Faux Lib bullshit of the week

From The Daily Mail:

Senator Bernie Sanders' 'Medicare for all' plan would increase government health care spending by $32.6 trillion over 10 years, according university study.

The latest plan from the Vermont independent would require historic tax increases as government replaces what employers and consumers now pay for health care, according to the analysis being released Monday by the Mercatus Center at George Mason University in Virginia. It would deliver significant savings on administration and drug costs, but increased demand for care would drive up spending, the analysis found...

Responding to the study, Sanders took aim at the Mercatus Center, which receives funding from the conservative Koch brothers. Koch Industries CEO Charles Koch is on the center's board.

OK, divide $32.6 by ten years, and then by 325 million US population = $10,000 a year per person. This would - by implication - be on top of what the US government already spends on healthcare and healthcare industry subsidies, $1.5 trillion a year = $5,000 per person.

Let's give Sanders the benefit of the doubt and assume that people would no longer have to pay for private health insurance, $2 trillion a year = $6,000 per person.

So according to the Faux Libs, the average healthcare spending per person would be $15,000 a year.

By comparison, average healthcare spending per person in Western European countries is about €4,000 a year, at least 80% of which is funded out of general taxation or "income based compulsory contributions" i.e. hypothecated taxes.

So either American doctors, pharma companies and insurers are allowed to earn ridiculous profit margins (and they do - an outrage in itself) or that report is total and utter hogwash. Or some combination of the two. And clearly, the American healthcare 'industry' is a damn' sight smarter than the poor American mugs paying for it.

Nobody move or your genitals get hurt!

George Osborne's Evening Standard has really jumped the shark this time:

Infectious diseases such as super-gonorrhoea could spread more rapidly if the UK leaves the European Union, health chiefs have warned.

Britain is said to be under “significant threat” from such diseases after Brexit if the government doesn’t work out a way of maintaining a close working relationship with European health bodies...

“It is in everyone’s interest to maximise cooperation. Diseases do not recognise borders."

Quite. I don't think they recognise EU borders either.

"Opel-Vauxhall reports first profit in almost two decades"

From The Independent:

Opel-Vauxhall has registered its first profit in almost two decades under the new ownership of France’s PSA Group, the maker of Peugeot.

Opel-Vauxhall made €502m (£447m) operating profit in the six months of the year on revenues of €10bn, the first time the company has been in the black since 1999. The numbers mark a turnaround from a €257m loss in 2016, the last full year when the company was under General Motors’ ownership.

Most things in economics follow some sort of pattern, but it baffles me why its parent company General Motors would keep going through thick and thin for nearly twenty years.

Maybe the costs of shutting everything down would have cost more in the short term than just running up another year's loss, in the vague (but folorn) hope that things would turn around in a year or two, throwing good money after bad.

Or maybe GM were not doing the transfer pricing properly and over-booking profits in the USA and understating them in Europe? But it's not as if GM globally was overly profitable either, from Wiki:

In May 2013 during a commencement speech, CEO Dan Akerson suggested that GM was on the cusp of rejoining the S&P 500 index. GM was removed from the index as it approached bankruptcy in 2009.

Which is all a word of warning for anybody who dreams of going into car manufacturing, you need real staying power and the ability soak up decades of losses while you make the leap to mass manufacturing and economies of scale. It's not like in the first half of the 20th century when there were dozens of small carmakers in every country, each grinding out a few hundred cars a year, they have all merged, been taken over or simply disappeared.

(Exactly the same thing happened with aircraft manufacturers (there were still 27 aircraft manufacturers in the UK in 1945), and the same thing has happened with internet/software businesses, only much more quickly.)

The Hunt for Crimson Tide - alternative ending

After heated discussion, the Captain of the submarine decides to launch the nuclear missiles. Yellow lights flashing, ominous buzzer repeating etc.

Screen prompt: Please enter launch code to continue

Captain reads launch code from slip he retrieved from the safe and diligently keys in: 0101WFRWS

Captain pauses, crosses himself and hits 'Enter'.

Yellow lights continue flashing

Screen prompt: Incorrect launch code. Please enter launch code to continue.

Junior Officer #1, nervously: Permission to speak, sir?

Captain: Granted.

Junior Office #1: I think that those are capital letter "i's" rather than digit "ones", and if you look closely, the second "O" is rounder than the first one, so I think it might be a capital "O" rather than a zero.

Captain, keying more carefully: 0IOIWFRWS

Captain looks carefully at the screen, holds up the slip of paper for a last check, hits 'Enter' again.

