Gloriously Shit Ideas Of The Day

From the BBC:

Parents who earn a combined income of more than £80,000 should have to pay if their children go to the most popular state schools, a report suggests.(1)

Private headmaster (2) Anthony Seldon raises the idea for left of centre think tank, the Social Market Foundation.

He said it would break "the middle-class stranglehold on top state schools" (3) and provide additional funds...

Dr Seldon said parents who were the top earners would pay the fee the state pays, which would be about £6,000.

Fees at the most oversubscribed state schools could be the same for the most affluent as those at independent day schools, about £15,000 a year for some primary schools, and £20,000 at secondary schools.(4)

He said a quarter of the money raised through charging should be retained by the school, with the rest redistributed among other state schools...

Speaking to BBC News, Dr Seldon said:

"There's a tremendously unjust system at the moment whereby the rich and the successful and those with strong elbows buy houses in catchment areas of successful schools; (5) they pay for tutoring, they elbow their way into top schools and this pamphlet is designed to enhance social justice."

...The proposal to offer poorer pupils places at independent schools says their fees should be paid by a government grant capped 50% above the cost of sending them to a state school.(6)

1) Dude WTF? Those self same people are paying more than their share of the cost of state education via the income tax system. This sort of means testing on speed just increases marginal tax rates even further.

2) Aha, now it makes sense. Want he wants is to increase the demand for private school places by reducing the cost differential between state and private sector. The money-grubbing shit.

3) How does he work that out? If, as he suggests further down, the state school concerned is allowed to keep some of the money raised, they'd have every incentive to accept as many pupils from higher income backgrounds as possible, so that would lead to increased segregation.

Unless he hopes to achieve this by driving children of better-off parents into private education - that's the only rational explanation

4) See 2).

5) Now he's getting down to the nitty gritty. What he is proposing is really a kind of twisted Land Value Tax or income tax surcharge which is only payable by the small sub-set of people who a) live in the area, b) earn a lot and c) send their children to the local state school. The only merit in his idea is that this would push down house prices in the catchment areas of good state schools.

The point of Land Value Tax is to reduce and replace other taxes and to apply to everybody. So we might end up with a situation where all the homes in the catchment area of a good state school are bought by higher earners - which is what happens anyway.

So what? They'd be paying the [land value] tax and they get the benefit, unlike Seldon's system where they pay the [income] tax for nothing in return and then pay again for the benefit.

6) Aha, yet more income for private schools, add that to 2) and 4). Except his maths is whack (he's only a fucking head teacher, after all, not somebody who knows anything), how on earth are parents of "poorer pupils" supposed to pay the difference between private school fees and the £9,000 grant?

He's got that one arse about face anyway. If we are going to have vouchers, give them to all children equally, that's the best system. If it's "social justice" he's after, that sorts itself out by definition because those vouchers are funded out of taxes paid by the "sharp-elbowed middle class".

Yes, but my job is replying to emails, you twat.

Allister Heath illustrates yet again that he who uses the word should has lost the argument before it even starts:

Workers should not be spending 650 hours a year on email

IT seems that we finally have an answer to why productivity is falling in Britain – and no, it has nothing to do with the fact that so many of us are spending so much time watching the Olympics. The problem is much more prosaic and far more devastating: we are spending so much time emailing each other that there is very little time left to do anything else.

Many people already suspected as much, but McKinsey has crunched the numbers. It finds that 28 per cent of office workers’ workweek is spent reading and answering email. Over a year, the average “interaction office worker” (management consultant speak for your normal white collar employee) spends 650 hours of “work” time on email, in most cases staring at a Microsoft Outlook screen. The study is based on US companies but undoubtedly applies equally to firms here in Britain.

And so on and so forth, blah blah blah. This whole research is about as useful as an earlier one they did pointing out that lorry drivers wasted too much time on the road.

Oi! Fatties! You're next!

From the BBC:

Prof Stephenson told the BBC a campaign to persuade people to eat healthy food might work in the same way as the current anti-smoking drive. There have been heavy restrictions on advertising smoking in the UK, on TV and at sports events, and a consultation is being launched on whether cigarettes should be sold in plain packaging.

"It's much more likely, as in smoking, that the solution will lie in changing the environments, changing the way people are exposed to marketing, advertising and pressures to buy these kinds of foods," he said, "Another aspect of that is the taxation of cigarettes to deter people from buying them - that seems something we should look at in relation to food," he said.

However, Prof Stephenson said he did not think society could simply exercise its way out of the problem of obesity. "My own personal experience is you have to exercise a huge amount to lose weight, I would have to run on a treadmill at maximum speed for an hour to counter-effect the calories from one or two Mars bars. Most people in modern life just don't have the time in our lives to spend several hours a day exercising."

