Causation is not correlation

The ConHome article (which Lola linked to recently to make a different point) says that there is a significant geographical overlap between 'former mining areas' and 'areas returning a Labour MP' at last week's elections.

Ho hum.

More to the point, there is, and always has been, a large overlap between 'relatively densely built urban areas' and 'areas with a Labour MP' i.e. Manchester/Merseyside; West/South Yorkshire; Tyneside; and central/inner London.

It just so happens that most towns grew where they did because coal was needed to power industry during the Industrial Revolution; the landless peasants (90% of the population) moved to these areas during the Industrial Revolution; these areas then became towns and cities; and for whatever reason, people in these areas tend to vote Labour to this day, while the Tories are the party for rural areas and outer suburbs.

The only reason that London is where it is, is because that's as far upriver as the Romans could get with their boats i.e. it has always been the centre of government and a major centre of trade. For slightly different historical reasons, about half the population are tenants (private or social), and again, these people will tend to vote Labour, even though London is about as far from a coalfield as you can get.

And all of this is not UK specific, as a general rule and in most democracies, people living in towns tend to vote more left wing/liberal and people in the countryside vote right wing/authoritarian.

More Not Seeing the Bleedin' Obvious

Here.

So this implicitly recognises that tax cuts boost economic activity. So why not extend that thought and cut taxes everywhere?

Now we know that this is about making some areas less tax costly than other areas. Fair enough. I can see what they are trying to do, but the way they are going about it...?

Since the prime tax cost difference area to area is 'rent' - which reflects itself through the productive factors of production - labour and capital - you'd thunk it bleedin obvious just what to do nationally.

Or have I missed something, again?

U- and Z-Turns Of The Day

U-Turn

From the BBC:

Telecoms giant BT is in talks with Telefonica about buying the O2 mobile network from the Spanish firm...

The irony is...

In 2002, BT spun off O2, then called BT Cellnet. In 2005 it was acquired by Spain's Telefonica for £17.7bn.

Taking irony to the next level...

[O2's] value is around half that paid by Telefonica. Deutsche Bank values O2 UK at £9bn, while UBS values it at £9.6bn.

Z-Turn

From the FT:

Germany has made a dramatic appeal to Sweden to help it out of an energy dilemma that threatens Europe’s biggest economy as it shifts away from nuclear power and fossil fuels to renewable energy.

Oops, caught with their trousers down after they overreacted to the Fukushima meltdown.

And what does the German government want 'Sweden' to do..?

Sigmar Gabriel, Germany’s vice-chancellor, warned Sweden’s new prime minister Stefan Löfven last month that there would be “serious consequences” for electricity supplies and jobs if Sweden’s state-owned utility Vattenfall ditched plans to expand two coal mines in the northeast of Germany.

I'm not sure what level of irony we're on here. Waving the Greenie flag, the Germans want to go from nuclear to renewables... but first they're taking the retrograde step back to coal, and the coal which they want to use was theirs anyway before they sold it off to foreigners.

Squaring the circle, we get this...

Angela Merkel’s cabinet is due to meet next week to discuss mothballing some coal-fired power stations as a means of helping the country reach its carbon goals.

But Berlin’s lobbying of Stockholm underlines a view held by some in the German government that coal-fired generation is vital to the security of the country’s power supply.

Fun Online Polls: Full English & Coal-fired power stations

There were 171 responses to last week's Fun Online Poll. Thanks to everybody who took part:

How do you like your Full English Breakfast? Choose max. one carbohydrate and one drink.

With toast - 108 votes
With chips - 7 votes
With waffles - 5 votes

With tea - 97 votes
With coffee - 48 votes
With other drink - 6 votes

Other preferences, please specify (i.e. mushrooms, Black Pudding etc.) - 57 votes
I don't like Full English Breakfast, full stop. - 14 votes

Of the 57 who voted "Other", about thirty people actually specified something. In descending order (if I've counted correctly):

Black pudding - 10 votes
Fried bread (apologies for missing this off the original list) - 10 votes
Mushrooms (the debate raged between 'field' and 'button') - 8 votes
Baked beans - five votes
Fried tomatoes - 6 votes
Kippers - 3 votes

I'd have thought that mushrooms, baked beans and fried tomatoes are part of the Full English, you'd expect at least one or two of them to be present, it doesn't really matter which. I'm not sure if they need an extra mention any more than 'slices of bacon' or 'sausages'.