Yellow lights continue flashing.

Screen prompt: Incorrect launch code. Please enter launch code to continue.

Junior Officer #2: Permission to speak, sir?

Captain: Yes, what is it?

Junior Officer #2: I don't think those are ones or capital "i's". They look to me like lower case "L's". And if you look closely at the "S" at the end, it could well be the digit five, it's a bit smudged.

Captain: Why the fuck did they print the launch code in san-bloody-seriff? Don't answer that!

Captain, turning to Junior Officer #1: Go on, what do you think? Digit "one", capital "i" or lower case "L"? And is that a capital "S" or the digit "five"?

After several minutes of earnest discussion, the Captain keys in very slowly, repeating each key stoke out loud: 0-l-O-l-W-F-R-W-S.

Captain compares the screen with the slip of paper for several minutes, finally closing his eyes and hitting enter, while muttering "Boom!" under his breath.

Yellow lights continue flashing.

Screen prompt: Incorrect launch code. For security reasons, your account is now locked. Please wait 24 hours before re-entering launch code or contact your software administrator.

Junior Officer #1 to Junior Officer #2, under his breath: I told them we should have stuck with Android.

Junior Officer #2: Yup. Fucking Apple! Jeez...
-------------
Cut to US and Russian Presidents, standing beaming on the steps of the UN building, shaking hands and taking credit for having averting Armageddon.

Where has all the QE gone, long time passing...

Well, here, obviously.

Sadiq Khan has no sense of irony.

From London.gov.uk:

Let’s cut road deaths in London to zero

Each year more than 2,000 people are killed or seriously injured on London’s streets, taking a devastating toll on the people involved, their families and communities across the capital.

Yes, Sadiq Khan will be remembered as the London Mayor who allowed the murder rate to soar, glad he's finally decided to do something about it.

The Mayor of London, Sadiq Khan, believes no death or serious injury on London’s roads should be treated as acceptable or inevitable. So he’s committed London to a bold target to eliminate all deaths and serious injuries from our road network.

Here are five ways we’re looking to achieve this:

Lower speed limits on TfL’s road network...
Transforming dangerous junctions...
Tough safety standards for the design of HGVs...
A world-leading Bus Safety Standard...
Safer streets for walking...

Ah right, he's not going to do anything about actual murders (about 150 a year); he's just going to make life even more difficult for motorists (most of whom don't need to drive into London anyway, to be fair) in order to reduce deaths in traffic accidents (about 80 a year).

On government "intervention" in the land market.

Lola's comment on Yesterday's post is worth a post in its own right:

I am not entirely sure that government actions like Schedule A taxation and council house buildings are 'interventions' as such.

The formation of the nation state comes about over time where a group of people evolve agreed values within a territorial boundary. By being finite those boundaries mean that land within them is limited. And the value of that land relates entirely to the work of all those citizens with those shared values.

Yes yes I know I know that history is a story of various warlords accreting ever larger territories, but without the help of the people they could not do that and make a success of it. So if we take the libertarian homesteading view what the nation state is is an assembly of lots of those homesteads with shared values.

This circumstance leads automatically onto the need for the two key functions of the 'state' - defence (of the Realm) and a system of justice (to keep one citizen safe from the predations of another). Both of these functions are essentially the defence of property rights, national and individual.

So what is the least worst way that these necessary two state functions can be funded. What tax regime works best?

Well, it is obvious that this is some form of land tax.

As this is a location tax it to a degree automatically taxes highest those who occupy the most desirable locations within the nation state it follows it must be a progressive tax.

Next since the land in this nation state is a de facto monopoly of the state - the ultimate owner of that monopoly being the citizens - how can it be acceptable that a few citizens are enabled to enjoy more benefits from the land monopoly than others?

If you take away the location premium then house builders (I am ignoring commercial buildings pro tem) will have to compete on the qualitative standards of what they build when they compete in similar locations. That might mean that the standard setting and price control function of council housing is not required - as it has been to provide competition for tenants and drive up standards.

These are not 'interventions' as such. Just logical responses to a requirement to fund the protection of property rights.

Of course, all this presupposes that the nation state - if it has a monopoly of money (which I would not support) - makes sure that sound money is available to the citizen. And that it does not engage in various subsidy programs to special interest groups where these subsidies always end up in rents, aka land prices.

Therefore these (non) interventions (LVT) lead to less interventions overall.

Oh the irony...