The first bit seems clear enough: they'll sail merrily on meddling in people's lives, and if their measures fail - as they will - they'll just step up the meddling. I can't wait to see the introduction of the eating ban, when people have to take their food out of the restaurant and eat it standing on the pavement, so that healthy diners aren't the victims of passive obesity. And then the pol's will act all surprised when restaurants start going out of business.

The bit about Mars Bars seems a bit off-piste. One Mars Bar has 281 calories. A normal male adult doing a desk job and next-to-no exercise (i.e. me) needs 2,000 calories a day. I bet I could eat two Mars Bars a day without getting fat, even if I stick to my strict little-or-no exercise regimen.

"Should not"

There was a bizarre reader's letter in today's Metro:

Whether or not you accept the NHS needs reforming (Metro, Mon) or repeated assurances from both the Tories and Lib Dems they have no plans to privatise the NHS - something I don't believe - there's another issue to consider.

Anyone who can recall the disastrous consequences of the internal market introduced into the NHS under the Thatcher government will remember any form of competition in this area will lead to disastrous results, such as hospitals and GPs competing with each other.

More importantly, health provision should not be based on whether one company is better than another at providing a service.

Dave Reardon, London.

Is this letter tongue-in-cheek or is he operating on a completely different level of reality?

Circular Argument Of The Day

From The Metro:

A sixth body has been discovered on the stricken Costa Concordia cruise liner, Italian officials have confirmed, amid reports the ship's captain may have been 'showing off' when steering the vessel too close to rocks on Friday evening...

Prosecutors said they were investigating claims Schettino abandoned the ship with passengers still being rescued. The liner started taking on water and listing badly after rocks tore a 50m gash in its hull. Schettino blamed nautical charts for the disaster – claiming the reef had not been marked.

"We were navigating approximately 300 metres from the rocks," he told Italian television. "There shouldn’t have been such a rock."

Schettino’s lawyer, Bruno Leporatti, said the captain had executed a ‘brilliant manoeuvre’ in steering the ship closer to the shore so people could be rescued. He added: "I would to like to say that several hundred people owe their lives to the skill of the commander of the Costa Concordia."

See also: The driver brought the speeding car to a halt by parking it against a tree.

Yeah, but which government?

We had lunch at Sainsbury's today, which has free newspapers, so for balance I read The Sun and then The Daily Mirror.

The Daily Mirror editorial was fairly motherhood and apple but ended with the following classic (in print, it was bold, underlined italics):

Mr Duncan Smith should be focusing on how to raise the skills of British workers rather than chasing a few cheap headlines. What’s holding people back is a lack of jobs and investment in training – which is down to the Government’s economic policies.

They get an extra minus mark for "should" instead of saying "it would be nice if", what riles is the implication that lack of jobs and investment in training can blamed on the current lot's economic policies. Their economic policies are indeed awful, possibly marginally worse than Labour's, but even if they were perfect, there's not much they could have achieved after one year in charge.

If they'd made it clear that the lack of jobs etc. is down to the cumulative effect of successive UK governments' economic policies or education policies for the past few decades (or even centuries, I wasn't alive at the time) regardless of whether they were Tory or Labour, then fair enough, but the Mirror is supposed to be a Labour-supporting paper so this is a bit of an own goal either way.

The standard of propaganda pushed out by The Sun is just far more sophisticated, the conclusion at the end of the Sun Says comment on the same issue is as follows:

Britain needs skilled migrants and must not shut them out. But we also desperately need our young back in work. What's the answer? We must improve education - which Michael Gove is doing - so our young can compete in the world, particularly in science and technology.

And we must create more jobs. That calls for a low-tax, low-regulation economy encouraging entrepreneurs to start businesses here. Good jobs for all must be our aim.

That's far more stirring stuff. The discerning viewer will note that they say something positive about a Tory minister (probably deservedly so, Gove's heart seems to be in the right place) and the rest is Indian Bicycle Marketing.

They pander to the widely held notion that the Tories are the party of low-tax, low-regulation, when nothing could be further from the truth. And it's also pretty ironic that The Sun, the organ of dumbing down, should make a po-faced plea on behalf of "science and technology".

The Daily Mail outlines the advantages of Land Value Tax

From The Daily Mail (our new weekend paper of choice as it has the best weekly TV guide):

Take a short trip on the metro to [Athens'] cooler northern suburbs, and you will find an enclave of staggering opulence. Here, in the suburb of Kifissia, amid clean, tree-lined streets full of designer boutiques and car showrooms selling luxury marques such as Porsche and Ferrari, live some of the richest men and women in the world...

