Modern Monetary Theory - Kwasi but twue

The MMT view of things is perfectly simple and covers the taxation/funding side as well as the spending side.

1. When the government spends money, it is printing or creating money. It does not need to 'borrow' money to spend, either there will be more coins and notes in circulation or more Treasury Bonds (or their digital equivalents). These are just two types of the same thing. Cash is liquid and non-interest bearing, bonds are less liquid and interest bearing. But both are just numbers on bits of metal, paper or in an electronic register somewhere, issued and backed by the self-same government.

2. When the government collects taxes, it is unprinting or destroying money. The purpose of this is to create demand for the currency (primary aim) and hence avoid inflation and keep interest rates down (outcomes). It is broadly agreed that that low inflation and interest rates are A Good Thing.

Some MMT supporters look at the first part, the spending/printing side and say, "Oh well, that means that the government doesn't need to borrow money or collect taxes to be able to spend", which is to completely ignore the second part. These people are moving the debate backwards and discrediting MMT, which is not a policy recommendation, it is a simple description of how things work.

The recent Truss/Kwarteng foray into cutting taxes was a bad idea politically (it would have increased inequality) but the financial markets don't care about that, they care about the second part. Unfunded tax cuts reduce demand for a currency and hence lead to the currency weakening relative to other currencies; hence imported price inflation; as well as higher domestic inflation (more money sloshing about chasing the same amount of goods and services); and higher interest rates (to compensate for future expected inflation and general uncertainty that the government doesn't have a clue what it's doing).

Simply reversing the proposed tax cuts has reduced the damage in part, but not completely. If a car runs you over, you can't ameliorate your injuries by having the car reverse back over you again! And with Truss and Kwarteng at the controls, you can expect to be the victim of lots of hit and runs in future.

"Heat rises" and other Alarmist fairy tales...

Sorry to come back to this, but it has been bugging me for days.

Joseph Postma posted a video on YouTube. He is top man and a "climate denier" but he has sadly fallen into the Alarmist traps of:
a) ignoring clouds, and
b) assuming that the Sun warms land and oceans and that they in turn warm the troposphere from below.
So he fights the Physics deniers on their chosen territory, splitting hairs over radiation theory and thermodynamics and so on, all of which are actually largely irrelevant.

I pointed out in the comments how the Greenhouse Effect actually dictates surface temperatures (cloud temp is fixed by sunshine; add on lapse rate x altitude of clouds = surface temperature) and a self-appointed Guardian Of The Galaxy (a True Believer and regular commenter at Science of Doom) tied himself in knots trying to come up with killer arguments. Apart from the usual ad hominems and meaningless jargon/waffle, the best he could come up with was this:

"The Sun heats the Earth and the lower atmosphere is heated by the Earth's surface... No physics supports top down warming when heat naturally rises."

Let's do the last stupid statement first. In everyday life and on a small scale, sure, hot air (from a fire, for example) moves up vertically. That's only because hot air wants to expand, so becomes less dense than the surrounding air, so gravity pulls the denser air down in its place and this in turn pushes up the less dense air. It's the density that is key - you could put a helium balloon in the freezer for a bit, it will still float upwards in much warmer air.

'Heat' itself doesn't rise, and certainly not 'naturally'. 'Heat' doesn't really do anything, it just a measure of thermal energy that moves from a hot object to a cold object. Put some polystyrene between them, hey presto, much less 'heat'.

When hot or warm air rises and expands, its temperature falls. It has the same amount of energy as before, but it gains as much potential energy equal as it loses in thermal energy. That is key to this, the TOTAL energy.

People always forget potential energy (mass x altitude x gravity), because it's not much practical use. You have to convert it to kinetic energy first to be able to harness it, i.e. allow water from a high reservoir to fall through turbines to generate electrical energy.

Now the first stupid statement, "The Sun heats the Earth". The Sun warms up whatever it hits first, which is clouds for two-thirds of sunshine. And it warms them the same as anything else, you can calculate the likely end temperature (effective temperature) using the Stefan-Boltzmann equation and it's around 255K.

Let's say one-third of the sunshine actually directly hits Earth at ground or sea level, plus a bit more that gets through clouds, call it half in total, This is only sufficient to warm land and ocean surface to 234K. That can't warm something that must be at least 255K, can it?