AFrom here: IEA launches Breakthrough Prize – £50,000 for your 2,000 word idea to solve UK’s housing crisis:

Richard Koch – the benefactor and supporter of the Prize – is a British author, speaker, investor, and a former management consultant and entrepreneur. He has written over twenty books on business and ideas, including The 80/20 Principle, about how to apply the Pareto principle in management and life.

The Pareto Principle is handy shorthand for many things, but let's not forget that it is based on the fact that "Essentially, Pareto showed that approximately 80% of the land in Italy was owned by 20% of the population."

Apart from that bit of irony, the whole thing is a travesty, it's like asking Houdini to get out of a strait jacket... without moving. Every premise is false, every statement a platitude and the questions are all (mis)leading questions:

Competitors will be asked to propose a single policy initiative which would:
• Increase the number of houses built so as to markedly reduce the housing shortage in this country (this can be reduced through increased rental or ownership).
• Increase the number and proportion of property owners in the UK.

i. There isn't a housing shortage in absolute terms, as a nation we've got 25 million spare bedrooms. Or as Blissex pointed out on an earlier thread: there's plenty of housing but the jobs are in the wrong places.

ii. Home builders have a profit maximising level of output, which is broadly speaking one new home for every two additional people in the UK. Unsurprisingly, and being fair to the construction industry, they have been building this many on average, even over the last ten or twenty years.

Why on earth do people who claim to understand free markets and capitalism think that "a single policy initiative" will encourage them to build more than this, thus depressing their own profits? (You aren't allowed to mention LVT, of course, but even that would not particularly increase overall construction rates).

iii. As to the second bullet point, private landlords acquired more homes over the last twenty years than were built. It requires government intervention, like restricting interest relief of charging landlords 3% extra SDLT to reverse this trend. (But you aren't allowed to recommend any sort of government action, oh no, that's not "market based").

Jacob Rees-Mogg said:

“Building more houses and supporting home ownership are the two great challenges for Conservatives. A property-owning democracy provides one of the most stable and prosperous forms of society. Its erosion denies people their reasonable life’s ambition."

Sure, until the 1970s, Conservative and Labour governments alike increased owner-occupation rates. They allowed lots of new homes to be built and discouraged landlords from snapping them up (rent controls and punitive taxation of rental income). Labour tended more towards building social housing, which kept a lid on private sector rents, but there was an overall consensus.

That social-democratic principle was gradually binned in in the 1980s and 1990s and now we have full-on Home-Owner-Ism - the aims of which are ever more expensive housing owned by fewer and fewer people. In other words, shifting back to the concentration/inequality which Pareto observed.

Mark Littlewood, Director General at the Institute of Economic Affairs said:

“Market-based policies have the power to dramatically change the economy and society for the greater good... it is time politicians looked beyond Brexit, to the pressing domestic issues of our time – arguably the most pressing of which is the cost of housing.”

T'was only government intervention and regulation which kept prices low until the late 1990s (s21 HA 1988 was changed in 1996-97 to allow no fault evictions, which threw the match on the bonfire which they had been building since abolition of Schedule A taxation of imputed rents on owner-occupied housing in 1963). "Market-based policies" had little to do with it.

Richard Koch said:

“In the twentieth century, home ownership went from one in ten Britons to seven in ten – a terrific achievement in extending a real property-owning democracy. And in the 1980s, Mrs Thatcher enabled millions of people whose families had never owned a home before to get on the property ladder. Today that’s just not possible.

Sure, home ownership increased rapidly, what these "free market" wankers never mention is the obvious corollary, that private landlords were nearly wiped out. That was the key to all this; eliminate the landlords and owner-occupation increases automatically.

And Thatcher could only "enable millions" to become owner-occupiers by flogging off the nicest third of social housing to higher earning tenants at big discounts. I fail to see how one government giving away assets accumulated by previous governments is a "market-based policy". This couldn't have happened if those previous governments had not adopted the distinctly "non-market based policy" of building all that social housing in the first place.

Meaningless Statistic Of The Day

From an article by a Faux Lib cheerleader in City AM, in short, everything would be fine if it weren't for those pesky councils!*

This a problem that has been decades in the making, largely thanks to our draconian planning laws. The passage of the Town and Country Planning Act in 1947 and the creation of the green belt has slowed the pace of housing development, and resulted in houses being built in the wrong places.

As an example, it is remarkable to me that between 2008 and 2013 twice as many houses were built in the towns of South Yorkshire, where prices were lower in 2014 than they were in 2004, than in Oxford and Cambridge, where property prices almost doubled over the same period.

Population of South Yorkshire, 1.4 million.