One of the reasons [the inhabitants] are so rich is that rather than paying millions in tax to the Greek state, as they rightfully should, many of these residents are living entirely tax-free. Along street after street of opulent mansions and villas, surrounded by high walls and with their own pools, most of the millionaires living here are, officially, virtually paupers.

How so? Simple: they are allowed to state their own earnings for tax purposes, figures which are rarely challenged. (1) And rich Greeks take full advantage. Astonishingly, only 5,000 people in a country of 12 million admit to earning more than £90,000 a year — a salary that would not be enough to buy a garden shed in Kifissia... (2)

With Greek President George Papandreou calling for a crackdown on these tax dodgers — who are believed to cost the economy as much as £40bn a year (3) — he is now resorting to bizarre means to identify the cheats. After issuing warnings last year, government officials say he is set to deploy helicopter snoopers, along with scrutiny of Google Earth satellite pictures, to show who has a swimming pool in the northern suburbs — an indicator, officials say, of the owner’s wealth.

Officially, just over 300 Kifissia residents admitted to having a pool. The true figure is believed to be 20,000. There is even a boom in sales of tarpaulins to cover pools and make them invisible to the aerial tax inspectors. (4) ‘The most popular and effective measure used by owners is to camouflage their pool with a khaki military mesh to make it look like natural undergrowth,’ says Vasilis Logothetis, director of a major swimming pool construction company. ‘That way, neither helicopters nor Google Earth can spot them.’(5)

But faced with the threat of a crackdown, money is now pouring out of the country into overseas tax havens such as Liechtenstein, the Bahamas and Cyprus. (6)

1) Yes, getting people to declare their incomes honestly is difficult, and even if they did, a tax on incomes still has huge dead weight costs...

2) ... but working out the value of land that people own is relatively simple.

3) The DM confuse 'cost to the economy' with 'the government collecting less in tax than you'd expect' and use the "s" word, but hey.

4) They haven't learned the lessons of the Window Tax. It's entirely unnecessary to know exactly what is built on any plot of land to work out the location value of the land to within a tolerable margin of error (certainly by Greek standards), it doesn't matter whether an individual house has a swimming pool or not (and if you wish to make swimming pool owners pay more in tax, then it's easier to slap a tax on mains water usage).

5) Most pictures on Google Earth are several years old, it's too late to try and camouflage your swimming pool now.

6) So what? A lot of that money will come flowing back to pay the LVT bills, won't it? And if not, the Greek can recover the tax arrears by selling off the plots of non-payers or renting them out. Which, coincidentally is more or less the opposite of their plan to sell off even more state-owned land.

But no doubt, all these millionaires will manage to track down a Poor Widow or two to use as a human shield: surely it's far more important to allow them to live out their days in peace than try to plug the budget deficit or anything?

One-sided Economics by people who don't know as much as they pretend they do

From a reader's letter in yesterday's Times (it's a very old fashioned organisation so they don't put their stuff online):

Mr Cameron... should look at taxing profits which stay in companies and are re-invested in markets and products differently from those that are paid in dividends and buy backs..."

Bob Bishoff, Managing Partner, SCCO International

OK, here's a crash course in calculating corporation tax for people who have better things to do than making their "clients more valuable by providing solutions to the key management issues of Strategy and Structure."

1. You calculate the company's profits under normal accounting rules.

2. In arriving at the company's profits under normal accounting rules you DEDUCT amounts that are spent on market research, R&D, product development, staff training, machinery, advertising etc (unless you are an idiot and don't deduct them).

3. Therefore, by definition, that part of a company's income which is re-invested in the business is excluded from accounting profits because it's not profit - it's an expense.

4. There's then a bit of tomfoolery with add-backs and deductions, timing differences etc blah blah, which even out in the grander scheme of things to arrive at taxable profits (overall, taxable profits are much the same as accounting profits, sometimes higher, sometimes lower).

5. You multiply taxable profits by the corporation tax rate and that's your corporation tax bill.

6. Therefore, only a complete moron would accuse the government of taxing re-invested profits at too high a rate, because the government does not tax re-invested profits at all because amounts re-invested in the business do not count as profits in the first place!!

Twat points to the first person to leave a comment saying that "But a company doesn't get tax relief for money it spends on land and buildings". Firstly, if you are a tenant you get a full deduction for the rents you pay; secondly, if you buy land and buildings, you still get a tax deduction for the interest you pay on the loan; and finally although you can't claim much in the way of capital allowances any more, IBAs having been phased out, there is very little tax on the increase in value of the land and buildings, so fair's fair.