We then descend into the long list of minority interest stuff with one or two votes each:

Saute potatoes
Bubble and squeak
Fried onions
White pudding
Haggis
Fruit slice
Cereal

So now we know!
--------------------------------
This week, three large coal-fired power stations shut down in the UK, see e.g. The Telegraph. Whether the EU's large Combustion Plant Directive was imposed on the large corporates running them, or whether those large corporates imposed the LCPD on us because it means they get even bigger handouts for doing something else instead remains to be seen.

Be that as it may, there are various different ways of estimating what percentage of the UK's total electricity generating capacity they represent. If I understand Ofgem's Electricity Capacity Assessment correctly, the total electricity generating capacity in the UK is about 80 GW and about 11 - 12 GW of coal and oil capacity is to be shut down by the end of 2015, including the big three power stations which have now shut down (4 GW or 5GW).

So that looks to me as if nearly 15% of the UK's capacity will be shut down in the next two years. Is this correct?

If anybody actually knows, please respond here.

Killer arguments against LVT, not (44)

People who have absolutely no idea what they are talking about keep lining up those killer arguments to be flattened by the Wadsworth LVT steamroller (TM Jim). I lobbed in the LVT grenade over in a thread on the IEA blog a couple of months ago and look what we found in the rubble:

Richard Wellings Says: "Mark,
(1) What would happen to old people on low incomes with big houses if a flat-rate land/property tax was introduced? Would they be thrown out of their homes and their property confiscated? [which he followed up with: "If LVT did mean forcing many elderly people from their homes, it would be almost impossible to implement politically."]
(2) And what about semi-subsistence smallholders who wanted to ‘opt out’ and live off the land? Would they be allowed to pay the land tax in carrots and turnips?"

I'll deal with the Poor Widow Bogey (for the dozenth time) tomorrow if I may. The debate on his question (2) developed thusly:

Philip Says: "... your last point is exactly the idea in terms of the economic justification. Say Baldrick is growing turnips on top of land that could be used for a diamond mine. The tax is levied not on the income from the turnips but on the rental value of the land which depends on its possible use as a diamond mine. The tax is therefore levied without any penalty for putting the land to its best value use – the diamond miner pays exactly the same tax as the turnip grower. As such, there is no disincentive to maximise the value of output unlike with a tax on rents, work and profits.

Jim keeps digging [obligatory pun]: "... the turnips vs diamond mine analogy nicely encapsulates my opposition to LVT. I maintain that I should have the right (3) to use my diamond mine as a turnip patch if I so choose, and not be forced to sell it, or mine diamonds against my will, in order to pay the LVT. In my view the property rights of the individual outweigh the overall (potential) positives for society as a whole from LVT.

I am for the individual against the collective, and I see LVT as a form of the collective imposing their view on what ’should’ be happening on a piece of land (4), rather than the right of the individual to choose his or her land usage, and be taxed on the income produced thereby (5)."

OK. Deep breath everybody.

Let's set the scene, a decade or three into the future and imagine we had phased out (a) all existing taxes on incomes and production (income tax, National Insurance, VAT, corporation tax, total current revenues £350 billion per annum) and (b) all existing taxes on land, property, wealth etc (in descending order: Council Tax, Business Rates, Stamp Duty, capital gains tax, inheritance tax, insurance premiums tax and for good measure the TV licence fee, total current revenues about £70 billion) and we collected as much as we could from land value tax. Total LVT receipts might be a quarter of GDP, which would average out at about £12,000 for an average house per annum (and maybe £9,000 for a median house).

In a proper Georgist world, LVT receipts are used to pay for the core functions of the state and the rest dished out again as Citizen's Dividends, so by definition, the median household in an median house is a net nil taxpayer, if Poor Widows are your concern, it would be a cinch to pay out most of the Citizen's Dividends to the elderly, of course.

Addressing point (2), having done a few minutes 'research', I know that the rental value of agricultural land in the UK is about £50 per acre per year. So Richard's Wellings' 'semi-subsistence smallholders' eking out an existence on (say) two acres of land would be paying about £100 in rent or tax per annum (and whether they pay this as rent to the current 'owner' or as tax to the local council makes not the slightest difference to anything anyway).