[Question: if 'back radiation', which is emitted in all directions, can significantly increase the temperature of the land and ocean surface below it, why doesn't it increase the temperature of clouds above it by a similar amount? As a result of which they'd all evaporate?]

Third stupid statement: "The lower atmosphere is heated by the Earth's surface". They are to all intents and purposes the same temperature and are both warm for the same reason.

What actually happens is that clouds are a certain altitude and the Sun warms them to a certain temperature, which of course warms the surrounding air to the same temperature. Clouds are high up, so that air also has a lot of potential energy. Energy likes to spread out evenly, so the air lower down, which has less or no potential energy, has more thermal energy to balance it out.

That PE - TE trade-off is the whole basis for the dry lapse rate, which = gravity ÷ specific heat capacity, and is observed in real life. The Gas Laws just show that low and high temperatures will never equalise. Pressure falls faster than density as you go up, so temperatures have to fall as well as you go up. Temperature is proportional to pressure ÷ density all the way up.

To use a simple maths analogy, Dave is six inches taller than Jack; Jack is six inches shorter than Dave. That doesn't tell us how tall either is. If I tell you the height of one, then you know the height of the other.

The lapse rate also works in both directions; cloud temp is fixed and surface temp is simply cloud temp + their altitude x lapse rate. It would be one heck of a series of coincidences if it worked the other way round and the surface temperature magically adjusted itself to be whatever is required to give a cloud temperature that is exactly what you would expect if you calculated cloud temperature on the basis of the sunshine they receive.

The Guardian Of The Galaxy then played what he thought was another trump card, saying that clouds are below freezing (duh, I kept saying that) and so they can't warm the land or ocean surface. It's not as simple as "clouds warm the surface", it's to do with energy (in all its forms) trying to spread itself out as evenly as possible. I think the fancy term is 'entropy'.

And doesn't this nuke the Alarmist claim that radiation from cold things (CO2) makes a warm thing (the surface) even warmer? As any fule kno, CO2 absorbs/emits radiation mainly at 15 microns, if you plug that into Wien's Displacement Law, that's equivalent to radiation from a blackbody at about 200K (minus 73C).
---------------------------------------------------------
Is this really so difficult to understand?

Is there a proper physicist who can see a flaw in this logic - the approach reconciles even better on Venus with 100% cloud cover so we don't need to make adjustments for that sunshine which directly hits the land or ocean surface like on Earth. If surface temperatures there were purely due to 'back radiation', its atmosphere would have to amplify upwelling surface radiation several hundred times over. Our Alarmist twat insisted, unprompted by me, that "Radiative fluxes do not add, they average" which is not only contradicts his whole thesis (that 'back radiation' multiplies itself) but is complete bollocks anyway, radiation is far more complicated than that.

Your occasional reminder that Jacob Rees-Mogg is a twat

Mirror editorials are usually wide of the mark (to the left, of course), but they've nailed it this time:

Labour blasted top Tory Jacob Rees-Mogg today after he suggested any "ambitious, driven” Brits should stop working from home. The Commons Leader, whose £5m house is a five-minute walk from Parliament, reignited the row over Tory ministers demanding employees get back to their desks...

So far so stupid...

Labour's deputy leader Angela Rayner, the Shadow Future of Work Secretary, said:

“This is an insult to the millions of working people who have worked effectively from home throughout this pandemic. Jacob Rees-Mogg should check the manifesto that he was elected on in 2019 which committed the Government to flexible working."

This 'digital hermit' applauds Ms Rayner.

Killer Arguments Against LVT, Not (489)

Emailed in by Benj from The Library of Economics and Liberty [sic]:

The author picks up on this pro-LVT argument:

Solution: A land tax. The first person to find some unused land gets to claim it, but also, the person who owns a particular piece of land at any given time has to pay a tax approximately equal to the intrinsic value of that land (the value not due to human labour). The tax money should then be distributed evenly among society.

That's a very hypothetical example, but hey. Note the key words "the intrinsic value of that land (the value not due to human labour)". The author is clearly thick and twists it round to the opposite.

Here's the KLN:

To put this in the form of a common-sense moral dialogue:
A: Welcome to the island!
B: Thanks. Now hand over half the surplus value of your land. You owe it to me.
A: This is my land. I’m the one who farmed it. I was going to give you some to help you out, but you’re scaring me.