NO2AV - Epic Propaganda Fail

On page 7 of their leaflet, they proclaim that "The winner should be the one that comes first" (thus using the s-word and thereby invalidating their own argumen, as well as using 'that' instead of 'who'), which they illustrate with a picture of four sprinters crossing the finishing line.

Even though they explain patiently and correctly on page three how AV works, i.e. in a close election without a clear result, the lowest-scoring candidate is eliminated etc, to illustrate the supposed unfairness of AV, their arrow points clearly to the runner who is last and labels him "The winner under AV" despite there is no earthly way he could win under AV as he would be eliminated.

Absolute and relative risk

From the BBC:

Fathers-to-be should stop smoking to protect their unborn child from the risk of stillbirth or birth defects, scientists say.

University of Nottingham researchers found that pregnant women exposed to smoke at work or home increased their risk of stillbirth by 23% and of having a baby with defects by 13%. They looked at 19 previous studies from around the world. A UK expert said it was "vital" women knew the risks of second-hand smoke.

Ho hum.

The figures are probably complete rubbish, but let's take them at face value for now. According to Tommy's there are around 4,000 still births a year in the UK against around 800,000 live births, and let's assume that a quarter of mothers smoke or are exposed to 'second-hand smoke'.

While I accept that a still birth is heart breaking and distressing for the parents involved, let's do our bit to inform women of the absolute risks of second-hand smoke:

Not exposed - 600,000 pregnancies x 0.473% = 2,837 still births
Exposed - 200,000 pregnancies x [0.47% x 1.23=0.58%] = 1,163 still births
Total = 4,000 still births.

So in absolute terms, 'second-hand smoke' increases the risk by 0.11% (from 0.47% to 0.58%). What's even more heart breaking is of course that 81% of still births where 'second-hand smoke' was in play would have happened anyway, so this will cause additional guilt and suffering on the part of the parents.

Finally, let me do a bit of Victimhood Poker for once and point out that a far greater risk factor is how many grandparents the parents of the child have in common.

Fun Online Polls: Land ownership and the Irish bail out

On a low-ish turnout (so special thanks to those who took part), the results to last week's Fun Online Poll were as follows:

Land ownership is based on...
Legal concepts - 49%
Private contracts - 25%
Social contracts - 18%
Other, please specify - 8%

Whoever thought that land 'ownership' is based on private contracts scores an F-. For sure, when Mr A sells to Mr B, Mr B assumes Mr A's rights to exclusive possession under a private contract, but those rights themselves are granted and/or guaranteed by 'The State' - the subject matter of the contract, the thing being sold is created by 'The State'.*

'The State' is of course all of us, not just the police who go after burglars or squatters; HM Land Registry which is the final arbiter on who owns what; or the court system which props up house prices by making it difficult to evict borrowers in arrears balances the interests of mortgage lenders and borrowers. Those 'institutions' are there for our convenience and we are not here for theirs.

So the next possible - and most popular - answer is 'legal concepts', but those concepts in turn are based on 'social contracts' (which are in turn sometimes imposed by military force, e.g. Normans in England; whitey in America or Australia etc). If there were no popular support** for the idea that everybody respects everybody else' right to exclusive possession (and that includes a tenant's rights vis-a-vis his landlord) which is more or less fundamental to the efficient working of the economy, even the Communist countries accept this, then we wouldn't have these legal concepts.**

No doubt you can guess what this is all leading up to: the fundamental point that if a car manufacturer makes money by manufacturing and selling cars, why shouldn't the government derive its income from doing what it does best, i.e. by creating and guaranteeing land titles?

* As a useful contrast, consider the sale of a second-hand car, this is a private, legally enforceable contract, but the subject matter is a car which a car manufacturer - a third party to the contract - has created. You can't trade in cars until somebody has built them first. Unlike with land, the manufacturer has no legal relationship with the subsequent purchaser; but when you buy land you assume privileges which The State will continue to provide for the foreseeable future, so The State is always a party to the contract.

** Again, we can contrast this with the trade in illegal drugs or prostitution, which is based entirely on private, legally unenforceable contracts and they are only illegal because 'society' in its infinite stupidity wisdom has decided they 'should' be.
--------------------------------------------
Just about every party running in this week's Irish general election mumbled something about renegotiating the terms of the EU-IMF bail out, for background see e.g. The Telegraph, so that's this week's Fun Online Poll - what sort of success do you think they'll have?

Vote here or use the widget in the sidebar. You can choose more than one possibility as they are not all mutually exclusive.