It's not clear whether means Oxford/Cambridge *city* or the larger *metropolitan areas* so let's give him the benefit of the doubt:

Population of Cambridge metropolitan area, 280,000.
Population of Oxford metropolitan area, 244,000

It's hardly surprising that more homes were built in South Yorkshire than in the other two towns, there is three times the population to start with. If it was only twice as many new homes, then per capita, more were being built in Oxford and Cambridge.

* NIMBYism and land banking don't exist on Planet Faux Lib. Neither does the acceptance that in pure numbers terms, new supply is more than keeping up with population growth; or that home builders have a profit maximising level and nothing on earth will make them build more. And even if they did, it would not have any marked downward effect on selling prices.

The Irish border - tail wagging the dog.

Far too much attention has been paid to this issue, for example from The Sun:

The issue of the border between Northern Ireland and the Republic has been a stumbling block to Brexit talks

The whole thing is nuts. The underlying logic is that any country with a land border with an EU Member State must also be or become an EU Member State to avoid the 'hard border' issue.

I don't see why the Irish-Irish border is of any more significance that the Swedish-Norwegian border, or the German-, Austrian-, Italian- and French-Swiss borders.

Put it another way, just imagine The Republic of Ireland had only recently become an EU Member State and the UK never had been - whose problem is it to sort it out?

All seems strangely plausible to me.

The original Novichok/Skripal story was most bizarre and full of inconsistencies, giving rise to lots of conspiracy theories. What we were officially told might well be true, it just doesn't feel true.

The second time round seems just as bizarre, but somehow perfectly plausible to me, even down to the perfume spray bottle and unnamed members of the 'security services' telling unnamed journalists that they have now miraculously identified the people responsible for the Skripal event.

"Cow trapped on cliff gets down with help from dogs, owner"

Emailed in by Peter S, from the NZ Herald, an rather bizarre tale:

A cow stranded above Mowhanau Beach, near Whanganui, has come down with the help of its owner and a few dogs.

It stood atop a subsided ledge and had no obvious path to freedom.

Callers to the Wanganui Chronicle said they were concerned about might happen at high tide.

Others said the cow had been stranded for up to two days.

The article is then just random bits of information and quotes, without saying how they did it.

Or indeed, whether the cow then promptly attacked her rescuers.

No retreat! No surrender!

An article at Lib Dem Voice points out:

There is however a ready-made solution that could sort this [Brexit] mess out, and that is for the UK to join the European Economic Area (EEA) and the European Free Trade Association (EFTA)*.

This arrangement already works well for Norway, Switzerland, Iceland and Liechtenstein, and it could work well for Britain too.

The author suggests that the Lib Dems should get behind this idea and unite moderate Leavers and Remainers... the comments are mainly hard core Bremoaners shouting the idea down.

Via @paulknight85, an article at ConHome says the Tory government:

... have no alternative but to look for a Plan B. Here is one.

The Government tears up Plan A, and seeks to park the UK in the EEA* for, say, four years. At the end of that period, the UK would trade with the EU on basic WTO terms, if a David Davis-style Canada Plus Plus Plus deal had not been agreed.

... the comments are mainly hard core Brexiteers shouting the idea down.

I suppose this is some sort of reverse Indian Bicycle Marketing, either way, I'm sick of extremists on both sides.

* The first author gets the order wrong, you have to join EFTA first and thus are eligible to join the EEA, and the second author glosses over this completely, or is ignorant of the fact that to be in the EEA, a country must be a member of EFTA or the EU, but hey.

"Agglomeration effects (might) change the YIMBY calculus"

A splendid article by Devon Zuegel, the first half of which I wish I'd written myself.

Worth reading in full, but the upshot is this:

There's a distinction within the YIMBY cause that's mostly unspoken, but it's important. Two* of the key goals the movement aims to address are (1) to lower housing prices and (2) to unlock economic, cultural, and social potential. These are often described in similar ways and are in many cases complementary, but they are not the same.

On one hand, there's a lot of talk about how building more will decrease prices because of the models of basic supply and demand curves from Econ 101. We'll call this goal the affordability objective: let's make housing affordable in key metro areas, both for residents who are already there and for those who'd like to come.

Another related but different goal is about how much is lost as a result of locking people out of opportunities in the most productive regions. We'll call this the opportunity objective: let's make it possible for people to to participate in the economic and cultural dynamism in places that they're locked out of right now...