Who says it's his land? Land ownership can only really exist under the umbrella of a government, i.e. consensus backed up by force. Or just force. What if they were both washed up at the same time but one of them managed to save a revolver and bullets from the ship wreck? Who do you think gets to own the land?

B: You’re entitled to your value-added, sure. But you have to share the raw productivity of nature with me.

This bit is actually correct. But the author is wilfully blind as to what the "raw productivity of nature" means...

A: Seems unfair.
B: Well, let me point out that you seem to have an inborn knack for farming.
A: True, I’ve always had a green thumb.
B: Interesting. I wasn’t born with this talent, so you also owe me half the value of your inborn green thumb. I think I’m going to like this island!

Exactly not. The point about Georgism is not taxing the value of individual skill and effort. No way is the newcomer entitled to half the total value of the output. He is - ultimately - only entitled to half of what he himself would be prepared to pay in rent/tax.

If the land is incredibly difficult to farm and/or the newcomer is absolutely rubbish at farming, the land is of no value to the newcomer and the "intrinsic value of that land" is zero as far as the newcomer is concerned.

If, on the other hand, farming on that island is really easy because there are a load of pre-existing edible plants, fruit-bearing trees and incredibly tame animals, only a small fraction of value of the food is due to individual skill and effort (somebody has to go out and collect it and bring it back) and most of the value is a freebie, like sunshine or rain.

Killer Arguments Against LVT, Not (488)

@benjit14 (aka BenJamin') replied on Twitter:

Of course we can internalise the cost/benefit of NIMBYism by taxing location rents at 100%. That would solve housing issues without the need to build a single extra home. Thats what good econ looks like. Bad econ only sees the supply side.

Floppy haired developers' friend @K_Niemitz countered:

This is why I mute Georgists. Georgism is the belief that you could fit the entire population of Britain into one single house, provided the ground underneath that house is taxed.

BenJamin' clearly said "without the need to build a single extra home", I'm not sure how mentally deficient you'd have to be to interpret that as "we'd all fit into one single house".

Meanwhile, back in the real world...

1. Population of England & Wales = 56.1 million.

2. Number of bedrooms in England & Wales according to the 2011 Census = 63.6 million. The ONS explain that there's a big margin of error here, it's based on sampling. How do you define 'bedroom'? What about Dad's study or Mum's home gym upstairs? What about downstairs rooms that aren't used much and which could be used as somebody's bedroom? And the number from the 2021 Census will be higher. But it will do for a start.

Let's assume three-quarters of the population are adults, and half of those are in a couple (who still get on with each other), if every couple shares a bedroom and 'everybody else' has one bedroom each, we would need approx. 45.6 million bedrooms. And we have 63.6 million, which is an extra 40%, so the average number occupied by couple-family with two kids would be just over 4. I suspect a median family with kids lives in a three-bed semi (so they're losing out) and we know there are a lot of people with holiday homes, retirees still in a family home etc (who are winning).

Do we really have a housing shortage overall, taking "one bedroom each" as a decent base level? Nope. Would LVT go a long way to shifting people closer to the average? Yup. Clearly LVT wouldn't get us all the way there, but so what? The retirees in a family home who also have a holiday home would be paying for the privilege and the family in crowded accommodation would be compensated, however indirectly. Which was BenJamin's actual point.

(For sure, you can blame crowded families for not earning enough to pay for somewhere decent or for having too many kids. But if they all earned more and all wanted to trade up, prices would just slip out of their grasp. The misallocation would be barely affected.)

Killer Arguments Against Citizen's Income, Not (33)

Bayard emailed me this, from the comments section at Craig Murray's blog.

Our idiot of the day responds to this sentence: "A solid leftist wish list, with the notable exception of the promotion of Universal Basic Income".

Temporary Covid-related measures apart, people need and want jobs, not to be given £100pw, have all other benefits removed, and being told to then f*** off and go away.

1. People "need and want" food, clothes and warmth, and a couple of little extras like a mobile phone, a Netflix subscription and enough money for a couple of drinks with friends every week or two.

2. It's society as a whole that wants people to have jobs. Everything you consume has to be produced by somebody else. From my point of view, I'd rather win the Lottery and never work again - but I'll still need other people to work to produce stuff for me to spend my money on.

3. The £100 would be a straight swap for "other benefits" and come to much the same thing. So the loss of "other benefits" is a non-issue.