... and finally they came for the water users!

The BBC wheel out their fakecharity template article.

1. There's a "should" in the headline, repeated in the first sentence, which is a signal that what you are about to read is complete fabricated bollocks.

2. Then there are some rent-a-quotes from the National Trust, RSPB and World Wildlife Fund etc.

3. It rounds off with a government spokesman agreeing that "more must be done".

So far so good.

Now, I can understand Them going for smokers, drinkers, fatties, skinnies, gamblers, pornographers etc, because those are all minorities; They launch occasional skirmishes against car drivers, but they are the majority so it's half-hearted at best; but what makes Them think they can humiliate water users? That's all of us, surely? Even tramps have to visit public toilets or take the occasional communal shower in a drop-in centre or something.

PS, water is indeed "a precious resource" but there is no lack of the physical substance itself; the cost is collecting it, storing it, purifying and pumping it.

We own land! Give us money!

Via HPC:

1. From HouseLadder:

Landlords should receive more government support in order to encourage lenders to grant buy-to-let mortgages, it has been claimed.

Chris Town, vice-chair of the Residential Landlords Association, noted although the market appears to be "loosening up … it is still very restrictive for professional landlords who wish to get into the market in a serious way".

Britons hoping to let property privately may find limited new home construction means it is difficult to join the buy-to-let market, as a shortage of real estate will potentially push up prices and make it harder to secure a loan.

And handing out more generous loans won't push up prices?

2. From Estate Agent Today:

Mark Clare, chief executive of Barratt Developments, said: “The findings from this nationwide poll illustrate the extent of the housing crisis facing Britain and the depth of the public policy challenges we now have to tackle as a result. There is no silver bullet which will solve the problem overnight, but there are steps which can be taken.”

“Without doubt, making mortgage finance more readily available to credit-worthy first-time buyers should be top of the list. It cannot be right that people in their 30s with good jobs and good credit histories are having mortgage applications turned down. I am pleased the Government has rightly identified this as an urgent problem and is meeting the banks to assess what can be done.”

OK, Barratts aren't so daft as to ask for money directly, but expecting the government to force banks to give their customers more money has much the same effect, and unlike the BTL vultures in (1), Barratts can take that money and walk away, it'll be the FTB's who are lumbered with the debts.

Vested Interest Fun

Nice to see a whole shed load of Vested Interest groups sticking their oars in at the BBC:

The UK government should put a moratorium on shale gas operations until the environmental implications are fully understood, a report says.

Inevitably, the article kicks off with a 'should'.

"We are aware that there have been reports from US of issues linked to some shale gas projects," a spokesman for the Department of Energy and Climate Change (Decc) told BBC News, "However, we understand that these are only in a few cases and that Cuadrilla (the firm testing for shale gas in Lancashire) has made it clear that there is no likelihood of environmental damage and that it is applying technical expertise and exercising the utmost care as it takes drilling and testing forward."

Regulator takes regulated's word for it. Nice.

The Tyndall report also expresses concern that the exploitation of shale gas is bringing new greenhouse gas sources into play. It says: "This will further reduce any slim possibility of maintaining global temperature changes at or below 2C (3.6F) and thereby increase the risk of entering a period of 'dangerous climate change'."

All things being equal, the amount of 'greenhouse gases' and other pollutants created per unit of energy consumed in a building is probably lower with domestic shale gas than e.g. importing gas from Russia or the Middle East.

... there have been reports of problems with the technology in the US, such as cattle dying after drinking water from the fracturing process that found its way to the surface.

Possibly true, that all depends on whether cattle drink water which has recently fallen as rain or which trickles out of rocks. But the overall safety record of European oil and gas producers is vastly better than in the USA, so I'm not sure that's relevant.

In Pennsylvania, some residents can now set fire to their drinking water after methane leaked into wells. They are blaming shale gas extraction.

Possibly true. Safety tip: if you turn on your water tap and smell gas*, then open a couple of windows and leave the tap running until the gas dissipates, and most importantly, don't hold a lighted match under a running tap.

The Tyndall report says that gas drilling in Lancashire will give rise to a range of local concerns including noise pollution, high levels of truck movements and land use demands.

Ah... the NIMBYs making a late guest appearance. As a rule of thumb, where there's a Greenie there's a NIMBY not far behind.

The Decc spokesman said: "We support industry's endeavours in pursuing energy sources (like shale gas), provided that tapping of such resources proves to be economically, commercially and environmentally viable...

If it weren't 'economically viable', then no private company would want to do it, short of there being massive subsidies. The reason why we can't rule out the government subsidising this is hinted at earlier in the article: "Experts say the technological breakthrough increases energy security worldwide and reduces the diplomatic power of gas-rich nations, such as Russia."