I doubt very much that these people would completely cut themselves off from the outside world and so we can safely assume that they would be selling some of their carrots and turnips to pay for things like seeds, replacement farm tools, medicine or toilet paper or something.

So I simply do not agree that expecting them to sell an extra £100's worth of carrots and turnips in exchange for society in general respecting and protecting their exclusive possession of two acres of land is excessive, neither does it make a scrap of difference whether they pay that £100 in tax or as rent to the current owner. Further, assuming some sort of Citizen's Dividend were paid out, 'semi-subsistence smallholders' would actually be ahead on the deal. See also my comments on (5).

As to point (3) I find it useful to look at actual facts rather than dabbling in hysteria
a) AFAII, there are no significant diamond reserves in the UK.
b) The most important mineral under UK soil, in terms of value is coal.
c) If our mythical smallholder were to discover a stupendously rich seam of coal (which could be extracted profitably) under his two acres, what would happen? Absolutely nothing. Please remember, in the real world, that to run a coal mine you need hundreds and hundreds of acres of land, the mining rights to two acres are worthless.
d) So would his tax go up? No of course not. More importantly, before you start digging, you have to get all sorts of planning permission and pay for the mining rights. Until and unless a mining company gets the permission to dig, acquires all the required bits of land and pays for the mining rights, the value of the land at the surface does not change.

His point (4) uses the s-word 'should'. Is he not even dimly aware of planning restrictions in this country, which dictate exactly what you are or are not allowed to build or do on any patch of land? Is this not an extreme form of "the collective imposing their view on what ’should’ be happening on a piece of land? Is there any fundamental difference between NIMBYism and a Socialist command economy? That's not a rhetorical question, by the way.

At least Jim has the nerve to stick up for income tax in his point (5). Quite why a tax that discourages individual efforts is preferable to one that encourages individual efforts is a mystery to me, but hey. As ever, he fails to realise that here in the real world, the existing tax and land use system in this country prevents exactly that which he claims to support, i.e. "the right of the individual to choose his or her land usage, and be taxed on the income produced thereby"

Before our income-producing average guy has the chance to engage in the mutually beneficial free exchange of goods and services, he first has to pay a privately collected tax to whomever it is who currently has dibs on that bit of land on which he'd like to carry out those exchanges. if you want to rent or buy a shop, you have to bid more than the next best offer, i.e. whoever can squeeze the biggest profits by trading from that site has to pay over the bulk of his super-profits to the existing 'owner'.

This privately collected tax (rents or mortgage repayments) leaves the trader with little choice as to what to do on that site and takes away a large chunk of the profits. It is impossible to have a non-Socialist economy where anything else happens - whether we tax incomes or land values, in the long run, the people who can generate the highest incomes and profits will always end up living in or trading from the best locations (and there is nothing wrong with that, of course).

By this stage, of course, the killer arguments have completely contradicted themselves, mired themselves in falsehoods and half-truths and collapsed under their own weight.

If you wanted to drop out of the rat race and become a 'semi-subsistence smallholder' anywhere in the UK, it is not just a question of scraping together the £100 a year in ground rent or tax for the actual land, the biggest problem you'll face is finding two acres on which you can build yourself somewhere to live.

The local NIMBYs will make bloody sure that that you never get planning permission for anything new, so you have to find a couple of acres on which a house is already standing - and as we know, houses sell at a premium of tens or hundreds of thousands of pounds over their bricks and mortar value, so the biggest (and in most cases insurmountable) financial hurdle to becoming a 'semi-subsistence smallholder' is not the £100 rent for the land, it's the tens or hundreds of thousand pounds premium you have to pay to be able to live on your two acres.

Here endeth.

The cost of commonsense in a dying government

Of all the riff raff and dross in the Gummint, there are - bear with me here - a couple who occasionally think and speak clearly:

John Hutton, at the recent Labour Conference: "Tories say no to new coal and have sent mixed messages on nuclear. The Liberal Democrats say no to new coal and new nuclear. But no coal plus no nuclear equals no lights. No power. No future."

Phil Woolas, Environment Minister, explaining why imposing a windfall tax on energy companies was a bad idea: "[There is] no guarantee that a windfall tax would not be passed on to the customer. We can only regulate in the UK; we can’t regulate Saudi Arabia.”