4. People who struggle through the welfare system to get a few quid Universal Credit and bits and bits and pieces are also "told to then f*** off and go away". Which is repetition. "F*** off" means "go away" AFAIAA.

A Job Guarantee, providing non-compulsory, government-funded, locally administrated employment, at a genuine living wage, with pension rights, sickness and holiday pay, and career advancement, achieves a far more humane and economically sound result.

1. These will all be made-up, degrading non-jobs of no benefit to society. If there is stuff worth doing of benefit to all, then the government should pay people a proper wage to do those things anyway. That's got nothing to do with the welfare system.

2. What's a genuine living wage? £10 an hour? If that's what you want, make the National Minimum Wages £10 an hour, job done.

3. For every non-job paying £300 a week, what are the overheads? They will need premises or equipment, supervisors and administrators, which will bump up the cost to (say) £500 per week per non-job.

4. What about all the people who don't currently "need or want jobs"; those who don't or can't do much paid work. Like stay at home parents; carers; people with severe disabilities; low-paid apprentices; full-time students; and dare I say it 'interns'? Are they supposed to survive on little or nothing?

5. For a given welfare budget of (say) £50 billion, is it better to give ten million (or however many) people £100 UBI a week each - or create two-million non-jobs and tell the other eight million "to then f*** off"?

6. How is JG "non-compulsory"? If the choice is JG or starve, then it's compulsory. As to "career advancement"? What? Move up to a better-paid non-job overseeing unmotivated adults doing low paid non-jobs?
[JG] forces the private sector to match the genuine living wage if it wants to bid workers away from the JG, it acts as a fairer inflation buffer than condemning 5% of the working population to sacrifice their social economic well-being, as well as their physical and mental health, to the fight against inflation under the neoliberal policy of the NAIRU...

1. So direct intervention in the markets? Draw lower-paid workers out of productive work and into non-productive work? Push up wages and make businesses bankrupt; putting even more people on the dole? Sounds like shit to me.

2. £100 a week UBI for a stay at home parents, carers etc will do wonders for their "physical and mental health", methinks.

... and, apart from the economic madness of a UBI pumping more money into the economy without a commensurate increase in productive capacity to absorb the extra spending...

1. He's trying to sound clever here and falling flat on his face. First he says UBI is part of the neo-liberal anti-inflation agenda. Then he says that UBI is inflationary. Twat.

2. UBI is no more inflationary than all the benefits it replaces. Funny how he overlooks that.

3. Each JG non-job pump five times as much money into the economy as one UBI claimant and *reduce* productive capacity. The UBI claimant is still free to get a proper job rather than being condemned to adult detention five days a week.

... and the absurdity of weekly giveaways to millionaires...

1. For millionaires, a UBI is just a refund of a few percent of the tax they pay. You can net them off and call it a "tax free personal allowance. Again, twat.

... a JG avoids the resentment of those who are still in employment towards others who simply take the money without making any contribution to the productive economy that benefits us all.,

1. But everybody gets UBI You'd have to be the most embittered Daily Mail reader to claim it and then resent other people getting it. Under this logic, people who don't make "any contribution to the productive econonmy" should be denied NHS care and their children should be denied state school places. And I'm not sure where that puts pensioners who all happily collect their UBI (aka State Pension) or people with severe disabiliites.

2. Stay at home parents, carers etc are doing valuable work and are making a contribution to society in general and "to the productive economy" (however indirectly).

UBI is a sop to neoliberal private capital interests; sustaining demand for its products, yet condemning workers to subsistence levels of survival.

1. He's descended into fuckwittery here. Most of the UBI supporters I know are Labour or Green Party members.

2. UBI means that low-paid workers will be up to £100 a week better off.

3. UBI covers subsistence, which means "demand for neoliberal private capital's products". If workers magically earned more (and that would be a good thing, given levels of inequality) then what does he imagine they would do with their extra income? Wouldn't they demand more of "neoliberal private capital's products"?
If in doubt, ask yourselves why there is such a high level of support for it amongst billionaire entrepreneurs and their think-tanks?

1. Because intelligent wealthy people realise that they are there largely by luck and need a cohesive society to underpin their wealth. They would rather hand over half their income in tax (or better, pay a shedload of LVT on their lovely big houses) than risk a revoution and lose the lot.

HMRC twattery

I posted an application on paper to HMRC five months ago.

Today they sent an email saying that that particular department no longer accepts paper applications, asking me to send 'electronic copies' by email instead.