So far, so good. Here's what most YIMBYs resolutely fail to take into account (and refuse to do so, if challenged):

The issue with the conventional supply-demand model is that it assumes that supply and demand are functions of price and price only. At a first approximation, and maybe at the margins, this is basically true. However, it does not account for the fact that the population is also a critical factor in determining the shape of the demand curve for a particular place... the value of living in a particular place is greatly determined by how many people live around it. As the number of people living in a place increases, so does the value of being there. This is often labeled the "agglomeration effect".

She concludes that additional supply probably depresses prices by more than the agglomeration effects push them up, while admitting she has little hard info to support this.

This is clearly not true, we know for a fact that the largest and best connected cities in any country or region always have the highest prices in that country or region (assuming no rent controls or similar measures). But hey, at least she has broken down the issue into manageable chunks and explained what the YIMBYs are missing.
---------------------
The analysis I would disagree with is this:

A lot of laws exist to effectively cut out the bottom part of the market. (The mechanism here is similar to the argument for how the minimum wage is in fact bad for the very low-wage workers it aims to protect.)

Laws like minimum lot sizes, setbacks, amenity provision, max numbers of occupants, etc effectively make it illegal to build affordable housing.

I wish it were as simple as that, but it clearly isn't.

Imposing large lot sizes is by and large a waste of space etc, but this reduces agglomeration benefits, so cancels out.

Remember - while allowing higher densities and smaller homes reduces the amount which people have to pay for entry-level bricks and mortar, it means more people and more efficiency, and more people and more efficiency means more agglomeration benefits, and that means higher total prices (the savings on the bricks and mortar cost are outweighed by the higher location rent). Think Manhattan vs Houston.

We know that in large, well-connected cities, even the modest/dense housing originally built for lower income people is now insanely expensive and only higher income people can afford it. Think an ex-council flat in London.

I rest my case.
--------------------
* On a personal note, I have been a lifelong YIMBY on the basis of "not being a total fucking hypocrite".

Vegans and vegetarians can rightly rail against the meat industry and meat eaters in general, that's intellectually coherent. But NIMBYs are like motorists who complain about all the cars on the road. I have always lived in a flat or house wherever it was I wanted to live, and who am I do deny others the right to live in a flat or house wherever it is they want to live? And if there aren't enough, build some more.

More subtly, I have been an owner-occupier for most of my life and it dawned on me decades ago that if they build more stuff near me, that must, however marginally, increase the value of my home (which I later found out was called "agglomeration benefits"). So as a laisser faire kind of chap who likes unearned gains, YIMBYism was always part of my belief system; as a Georgist, YIMBYism sits just as comfortably.

Economic Myths: innovation, employment and wages

Nobody will every be able to prove anything either way, but here are a couple of things which may well be complete misconceptions:

From the BBC:

Wage growth slows despite jobless fall

UK wages rose more slowly in the three months to May, despite a further fall in unemployment, official figures show.

Wage growth slipped to 2.7% from 2.8% in the three months to May, while unemployment fell by 12,000 to 1.41 million, the Office for National Statistics (ONS) said.

We've done this before, it's a mathematical thing - the 'new'jobs tend to be lower paying than existing ones, thus dragging down the overall average increase.

Also from the BBC:

AI will create as many jobs as it displaces - report

Opinion is split over AI's potential impact, with some warning it could leave many out of work in future.

The pessimists argue AI is different to previous forms of technological change, because robots and algorithms will be able to do intellectual as well as routine physical tasks.

AKA 'it's different this time'. No it's not. Nearly all human labour is and always has been to some extent 'intellectual', so machines have always, to some extent, taken over 'intellectual' jobs.

Like using weather forecasts and the calendar to decide when to sow and harvest instead of relying on oral traditions and rules of thumb; like doctors using thermometers and X-ray machines; or like drivers using a sat nav instead of a paper map and road signs.

... John Hawksworth, chief economist at PwC, said:

"Major new technologies, from steam engines to computers, displace some existing jobs but also generate large productivity gains. This reduces prices and increases real income and spending levels, which in turn creates demand for additional workers.

"Our analysis suggests the same will be true of AI, robots and related technologies, but the distribution of jobs across sectors will shift considerably in the process."

PwC said about seven million existing jobs could be displaced by AI from 2017-2037, but about 7.2 million could be created, giving the UK a small net jobs boost of around 200,000.

Their figures are meaningless, but his point stands. In the short term, all this 'progress' is a pretty bad thing from the point of view of those who lose their jobs or whose businesses grind to a halt; in the long term, it's all good and seems to cancel out.

"Police continue to investigate 'cow in car boot' on M4"

Full story at the BBC.

In fairness, it's not in a car boot, it's in the back of an estate car, and looks content enough to me.