The article concludes:

"All onshore oil and gas projects, including shale gas exploration and development, are subject to a series of checks, including local planning permission before they are able to move ahead with drilling activities."

Not going to happen then, is it, short of energy companies merrily greasing a few palms. So it's in the interests of local politicians to stoke up Greenie and NIMBY opposition because that enhances the amount of bribes they can demand.

*The problem being that apparently you can't smell natural gas, but hey. More to the point, UK water companies are very much geared up to separating out methane from water pumped into the system, that's what sewage works are for.

It can't be rocket science to separate a heavy liquid (like water) from a light gas (like methane). From here: "Methane can also migrate from coal seams into sandstone aquifers. If methane is present in an aquifer, it will likely exist as a dissolved gas in the water. When the well is pumped, the water level is drawn down. The draw down will lower the pressure in the well and allow more gas to be released from the water. Methane will readily move from the water phase to the gas phase when water pressure is reduced to atmospheric pressure at the ground surface."

Fascist Health Scare Du Jour

From The Metro:

Children who have not had MMR jabs should* be banned from schools, a leading health official said yesterday. The ‘radical’ move was the only way to increase immunisation rates, said Dr Sohail Bhatti, director of public health for east Lancashire.

‘It’s what happens in France,’ he said. ‘There, you can’t be admitted to school unless you show your vaccination certificate. That’s what we call big society. You have a responsibility to be a good citizen and part of that is not spreading potentially fatal diseases to other children.'

... In 2008, a similar proposal by the Labour government was dubbed ‘Stalinist’ by the British Medical Association.

Question: do children who haven't had the MMR jab 'spread potentially fatal diseases'? Is there the slightest shred of evidence for this? Like most of my classmates, back in the day, I've had measles and mumps and am still alive.

Question: would the excluded children be given the cash equivalent of the cost of the school place that is denied them to try their luck in the free market?

Question: isn't that last comment from the BMA a bit rich?

Declaration of interest: both my children had the MMR jab.

* He who says 'should' is usually completely in the wrong.

"Should"

Right-wing authoritarian, Philip Booth (of the IEA, not to be confused with devoutly libertarian Phil Booth of No2ID), displays a surprising naïvety in his comments on Iain Duncan Smith's proposals for a Citizen's Pension:

There are problems with the current system, but sustainable reform is possible. The contributory principle should (1) be strengthened and the two state pensions merged into one. Individuals should (2) earn an entitlement to a fixed amount of pension each year when they pay their NICs with that fixed amount being indexed until retirement. Once pension is accrued it should (3) neither be added to nor taken away by the government.

The pensions of all the elderly would then be determined by the entitlements they earned throughout their working lives. If a particular generation wanted higher pensions, then that generation would pay for it with higher NICs. (4)

The problem with the proposed “citizens’ pension” is that the pension will be decided by parliament and not be dependent on contributions (5). No fewer than 43 per cent of active voters are aged 55 or above. The government will thus not do anything to undermine the financial position of the elderly. (6) A citizens’ pension will be forever increased under pressure from a greying electorate...(7)

The Lib Dems say they do not like the contributory approach because carers and the disabled might be left out. Such people would not pay NICs and so they would not get a state pension. But if it is desired to fix this problem, the solution is easy: the government just gives credits to such people; it happens now and the system works. (8)

1) He who says 'should' has just lost the argument.

2) And again.

3) Three strikes and you're out.

4) The state pension has always been 'pay as you go'. It's the simplest and cheapest way of doing it. The fact that people believe it to be 'contributory' is a separate issue. And any discussion of state pensions that ignores the Pension Credit is pointless.

5) Who decides on the age at which you qualify for a state pension? Who decides the level thereof and how it will be indexed? Who decides on the level of the Pensions Credit (which makes a mockery of the whole 'contributory principle')? Who decides the level of the super-tax on employment National Insurance contributions?? That wouldn't happen to be, er, the self-same Parliament, would it?

6) Sort-of-true. This pandering to the over-55s primarily manifests itself as Home-Owner-Ism, which is a far greater drag on the economy than the 5% of GDP we spend on state pensions and Pensions Credit.

7) Also sort-of-true. But if things were as simple as he said, by now the state pension would kick in at age 55 and be £300 per week. It clearly isn't, so there must be equal and opposite counter pressures from somewhere that decide how mean or generous the state pension system is.

8) If he approves of this approach, has he not just driven a horse and cart through his own argument?

