar planning application.

Today she said she had been 'flooded' with requests from travellers who wanted to take her up on her offer of buying the plot which she says is worth around £350,000.

One suspects that the new building really would only have been 'temporary accommodation for stable workers' for a year or two, after which it would be sold as a normal house, but so what?

Sadly, the article does not tell us what a typical house would cost in the village. Her plot would be worth £350,000 if she had planning for a couple of houses, but she doesn't.

Conscious UN-coupling

Ryan Bourne in yesterday's City AM:

According to the UN, Britain is ranked 156th out of 165 participating countries for “kids’ rights”. If you think this is a genuine reflection of the welfare and rights of children here relative to other countries – including Venezuela and Saudi Arabia – who are ranked higher than us, then I have a bridge to sell you.

Then again, what are we to expect from an organisation whose Human Rights Council recently appointed a representative from Saudi Arabia to its 2018-2022 “Commission on the Status of Women”, which is “exclusively dedicated to the promotion of gender equality”? In Saudi Arabia, women are still banned from driving.

But no doubt we can look forward to that Commission criticising Britain’s so-called “gender pay gap”, as representatives from Sudan and Algeria did in our 2012 Universal Review. This featured other delights, such as Russia criticising “police brutality” in the UK, Vietnam denouncing our “austerity”, Cuba urging us to protect economic and social rights, and China discussing the freedom to protest...

Why are British taxpayers funding this nonsense?

It's a good question and I don't know the answer. I'd ask the same about our membership of NATO.

Tuesday, 5 September 2017

US Sanctions

The list of countries on which the USA imposes sanctions grows every year, as does the severity of the sanctions, despite they hardly seem to work.

Traditional thinking is that imposing sanctions on any particular country is but a pin prick for the USA economy, it is a massive burden for the other country. My thinking is that as the list grows, those pin pricks turn into a proper wound, and things get markedly better for countries on the naughty list.

If the USA imposes sanctions on Country Z, then that's bad for the USA, very bad for Country Z but rather good for all the other pariah countries who now have a new trading partner. So Cuba can now trade with Iran, Syria, Russia, North Korea, Venezuela, Russia etc and Country Z.

If the USA goes mental and imposes sanctions on PR China for having the temerity to trade with today's Bad Boys North Korea, and by extension on every country which trades with PR China, then I would assume that the rest of the world would decide to cut the USA loose and merrily trade with each other and with Russia, Iran etc and it would be the USA losing out massively, in which case, one would assume, it would meekly come back to the table.

But while I was reading around, I stumbled across this fine article explaining why sanctions don't achieve the desired effect with the concept of the J-curve (scroll down to end of article). Which is probably far more interesting than my hypotheticals above.

Monday, 4 September 2017

Daily Mail on top form

Stalker who is banned from going within 100 yards of Keira Knightley's £3.9m home breaks his restraining order by tweeting the actress indecent images of a child

Economic Myths: Compulsory pensions saving

From "There is no economic rational for compulsory superannuation".

He explains that forcing people to buy financial assets instead of funding old age pensions directly (via the tax system) is just another Ponzi scheme that will collapse under its own weight soon enough. Using the tax system at least has the advantages of predictability and low transaction costs.

I would add that the total return on financial assets is simply not enough to give all pensioners a predictable and adequate income in retirement. For sure, some people could, but that just reduces the pool of available assets/income for all other potential pensioners.

Somebody on Twitter followed it up with this from The Monthly: "Why compulsory superannuation benefits the financial industry and the rich at the expense of everyone else".

Sunday, 3 September 2017

Lies, damned lies and statistics

On the subject of our current online poll, I came across the article I referred to in an comment on the introductory post once again.

The Telegraph reports Britain’s official government immigration statistics are based on relatively small-scale passenger surveys at airports. Surveys that are dramatically incorrect based on a comparison with a new system which aims to actually measure migration. Incorrect by “tens of thousands” a year for international students alone.

Based on previous figures the analysis suggests that around 3,300 people a year overstay their visas, far lower than estimates which suggest tens of thousands of people “vanish” after finishing their degrees. Yes, they do vanish… back home overseas… All those foreign students we thought were staying in the UK illegally actually left a long time ago. Only 3% remain each year according to the new system’s figures.