Guess what. Hutton and Woolas have been reshuffled out of their posts.

Hutton has ended up as Secretary of State for Defence. Possibly a huge mistake, as there is more than a slim chance he actually knows what he is talking about: His hobbies include military history and he recently published a book on the experiences of King's Own Royal Lancasters during the First World War.

Woolas is now Immigration Minister. Oops! He actually knows a thing or two about this and is one of the few MPs* who have had the nerve, gall and temerity to point out:

... that marriages between first cousins are a factor in birth defects and inherited conditions. "Part of the risk, I am told by the health service, is first-cousin marriages. If you are supportive of the Asian community then you have a duty to raise this issue." It is estimated that 55 per cent of British Pakistanis are married to first cousins. The likelihood of unrelated couples having children with genetic disorders is about 100-1, but it rises to one in eight for first cousins. British Pakistani children account for as many as one-third of birth defects, despite making up only three per cent of all UK births.

... so I doubt whether either of them will last very long in their new posts.

* It's just him and Ann Cryer (Lab, Keighley), actually, AFAIAA.

New Labour Minister* talks sense - shock!

John Hutton at the Nulab Conference, in among the inevitable dross is this: "No coal and no nuclear equals no lights, no power, no future."

Guess what The World Development Movement, who received a modest £129,710 from the EU back in 2005 (page 9 of this), the last year for which they could be arsed to prepare accounts, have to say...

"John Hutton’s pro-coal stance ... is not founded on science, economics or reason."

Erm, coal burns to boil water to drive turbines to produce electricity, that's the science covered; extracting coal and burning it in power stations is a profitable activity that doesn't need subsidies - in fact, it creates tax revenues and employment, so that's the economics covered; and people like having electricity, that's the reason. Have I missed anything?

The World Development Movement has a parent charity, which spent a cool £1 million on a new office building in Ruffley Road, London SW9 0LS in 2006 (page 8 of this). The accounts bemoan "the widespread persistence of poverty after half a century of international effort to eradicate, or at least appreciably diminish it" without any apparent trace of irony. The possibility that aid payments cannot, and will not ever 'eradicate poverty' is of course off the radar - if they ever admitted it, they'd lose their raison d'être.

* Yes I know that he is a Secretary rather than a Minister, the difference appears to be that a Secretary is more senior and is in the Cabinet. So why is the Prime Minister not called Prime Secretary?

"Britain faces power cuts threat"

The BBC have done a fair write up of a press release.

The killer sentence - and not even the Beeb seems to bother denying this - is "And an EU Directive that requires the most polluting coal- and oil-fired power station to close would result in the likely loss of a further 12GW generation capacity."

As a taxpayer and electricity user* who lives on a small, windy island built on coal, may I suggest that ... er ... coal may the way forward? Unlike nuclear or windmills, it doesn't need subsidies - we can collect tax from the mines, the miners and the generators. It's a safe and reliable energy source under our own feet. And BTW, CO2 is not a pollutant, FFS, it's a perfectly natural, airborne plant food. The coal will last us for centuries, and if and when it runs out, future generations can fill the empty shafts with household waste or something.

* In common with presumably 99% of the rest of this island's inhabitants.

The Kingsnorth Six

The Fat Bigot's musings on this set me thinking...

That they committed criminal damage appears to be beyond dispute, so the whole case was about lawful excuse, e.g. "Judge David Caddick said that the case centred on whether or not the protesters had a lawful excuse for their actions. He told the jury that for a lawful excuse to be used it must be proved that the action was due to an immediate need to protect property belonging to another."

Typical examples for this are; you see a child or dog dying of heat stroke in the back of a parked car and you smash the window open; or the fire brigade have to smash down a door in order to put out a fire. Fair enough, that's immediate need. But even the most hardened MMGW proponents are only saying that temperatures will rise as some vague unspecified point in the future (they keep pushing this date back of course, now that temperatures are going down again). So the reasonable defence of immediate need obviously can't apply here; the question is, out of twelve jurors (a couple of whom will inevitably be MMGW nutters themselves), how many would fall for this?

Anyway, the answer appears to be that "a jury that accepted their claim that only “emergency action” could stop damage to the environment and decided by a 10-2 majority that they did not act with criminal intent."

At least, Greenpeace are spinning it that way - according to them, a majority of the jury went for 'Not guilty'.