Pendatry Fun With Simon Heffer

From the BBC:

"We are judged by how we speak and we are judged - when we put things on paper (1) or online - by how we write," he says. Now he's calling for schools to put more emphasis on grammar in the classroom. "There are many contexts in life (2) where formal communication in every sense of the word (3) is required. I think (4) the education system needs to acknowledge this," he argues...

Surrounded by well-stocked bookcases in the school's learning centre, the writer - now Associate Editor of the Daily Telegraph - became a temporary English teacher to a group of students (5). "The difference between 'I will' and 'I shall'. Have any of you been taught that?" (6) he asked.

1) "Put things to paper", surely? "Put" is an ugly word anyway, so why not say "commit things to paper"? And you don't "put things online", you "post" them or "upload them" or something. Actually, the whole clause (or whatever that things between the hyphens is called) is superfluous, we know that "writing" is usually on paper or online.

So he could have boiled that down to "We are judged by how we speak and by how we write." But that's the stupid passive form, so even better would have been "People judge us by how we speak and write."

2) WTF is a "context in life"? Wouldn't "situation" have been better?

3) Which word - "formal" or "communication"?

4) Missing "that". And there's no need to prefix every opinion with "I think that...". It's almost as irritating as people who say "should" all the time. This is quite different to from him his saying "I think that platinum is denser than gold", which is a tacit admission that he is not sure whether the statement is factually correct or not (it is).

5) They're pupils, FFS (although that was down to the BBC, not The Heff).

6) What a rubbish sentence. "Have any of you been taught [what] the difference between 'I will' and 'I shall' [is]?" would have sounded much better, but even that would have at best elicited a "yes" or "no" answer, and not furthered his cause. Why didn't he just tell them that there is a difference are differences, and go on to explain what the difference is the differences are?

What about PayPal? And "known" to whom?

From the BBC:

Credit and debit card companies should face fines if their products are used to buy child pornography on the internet, an MP says. The Labour MP, Geraint Davies - whose motion is being debated on Wednesday - said he wanted an end to anonymity for pre-paid credit cards. He said as long as the users of the cards remained anonymous the credit card firms were "complicit" in the viewing of child pornography. Forty MPs have so far backed his call.

Mr Davies told BBC Radio 4's Today: "The major abuse now in terms of use of credit cards for downloading child pornography is through pre-paid credit cards, which you can pick up for around £100 a time at your local shop or service station. They're completely anonymous, you can register as Donald Duck at Buckingham Palace, and then use these, through a password or directly, to download abusive images."

Geraint Davies' motion in full: "That leave be given to bring in a Bill to impose penalties on credit and debit card providers for the facilitation of the downloading of child pornography from the internet; and for connected purposes"

The Swansea West MP said the identity of the person who owned a pre-paid card should be known.

These arguments fail for use of the word should and in any event, "known" to whom?

Further, he is muddling two completely separate issues: fines can be levied on the credit card companies whether the identity of the person using it is known or not. And if PayPal goes "legit", then as sure as eggs are eggs, there'll be plenty of others to take its place.

More 'should' and 'must' fun

Roger Thornhill left this comment here (which doesn't show up, comments are on the blink again):

Interest rates should be kept at a level to preserve the value of the currency, not protect house prices. If you stray away from that path, you are adding new distortions to anything you think you are "correcting".

Nope. Any argument based on the word 'should' fails by definition, and in any event it's not clear whether RT means the exchange rate or inflation (and if so, whether he means price inflation or monetary inflation).

The exact level of a currency (as measured by its external exchange rate) is no more business of a small committee of political appointees than any other economic variable, such as minimum or maximum wages, export or import quotas, the price of houses or indeed interest rates*. The best thing you can do for a currency is abandon exchange controls, which happily we did in the 1970s, with a brief reversion to intervention in the late 1980s/early 1990s. If people think their domestic currency is overvalued, they can swap into another one and vice versa.

As a massive debtor, the government is honour bound to minimise the interest rate it pays to reduce the burden on the taxpayer, which could be best done by just paying off the debt - the main driver of government interest rates is the debt-to-GDP ratio as I showed here.

If RT means monetary inflation, then see the second half of this post.

* We agreed by a reasonable margin that the best thing the MPC could do at its next meeting is to disband itself. The MPC has far less impact on interest rates than people think, and whatever it decides leads to more distortions etc. What has had an impact on interest rates is the £300 billion plus soft loans which the government gave to UK banks under the guise of the Special Liquidity Scheme and the Credit Guarantee Scheme, all with the aim of propping up house prices, of course.
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From diametrically opposite on the economic spectrum, Robin Smith commented thusly here:

... no need to nationalise banks. But the issuing of the people's money certainly must be taken away from private hands.