They had lovingly scanned every page of my original application and attached that to their email.

Best of luck with that, you insufferable twats.

From The Telegraph:

A landlord is taking legal action to shut down Pizza Express over unpaid debts, sparking new fears for the future of the ailing chain.

Grainrent has filed a winding-up petition against the business in the courts as high street tensions grow amid a collapse in business during the lockdown.

Unless Pizza Express pays back what it owes, this process would normally lead to a hearing on whether to liquidate the company - putting as many as 14,000 jobs at risk in 627 restaurants.

Gainrent's parent firm London and Cambridge Properties said it remains open to compromise with the chain.

The legal action began on Friday ahead of new rules that came into effect on Monday banning the use of winding-up petitions if a company cannot pay rent bills due to coronavirus.

Shit PR by Boeing

From The Evening Standard:

Planes giant Boeing was humiliated on Friday after hundreds of internal emails showed staff fraught with concerns over possible design flaws on the 737 MAX, saying the doomed jet had been “designed by clowns”...

According to documents released to Congress today, Boeing employees repeatedly raised concerns internally about design issues, with one person involved saying software had “piss poor” design and was “doomed”.

“This airplane is designed by clowns who in turn are supervised by monkeys,” the employee wrote in April 2017. Another employee involved in the jet’s development wrote: “Part of me wants to see it fail so we can say WE TOLD YOU SO. That’s kind of sick of me, huh.”

That seems pretty damning to me, you'd think that Boeing would just keep quiet and pray for lenience.

But no:

Boeing apologised for the messages. “The language used in these communications, and some of the sentiments they express, are inconsistent with Boeing values, and the company is taking appropriate action in response.”

Exactly not.

Those emails are entirely consistent with Boeing's (lack of) values, as evidenced by the subsequent 737 disasters and botched cover-up attempts. Boeing shouldn't be apologising for the messages, they should be apologising for the crimes (that were exposed by the messages). The "appropriate action" would be to never cut corners like this again and listen to their engineers' concerns in future.

Ex-HMRC head goes through revolving door; forgets everything he ever knew (or should know)

From The Guardian:

The former head of HM Revenue and Customs has called on the government to scrap a controversial tax break designed to help entrepreneurs, which he said was costing the country £2bn a year in lost tax yet provided “no incentive for real entrepreneurship”.

Sir Edward Troup, who was executive chair of HMRC from 2016 until January 2018, said whichever party won the general election on 12 December should abolish the “entrepreneurs’ relief” applied to capital gains tax (CGT).

Troup’s intervention on Wednesday came in response to a Guardian report on Tuesday showing thousands of the country’s richest people were exploiting the policy to pay as little as 10% tax on billions of pounds’ worth of capital gains...

Troup, who is now a consultant at McKinsey, said there was a “very strong case for [whichever party won the election] to ramp down entrepreneurs’ relief immediately”.

Whatever your view, gut instinct tells me that if people build up a business from scratch and sell it, such gains ought to be taxed at a lower rate (aka Entrepreneur's Relief) than straight investment gains, which of necessity mainly accrue to the already wealthy. We can argue about the finer details later on (the £10 million limit for Entrepreneur's Relief seems excessively high to me, why not go back to retirement relief and just exempt the first £1 million or so and tax the rest at full rates?).

For some reason, this ex-HMRC head is homing in on Entrepreneur's Relief while missing the obvious targets.

1. Investor's Relief, which is a 10% CGT rate for people who in subscribe for new shares in the right kind of company, and

2. SEIS, EIS and VCT reliefs, which include a 0% CGT rate on shares (among many other goodies).

It's those two items which are designed to - and do - benefit the already wealthy, not Entrepreneur's Relief.

How the heck he ended up running HMRC is a mystery to me, he'd have failed the most basic tax exam. And presumably McKinsey took him on for his other marketable skills. Maybe he knows how to unblock paper jams in printers or something?

Yes, that'll work. I wonder why nobody thought of this before?

From City AM:

The UK film regulator will this week roll out a series of new age rating symbols designed for online streaming platforms.

The digital classification symbols, which will launch on Netflix from Thursday, are designed to help young people make more conscious choices about what they watch online...

I've never bothered putting passwords or doing this age-related nonsense on my computers or on our Netflix and Amazon accounts. If my kids are old enough to hack them, they will be old enough to watch whatever they like.