And even the new system introduced in 2015 can’t handle it when an immigrant dies, has a second passport they use to exit the country, or someone misspells their name at customs. When the number crunchers compared airline data with immigration data from the new system, they still only got a 90% match for people needing visas. In other words, the new and significantly improved system can’t count humans either.

I rather think that this is the sort of thing that the coiner of the title phrase had in mind.

Saturday, 2 September 2017

Life copies satire, or "a stopped clock is right twice a day"

From the BBC, 20 February 2017:

US President Donald Trump has sought to explain why he referred to a security incident in Sweden on Friday which did not actually happen.

Addressing a rally on Saturday, he had said, "look at what's happening last night in Sweden", as he listed parts of Europe hit by terrorist attacks. With no such incident reported in Sweden on Friday, the country asked the US administration for an explanation.

From the BBC, 9 April 2017:

Swedish police have confirmed they discovered a suspect device inside the lorry which was driven into a Stockholm department store on Friday. The device was found in the driver's seat, National Police Commissioner Dan Eliasson said, but it was not known whether it was a bomb. Mr Eliasson also said the suspect in custody was from Uzbekistan, 39, and known to security services.

The hijacked lorry was driven into Ahlens department store in the capital. Four people were killed - 10 remain in hospital, including a child. Two are in intensive care.

Daily Mail does maths.

From The Daily Mail:

Friday, 1 September 2017

Killer Arguments Against LVT, Not (422)

That Facebook conversation started with this:

Hello! I would love to get some feedback on an idea I've been thinking of. Today the Tories attacked irresponsible big business, but I believe it's the government's job to adequately tax business and not to pick any winners if we're not getting enough money from them, that's the government's fault not the companies'.

I have always thought having a £2,000.00 VAT refund per person would be good and there's plenty of articles to support this, it would encourage people to collect VAT receipts for any purchases and likely increase the total taxation and lead to less tax evasion...

I've read some interesting articles proposing raising VAT to 40% and ridding all other tax's and they offer just as convincing an argument as [those for LVT].

That's supposed to be a sane alternative to LVT, is it? The proposal is fundamentally flawed on very many levels.

1. There is no need to match any particular item of government spending with any particular kind of taxation, as long as the totals roughly match up. A Citizen's Dividend of £2k a year each is just a Citizen's Dividend, and VAT is just VAT. People who believe that National Insurance is a good tax because it goes towards old age pensions and/or pays for the NHS need their heads examining (but preferably not on the NHS).

2. Flat rate universal welfare payments/tax rebates would be a good replacement for the bulk of the welfare system (excl. disability related stuff) and various tax breaks/allowances, no need to worry how it's funded (in isolation).

3. When he talks about "a VAT refund" and people collecting "VAT receipts", this suggests a system like they have/had in Turkey (according to my Turkish friend). When you do your own tax return at the end of the year, you get a tax deduction for a certain amount of private spending, as long as you provide actual receipts. In which case this would not be a Citizen's Dividend - the rebate would be larger for people who spend more than the limit and lower for really low earners/spenders who don't. So presumably high spenders would be able to sell spare receipts to low spenders for a share of the value of the extra tax rebate they can claim. Either way, it's a shed load of extra paperwork and opportunities for fraud.

4. VAT is the most damaging tax (favoured only by Faux Libertarians and Puritans), facts and logic tell us this. They also tell us that VAT is largely borne by producers (owners and employees alike) but that's another topic. The incentive to evade it is the same no matter which particular item of spending it is nominally matched with, and as we know, it is not primarily domestic UK businesses who evade it, it is international conglomerates that route sales offshore somehow. All those receipts that people collect would be from high street retailers etc who by and large cough up the VAT (their systems being computerised thus making underpayment easy to detect). Businesses who currently don't pay the full amount of VAT - be they evaders or magically exempt (banks, landlords, private schools etc) - still wouldn't.

5. With a UK population of about 65 million, an annual rebate of £2,000 each would 'cost' £130 billion, which is more than total VAT receipts. Perhaps tax compliance would improve slightly, but nowhere near enough to make up the shortfall.

6. Those arguing in favour of 40% are the Faux Libertarians, Puritans and idiots generally. It would be massively regressive and damaging to the economy. I have read lots of such articles and they are addle pated nonsense. I have read endless articles in favour of LVT, most of which are pretty convincing.

So that's my feedback.