A lot of people think that it is the preserve of 'the state' to issue money, but as I've explained before, anybody can 'issue money', provided people trust that person to back it up. Anybody who has ever bought anything on credit has 'issued money', whether that is a hastily scribbled IOU in a corner shop or merely waving your credit card at the bar maid at the start of the evening. But the next time you pop into the shop, the shopkeeper will expect to be repaid, and at the end of the evening, the pub will be most dischuffed if your card payment doesn't clear.

You might get away with not honouring the occasional small debt, but on the whole, if you are seen as somebody who does not, or simply cannot or will not honour his debts, your 'credit rating' (i.e. your ability to buy goods on credit or issue your own money) is at an end.

I assume that RS is referring to the misconception that banks 'issue money' when they grant mortgages. Wrong. The banks actually 'issue money' when they issue shares or bonds or indeed take deposits. They take your state-backed money and give you a piece of paper with a number on it saying, "The bank owes you the sum of £xxx". (It's exactly the same as the shopkeeper giving you a packet of fags on the day before pay day in return for you giving him a piece of paper saying "IOU £6").

This practice is quite innocuous, provided the bank has assets to back this up, i.e. it takes your money and puts it to a slightly more profitable use than you could. In practice this means lending it to somebody who can easily afford the repayments of interest and principle. (It's exactly the same as any other business issuing shares or bonds - it has to invest that in something sensible that will make a profit out of which it can repay you).

By and large, and in the absence of a bubble in the perceived market value of land and buildings, the banking system (in the UK and in most other countries) works fine. Even in the most favourable economic climate, one loan in two hundred will go bad, so the interest the bank pays you is 0.5% less than what its borrowers are paying but you would rather accept the slightly lower interest rate from the bank than run the risk that you lend money directly to the one-person-in-two-hundred who defaults.

It is only in bubble conditions that it goes horribly wrong.

The banks lend £x00,000 to somebody to buy a house (which a few years ago would have sold for half as much), who dreams that even if he can't really afford the repayments, he will be able to sell on the same house to A Bigger Fool, repay the loan and trouser a tidy profit. The purchaser never sees the £x00,000 the bank lends him, because his solicitor gives that to the vendor's solicitor who pays it straight back into the bank. Within a split second, the bank's assets (the loan to the borrower) and the bank's liabilities (the deposit from the vendor) have both increased by £x00,000.

The problem is that once house prices have risen high enough, the last purchasers in the pyramid scheme cannot keep up repayments, so the whole bubble bursts. As between borrower and bank, this gets ugly enough, but what of the vendor who deposited his money with the bank on the assumption that the bank knew what it was doing? So, he panics and there's a run on the bank - some depositors are repaid, others aren't - so now three people are agonising over the same loss (the borrower, the bank and the disappointed depositor).

So the government steps in to bail out the disappointed depositors, and now a fourth group has to suffer, and so on. it's even worse if you have a government that is Hell bent on keeping house prices as high as possible, they have to pump in money to keep the bank afloat and then as much again in the vague hope that the bank will keep lending enough money to an eternal supply of Bigger Fools. The government in turn has to suck this money out of the productive economy - which has already taken a big knock because of the loss of confidence - and the economy goes into a Home-Owner-Ist death spiral.

To cut a long story short, the best way to prevent banking crises is to prevent there being bubbles in the price of land and buildings in the first place, which is of course something that our old chum Land Value Tax would do on his afternoons off.

Yasmin Alibi-Brown on VAT

Oh, the sheer and unadulterated Righteouness of it all:

“Zero-rated items, such as food (1), books (2) and children's clothing (3), shouldn't have VAT applied to them as it would hit the most vulnerable members of society the hardest."

Wot? Of course, we 'shouldn't' have VAT on anything, but let's look at those three items in turn:

1) We would get an average household's food bill down by hundreds of pounds a year if we left the EU.

2) Books? What is she talking about? Has she never heard of public libraries or second hand book or charity shops? I'm not aware that that the ultimate - and as yet undefined - victim group, 'the most vulnerable' would be 'hardest hit' if the price of a new book went up by a quid.

3) Children's clothes are stupendously cheap, cheaper than they have ever been. In any event, has she never heard of hand-me-downs, charity shops etc? Or is she thinking more of Nike trainers? And don't we have Child Benefit (or, G-d forbid, Child Tax Credits) to part-pay the cost of children's clothes?

Problem is of course, it wasn't the Yazzmonster (TM JuliaM) who said that, it was Stephen Robertson, Director General of the British Retail Consortium.