The people who run our country don't know what "investment" means.

It's very simple. Businesses 'invest' (in productive assets, tangible or intangible) and individuals (or pension funds on their behalf) 'save' (defer consumption), by either accumulating money in the bank or buying shares (directly or a pension fund does it on their behalf).

Individuals dissave (accelerate consumption) by cashing in a pension; withdrawing money from the bank and spending it; or selling shares and spending the proceeds. When one individual buys shares, another must have sold them, so the two sides cancel out and it's not even net saving, let alone net investment.

The actual businesses whose shares are bought and sold couldn't care less who buys and sells their shares and are unaffected. They make profits (hopefully), reinvest what is needed to make more profits in future and dish out the rest as dividends to whoever own the shares.

The people who run our country (from MPs to the Governor of the Bank of England) are too stupid to understand this not particularly subtle or difficult point. From City AM:

Three hundred MPs are calling on the trustees of the £700m Parliamentary Pension Fund to end their investments in fossil fuel companies...

The pledge, supporters of which include Labour leader Jeremy Corbyn, Lib Dem leader Jo Swinson, SNP Westminster leader Ian Blackford, and mayor of London Sadiq Khan, stated: “We believe members of parliament have a responsibility to act on climate change, and a unique opportunity to show leadership on climate action, responsible investment and the management of climate risk through addressing the practices of our own pension fund.”

Caroline Lucas MP, the leader of the Green Party, said: “I am encouraged by the huge number of MPs who now agree that we must move our investments away from the polluting industries of the past, and instead support policies that will bring about a clean energy future.”

Bank of England governor Mark Carney and the Environmental Audit Committee have warned that people’s pensions are exposed to overvalued carbon assets as the world moves quickly towards cheaper, greener renewables, and governments legislate for net-zero emissions.

OK, so all "ethical" pension funds simultaneously try to dump their shares in oil or mining companies, what happens? The price falls and they've lost a lot of money anyway - and the yield to future investors goes up. Other pension funds, whose very statutory duty is "getting the best return you  can for your pension savers" would be acting entirely unethically if they didn't snap up those cheap, high yielding oil and mining company shares on behalf of their pension savers. Oil companies won't care less either way.

And anybody who drives a car is contributing to oil companies' profits and encouraging them to continue extracting oil; there's no point them being squeamish about owning shares in oil companies and thereby getting a bit of their own money back.

"Protests as five-week Parliament suspension begins"

From the BBC:

Parliament has officially been suspended for five weeks, with MPs not due back until 14 October.

Amid unprecedented scenes in the Commons, some MPs protested against the suspension with signs saying "silenced" while shouting: "Shame on you..."

Zero sympathies from me.

Rumours - well-founded as it turns out - that Johnson would suspend Parliament if he couldn't get his own way started circulating three months ago, before he'd even won his party leadership contest and thus by default (or by tradition or by custom, but with no particular legal force) become Prime Minister.

MPs have therefore had plenty of time to organise a vote of no confidence. It appears that they were incapable of agreeing on who would be the replacement PM. By default, it would have to be a moderate Conservative MP who is a Remainer (of which there are plenty) or at least in favour of a soft-ish Brexit (of which there are also plenty).

The template for this is the Chamberlain-Churchill handover. Technically, the Norway Debate was not a vote of no confidence, but it is accepted as having had the same effect. A majority of MPs from all parties had more or less agreed beforehand that Churchill - who was a Conservative MP, just like Chamberlain - would replace Chamberlain as PM. The whole thing took three days start to finish.

Today's MPs have been fannying around for three months and achieved precisely nothing. Corbyn had the mad idea that he might be PM; Lucas thought there should be an all-woman government and heck knows what Swinson wanted. Not exactly serious grown-up debate, in other words.

Killer Arguments Against LVT, Not (468)

From The Sun:

LABOUR are plotting a “punitive” tax raid on Middle England that would add nearly £400 to the average council tax bill.

Tory Ministers leapt on incendiary Venezuelan-style proposals* for a blistering new levy based on the value of everybody’s home...

* Strange. It would be more accurate to point out that the proposed system would be very similar to Domestic Rates in Northern Ireland, only without the £400,000 cap, which makes it closer to residential property taxes in the USA (where the rates are usually much higher than the 0.7% proposed here and which is the base rate in Northern Ireland, plus local precepts, so in some areas in NI, the final rate is 0.8% or 0.9%).