Fun with numbers

From last week's City AM:

Re: Trump claims Nato spending win after US President warned over US membership

As Donald Trump calls for Nato members to spend more on defence, it is important to consider where the US currently spends its 3.5 per cent of GDOP.

According to figures from the US Department of Defense [sic], even the flagship European Defence Initiative only accounts for 0.67 per cent of the US defence budget, the majority being spent at home or in the Pacific. Only five per cent of US personnel are stationed in Europe - it is Japan that hosts the largest number.

By contrast, almost all defence expenditure by European Nato members occurs in the North Atlantic area. All Nato members should meet the two per cent target but it must be noted that a large proportion of the US's 3.5 per cent is spent elsewhere.

TH Dempster.

Friday night gearchange(s)

Barbara Mandrell, "Tonight my baby's coming home".

Her baby takes the scenic route. He sets off in A#, changes up to B after 26 seconds, and then does the rest of the journey home via C after 1 minute 11 seconds.

"Woman 'killed by a cow' on farm near Worcester"

Emailed in by occasional cow-respondent Robert H, from the Worcester News:

AN inquest has been opened into the death of Patricia Ann Ganderton, aged 64, who was reportedly killed by a cow.

The inquest has been scheduled for Monday, July 23, at 2pm at Stourport Coroner's Court, with coroner Geraint Urias Williams presiding. The hearing is set to last an hour.

The Worcester News understands that the woman suffered fatal injuries when a cow attacked her on a farm in Hallow.

Reader's Letter Of The Day

From yesterday's Metro, on the topic of the Thai cave rescue:

Perhaps attention will now turn to how the boys got there in the first place.

Derek Gomer, Pontypridd

"I can't be the censor. It's not for me to decide what's in good taste or bad taste."

From The Daily Mail:

Sadiq Khan has defended his approval of a giant 'baby Trump' blimp which will fly above London during a visit by the US President...

"My views are irrelevant. The issue is 'Do they have freedom to protest, freedom to assemble and should they be allowed to do so? If it's peaceful and it's safe they should.'

Piers Morgan asked the mayor if he would have endorsed a giant black baby blimp of Barack Obama in protest during his presidency, or an image depicting Mr Khan as a pig despite that being offensive to Muslims.

Mr Khan said: 'If it's peaceful and if it's safe. Look, I can't be the censor. It's not for me to decide what's in good taste or bad taste.'

Piers Morgan came up with some really good suggestions there, although he chickened out of suggesting that Obama's balloon would have been a monkey with Obama's face on it, that would have really got the crowd going. I'm all in favour of the Trump balloon, and would have been equally delighted by a pig with Khan's face.

Returning to the main issue, Khan has made it his job to censor stuff, like adverts with pictures of slim women and adverts for affordable ready cooked meals. Pity Morgan didn't confront him with those examples.

Reinventing the wheel, although it's a good wheel to reinvent.

This IPPR report has some good stuff in it, in among the waffle (as you can see from the excerpt below). The recommendation that was given most attention (favourable and unfavourable*) is that house prices could/should be stabilised by capping loan-to-value and loan-to-income ratios:

Currently, the FPC achieves its objectives via controls on loan-to-value and debt-to-income ratios allowed by mortgage providers, and controls on the proportion of mortgages in bank portfolios. The FPC recently implemented a loan-to-income ratio of 4.5 for 15 per cent of new mortgages, even though the Bank of England recently estimated that around 11 per cent of mortgages exceeded this ratio in 2015 (Chakraborty et al 2017).

Implementing targets that bite requires giving the FPC a strong mandate to limit asset price inflation. Since house price inflation is different in parts of the country, the FPC’s guidance should be regionally specific. There is a risk that a target for house price inflation, tackled through macroprudential tools, could inadvertently increase inequality, by reducing access to credit for the  poorest borrowers**. To mitigate this risk, we recommend that the exact nature of the target, and the tools the FPC be given to achieve it, be determined jointly by the Bank of England and the Treasury, and be put out for consultation before being implemented.

House prices are also determined by other factors, not least the supply of housing, and therefore adoption of the target would need to be accompanied by a much more active housing policy. This might include public housebuilding, changes to planning policy, and curbs on overseas purchases of UK homes (Ryan-Collins et al 2017). The FPC should be able to request that the government do more with housing policy if it judges that it will be unable to meet its target through macroprudential tools alone.

It is also worth noting, however, that recent research has shown that the level of mortgage lending is the primary determinant of house prices (Ryan-Collins et al 2017).