Does really this mean that ten out of twelve jurors were that gullible? That would be very worrying and suggest that the opinion polls on attitudes to MMGW, which say that public opinion is split 50/50 or even mildly sceptical overall are wildly wrong.

According to Wiki "In the past a unanimous verdict was required. This has been changed so that, if the jury fail to agree after a given period, at the discretion of the judge they may reach a verdict by a 10-2 majority."

In other words, in criminal trials, you only get convicted if at least ten jurors say so. Or you get off the hook if at least three jurors say so.

So, in order to preserve my sanity, I shall assume, for the time being, that the Kingsnorth Six got off the hook because there were three gullible idiots on the jury, rather than there being ten gullible idiots on the jury. Or would the former verdict have been reported as "The jury failed to reach a verdict"? In which case we are well and truly stuffed.

A little tip for E.On: in future don't press criminal charges in cases like this. Take a straightforward civil case, in which case there are no criminal penalties, you just put in a claim for the costs of cleaning off graffiti and loss of earnings from having to shut down operations for a couple of days etc.

The Return Of King Coal

Amidst all the doom and gloom, there were a couple of related articles in the FT today:

"Rising prices fuel unexpected renaissance in British coal"
The renaissance of UK coal is the result of a steep rise in world prices, caused by soaring oil and gas prices and a growing demand for electricity in the developing world. It is once again profitable to mine many of the UK's deposits and power companies are increasingly choosing local coal because of concern about shortages in the international market. Several power companies have indicated they will import less foreign coal and rely more on local supplies. In July, Scottish Power signed a deal with Scottish Coal to buy 2m tonnes a year - half of its output - for the next five years, which the mining group said would lead to the opening of new open-cast pits and more than 100 new jobs.

"Rising fuel prices give Welsh mines new lease of life"
The Unity Mine at Cwmgwrach in the Neath Valley closed 12 years ago. Now it is back in business, thanks to spiralling world energy prices. Around 220m away from the tunnel's end lies a 3m deep seam of high-quality coal. Processed for specialised industrial use, it could be worth as much as £300 a tonne - making miners on £30,000 a year eligible for bonuses that will double or triple their pay.

Don't forget that the UK coal industry went so horribly wrong last time because it was nationalised, unionised, subsidised and politicised. Unlike oil and gas production which is privately-owned and taxed to within an inch of its life, but is still going strong. If there is a threat to UK oil and gas (or coal, for that matter), it's the MMGW and windfall tax nonsense - maybe that's the real threat, the politicisation, if that's an actual word.

As long as we learn those lessons, it will all be fine.

Outbreak of commonsense!

Against a long backdrop of the LibLabConsensus trying to out-do each other in the MMGW-f***wittery stakes, comes this in today's FT:

Hutton eyes coal to replace imports of gas

John Hutton, business secretary, yesterday paved the way for a new generation of coal-fired power stations, claiming Britain could not wait for new clean-coal technology to come on stream... He said the Conservative policy on these plants - which would place a limit on carbon emissions - was "a potential threat to our energy security"... But Alan Duncan, shadow business secretary, said the intent of the government to develop coal "at any cost", was a decision that would leave future generations with a "massive carbon headache". He added: "That means they can only keep the lights on by being dirty."

What a turnaround! It only seems like a few days ago that The Goblin King heralded windpower as The Next Big Thing ... oh, it was.

Of course, John Hutton seems to have overlooked the EU's Large Combustion Plants Directive, which means we can't build them anyway, but hey.

"Britain facing energy shortfall"

More total and utter bollocks, of course, in particular this bit:

"More importantly, a number of older coal-fired stations may also have closed. Under the European Large Combustion Plants Directive (LCPD), aimed at curbing pollutants such as sulphur dioxide, power units built before 1987 must either be modified with modern emissions control equipment, or operate only for a total of 20,000 hours between 2008 and 2015, when they must come out of service completely.".

20,000 hours mean about one-quarter of the time, sure electricity demand is much higher at certain times of the day, but this is still a pretty stiff restriction. And what's this about "coming out of service completely"? We're facing an "energy shortfall" and the EU is forcing us to shut down perfectly good power stations?

In that case, the whole matter can be solved by leaving the EU and building more coal-fired power stations (we have plenty of coal left, as it happens).