The highlight is the first comment:

BewareRedFlag: Its OK for multi millionaire politicians like corbyn [sic] he can afford it. Progressive taxation robs those on median incomes and below of their disposal [sic] income. Labour lied about brexit, they lie and will hammer the working class for tax, forget the £80k tax threshold they want to double foreign aid how dies [sic] that benefit you?

Commenter clearly doesn't understand what "progressive" means. Corbyn would end up paying about £7,000 a year or something. Bill for median home in the UK would be £1,400.

"The dangers of slot auctions"

From Airlines.IATA.org:

Recently, China experimented with the idea, putting a selection of slots on the market at Guangzhou Baiyun and running a slot lottery at Shanghai Pudong. This raised a substantial amount of cash but, according to an IATA assessment, that is part of the problem.

“The experiment showed that paying a large amount of money for slots is not sustainable,” says James Wiltshire, IATA’s Senior Economist. “If you boil down the money paid for the Chinese slots to a per passenger basis, it pretty much wipes out the anticipated $4.44 per passenger average profit for Asia-Pacific carriers in 2017, and that’s only for slots at one end of the route.”

In other words, even a small-scale slot auction can be the difference between profit and loss for an airline. The same conclusion can be reached from a different viewpoint.

In China, the auction winners have been granted the right to use the slot for three years. It typically takes up to three years for airlines to make money on new routes, given start-up costs, marketing, and the time taken to develop consumer awareness.

Are they saying that airlines are so f***ing stupid, they would a single dime for a slot which is not going to earn them a profit?

Seriously?

I think the three year claim is an outright lie as well. If you want to fly from A to B, you type in A and B on one of these comparison sites and choose whichever time and price suit you, I'm sure most people don't care who the actual airline is. I doubt anybody cares whether that airline has ben flying that route for decades or for a couple of weeks.

As it stands, at the 177 airports where IATA’s Worldwide Slot Guidelines (WSG) are used, demand outstrips infrastructure supply.

This makes slots a scarce commodity. Airport owners, government or private, would have an incentive to keep slot prices high by drip-feeding capacity.

Brilliant one-sided economics worthy of the Faux Libs. Slot prices are only high because ticket prices are high; and tickets prices are high because supply is restricted. So incumbent airlines are actually quite happy with restricted supply - it keeps their profits up. (I am heartily indifferent as to whether there should be more capacity or not, the Greenies would say definitely not).

Secondary trading

Secondary trading is completely different from slot auctions, which concern primary allocation. With secondary trading, airlines can swap slots that they have been given the right to use under the WSG but are unable to use in the future.

Not every jurisdiction allows secondary trading and it is probably only required at the most congested gateways. In the UK, secondary trading has been used successfully at London Heathrow and, to a lesser extent, at London Gatwick.

Airlines must have used a slot for two years before it can be traded but the final deal is dependent purely on the negotiations between the two parties.

And at the major hubs, large amounts of cash change hands.

But that is somehow COMPLETELY different to a public auction. Not.

Cannabis-related twattishness

The Evening Standard has launched a laudable campaign to get cannabis legalised in the UK, hooray, nonetheless, the article highlights some cases of extreme twattishness:

Nova Cannabis, just down the road from Hunny Pot, was the third brick and mortar [cannabis] store to open in Toronto, and I pitched up to find the owner, Heather Conlon, looking shell-shocked in her first week of business.

The 50-year-old was one of 58,000 people to enter the licence lottery, and her win has turned her into an instant multi-millionaire. “My husband and I run a locksmith so running a cannabis business is totally new to us,” she said.

The Toronto government should have auctioned off the licences rather than turning a random few people into 'instant multi-millionaires'. It is a protection racket, after all - you pay us, and we'll lock out the competition. Or they could have handed out more licences, or imposed an annual tax on licensed premises, such that the value of the licence is minimal.

“Our competition is not the other legal shops like Hunny Pot, it’s the prolific number of illegal dispensaries that operate without the same restrictions we have,” said Conlon. “They can undercut us on price because they don’t pay tax. It’s unfair. I hope they will make arrests and shut the lot of them down.”

The mark-up for anything illegal, like cannabis, is enormous because of the risks (being shot by a rival dealer or going to prison), the overheads (mainly bribes and hush money) and the fact that a lot of supply is confiscated (by the authorities or other dealers). So unlicensed dealers will have to drop their prices significantly to compete, not the other way round. Dealers aren't paying tax to the government as such, but a bribe to a government official is still a kind of tax.