Well duh, this is what building societies did until the 1980s. And it worked a treat, getting rid of these limits was a key part in stoking the Home-Owner-Ist bonfire. The report doesn't emphasise enough that this is all tried and tested IMHO.

* The nutters at CapX are sticking to the Faux Lib orthodoxy that it's all about supply and lax lending has nothing to do with it, despite the report going to some length to provide evidence to support their opposite and correct explanation.

** They are undermining their own case here. Credit bubbles are an arms race. By being allowed to borrow more, every borrower ends up worse off, rich and poor alike. It is quite possibly the case that higher income borrowers will see bigger absolute savings than lower income people (in fact, mathematically that must be true), but so what? Overall equality (taking earnings and housing wealth together) will increase, and higher income and lower income aren't competing to buy the same houses anyway.

So how did people manage in the days of black and white television?

From the BBC:

Sean Hargrave is a self-declared football obsessive, but when he sat down to watch the opening match of the 2018 World Cup he couldn't tell one team from the other.

He wasn't the only one struggling. Roars of frustration jumped from sitting rooms to social media as fans worldwide branded Russia v Saudi Arabia "a disgrace".

The problem? Sean, like 1 in 12 men and 1 in 200 women, is colour-blind...

"Thailand cave rescue: water pumps failed just after last ladyboy escaped"

From The Guardian:

The rescue operation to free the last of the 12 ladyboys and their football coach from a Thailand cave could have been a disaster, divers have revealed, with water pumps draining the area failing just hours after the last ladyboy had been evacuated.

Divers and rescue workers were still more than 1.5km inside the cave clearing up equipment when the main pump failed, leading water levels to rapidly increase, three Australian divers involved in the operation told the Guardian on Wednesday, in the first detailed account of the mission to be published...

The remaining 100 workers inside the cave frantically rushed to the exit and were out less than an hour later, including the last three Thai navy Seals and medic who had spent much of the past week keeping vigil with the trapped ladyboys.

Piss poor use of statistics of the week

From the BBC:

Research for the report, carried out by the University of Exeter, shows the extent of the challenge - with figures showing how few places in 2016 were awarded to applicants from areas with few young people going to university.

Meaningless. This boils down to: "few people from areas where few people go to university go to university".

The University of Cambridge had only 3% of entrants from such "low participation neighbourhoods", the University of Bristol 3.7%, Oxford 4.6% and Exeter 5.3%.

Meaningless. We are not told what percentage of potential students live in a "low participation neighbourhood". If about 4% of potential students live in such areas, we'd only expect 3% - 5% of students at any university to be from such areas.

Killer Arguments Against LVT, Not (443)

The KLN: "You will never be able to really own land if you have to pay 'rent' for it."

The 'rent' i.e. tax you would have to pay is merely your contribution towards the cost of stuff (defence, police, roads, education, NHS etc) that increases/maintains the use value of that location. The same as paying for repairs, utilities, service charges on a flat, home and contents insurance etc.

(For sure, you need the government to provide the basics AND the private sector economy to do everything else, one without the other is no good without the other and location values would be very low, but hey.)

Clearly, there are large swathes of the UK where the rental value is so low that it's not worth collecting the tax, i.e. most farmland and housing in the cheapest areas (the bottom ten per cent).

So if you are mad keen to 'own' land and not pay any 'rent', then just buy some farmland and pitch a caravan on it, or buy a house in a run down area with low employment rates. You don't get much in exchange, so you pay little or nothing.

If you want something nicer, then you have to pay for it, the future tax bill comes off the price anyway, so what's the difference.

The Breakfast Book Club

From Wiki and Wiki:

Four women have attended a monthly book club for thirty years every Saturday morning in 1984.

Each comes from a different clique: pampered Vivian, who owns and builds hotels; recently widowed state champion wrestler Diane; geek Sharon, a judge who has been single ever since she divorced her son's father; outcast Carol, who had a successful marriage to Bruce that has recently lacked intimacy; and delinquent John Bender.

They gather in the school library, where assistant principal Richard Vernon instructs them not to speak, leave their seats, or sleep until they are released at 3:00 p.m. He asks them to read Fifty Shades of Grey and leaves, returning only occasionally to check on them.

Viewing it as a wake up call, they decide to expand their lives and pass the hours by talking, arguing, and smoking marijuana.

"Government urged to slash business rates to save UK high streets"

This week's prize for people who completely undermine their own logic goes to...

From The Independent:

Sainsbury’s boss Mike Coupe joined the calls for reduced rates on Wednesday.

After the supermarket chain announced slowing sales growth on Wednesday, Mr Coupe said: “There isn’t a level playing field between online players and traditional bricks and mortar players, and it’s playing out in a very stark way on the high street at the moment.”

He added the government needs to review “total business taxation”. Sainsbury’s paid £560m in business rates last year, 6 per cent of its overall tax bill.

Yup, a modest 6 per cent. VAT is by far and away their biggest bill (unless you believe the crap about consumers paying it); PAYE is probably not too bad because most staff are on fairly low wages; and corporation tax is chump change.

Their total turnover is £28 billion (page 94 of latest financial statements), divide one by t'other and Business Rates cost them 2p for every £1 of sales. If they think online is so easy, why don't they do it themselves and save the 2p. Ah, they do. So what's the problem?

Daily Mail's standards are slipping

From The Daily Mail:

Police have sent samples to Porton Down as they probe a major incident after a couple in their 40s were exposed to an unknown substance, it has emerged...

Images from the scene showed a police presence in Muggleton Road, Amesbury, where the pair were found unconscious inside a property on Saturday, while a nearby Baptist church appeared to have been cordoned off.

The address is thought to be on a new housing development on the southern edge of the town, which lies close to Stonehenge...

Here's the bit they missed: "Four-bed detached houses on the estate sell for £410,000".

"Waistcoat sales up as Gareth Southgate sets trend at World Cup"

From The Guardian:

For years, football fans have been able to emulate the look of their idols with replica shirts, but this World Cup something different is happening: supporters are rushing to buy replicas of Gareth Southgate’s England waistcoat.

Marks & Spencer, which has been the official suit supplier to the England team since 2007, said demand for waistcoats has risen 35% thanks to what they say is “the Gareth Southgate effect”.

Ho hum.

1. That's a fairly meaningless statistic, have sales gone up from 100 a year to 135, or from 1 million to 1.35 million?

2. Will people actually wear them, or was it just impulse purchases?

3. Will people stop wearing them if England crash out before the final?

My marginal tax rate

For every £100 + VAT my employer invoices clients for work I have done, they pay me about £40 gross.

This nets down to £23 after income tax and NIC at my marginal rate (the overall average is a bit lower than that).

My wife decides how I spend two-thirds of my income. This is mainly private school fees for her social status reasons, officially known as "I just want what's best for the children", but either way it is rent, ransom or tax.

This leaves yours truly with £8 pocket money to spend on the finer things in life, out of the £120 that the client originaly paid, a marginal tax rate of 93% or so.

The disappearing homes conundrum

Via @HenryPryor, from Property Industry Eye:

Supply of rental properties has hit its highest level so far this year, but fewer tenants seem to be searching, say letting agents.

The May Private Rented Sector Report from ARLA Propertymark shows that letting agents had an average of 186 properties per branch last month, up from 179 in April and the highest figure for 2018.

However, demand also fell to a new low of an average of 60 prospective tenants per branch, the lowest figure since last December when 59 registrations were recorded.

"It's only half past twelve but I don't care..."

"... it's five o'clock somewhere."

My favourite country and western song at the moment, musically and lyrically.

Wimbledon prize money doesn't go far these days...

From City AM:

Tennis stars are descending on Wimbledon ahead of the start of the tournament next week, but many might be disappointed to find that winning one of the most acclaimed sporting competitions in the world could not even buy them a detached house in the local area.

While winners of the men's and women's singles titles are set for a £2.25m windfall, the average cost of a detached home in Wimbledon's SW19 postcode is a far higher £2.9m.

There was another article in City AM last week explaining that lucky home owners in SW19 will earn more by renting out their homes during Wimbledon fortnight than will be paid out in prize money, but I can't track that one down.

... let's fund the NHS instead

Meme kindly created by Jeremy L:

Steven Pinker: The Better Angels of Our Nature

My son borrowed this from the school library and I have started reading it.

It's a splendid book. It's basically a really detailed and expanded version of one chapter of "Guns, Germs and Steel", but with more charts, statistics, tables and illustrations.

My favourite bit so far:

It's not that any early state was (as Hobbes theorized) a commonwealth vested with power by a social contract that had been negotiated by its citizens. Early states were more like protection rackets, in which powerful Mafiosi extorted resources from the locals and offered them safety from their neighbours and each other.

Any ensuing reduction in violence benefited the overlords as much as the protectees. Just as a farmer tries to prevent his animals from killing one another, so a ruler will try to keep his subjects from cycles of raiding and feuding that just shuffle resources or settle scores among them but from his point of view are a dead loss.

I don't think much as changed so far.