And if unlicensed dealers have drop their prices significantly, that in itself is A Good Thing. The trade is now less attractive to criminals, so attracts fewer of them and acquisitive crime falls. If the government wants to shut them down, it just has to keep dropping the tax until illegal supply is simply not a commercially viable enterprise.

Tax haven bleating

From The Mirror:

Big companies are avoiding an estimated £100billion a year in tax thanks to Britain’s “spider’s web” of offshore tax havens.

A damning report says the UK and its network of overseas territories is “by far the world’s greatest enabler of corporate tax avoidance”. Four of the top 10 places branded tax havens by campaign group Tax Justice Network have strong UK links...

The TJN previously estimated that multinationals avoid around £400 billion a year in corporation tax. While it did not put a figure on how much of it was due to UK tax havens, it may be over £100billion annually.

There are growing calls to clamp down on firms that, through clever accounting, deprive countries of tax.

There are two sides to this - the tax havens, and the countries out of which profits are siphoned. Any country out of which profits are siphoned only has itself to blame and is complicit in the whole scam.

A non-tax haven merely has to tweak its tax rules to ensure that a company cannot claim a tax deduction for money paid to a company in a tax haven, in other words, treat such payments as dividend payments, which are paid out of after tax income.

With the really big corporations, the sensible thing to do is to find out (or estimate) their global profits, find out (or estimate) what share of those profits are derived from customers in your own country and then charge them to tax on that element of their global profits derived from your own country.

This is standard practice in countries which have different rates of corporation tax in different regions/states, for example Germany, Switzerland, USA etc. It's not reinventing the wheel.

The EU has a cruder - but equally effective - way of taxing the big corporations, especially American ones. The EU knows perfectly well that they will wriggle out of any tightly defined rules, so it just "fines" them a few hundred million Euros on some trumped-up offence every few years (market rigging, anti-competitive practices, banking fraud, tax evasion, whatever), the big corporations haggle a bit and then pay half or two-thirds of the original sum demanded, it's just a 'market access fee', like an ice cream seller paying for a pitch.

And while £400 billion is clearly a lot of money, it's probably an over-estimate, so let's call it £200 billion. What share of that ought really to have been paid in the UK? Ballpark, the UK is 5% of the global economy, so maybe our tax receipts are down by £10 billion a year, which is barely one per cent of the UK's annual government budget. So nice to have, but not fatal.

DIY door knob gripe

I learned something new at the weekend, there's a good summary here:

Sprung v Unsprung Door Handles [for 'handles' read 'knobs']

Springs are required to get door handles to return to the horizontal after they have been pushed down. The spring can be located in the handles and or in the latch/lock. Most early handles were unsprung and most modern handles have springing.

You can tell if handles are sprung because they will return to the horizontal without being connected to the latch/lock. If you select unsprung handles then you need to make sure your lock/latch has a heavy duty spring, as this spring has to do all the work.

I had to replace three latches over the weekend which were either too stiff or too wobbly. Easy job, you might think, the old latches were standard size, buy three new ones and pop them in, refix the door knobs, sorted.

The first latch I replaced had old-style door knobs with no spring/return mechanism of their own (the latches have their own spring/return mechanism, so completely unnecessary). That was a ten minute job, line up the grub screws with a hole on the spindle, the new latch clicks into the existing strike plate nicely, job done.

Two of the three pairs of door knobs had their own spring/return mechanism, which were a bloody nightmare. It is nigh impossible to line up both knobs so their spring/return mechanism co-operates with the one in the latch, i.e. still very stiff to turn and you have to turn the knobs back again to get the latch to pop out.

Her Indoors complained that she still couldn't open the bedroom door without using both hands. She had a crack herself and after two or three hours she threw in the towel.

So I bought an unsprung pair from B&Q (the last one in stock), which works a treat and only needs the lightest touch to open and it clicks shut perfectly - provided you don't over-tighten the screws holding them in place (another twenty minutes of trial and error). If you over-tighten them, the mechanism jams or is it 'jambs' in this context?)

Which maniac decided to put springs in door handles/knobs? They are more expensive to make, a bugger to fit and don't work properly. What is the bloody point?

How office twats 'stay hydrated'

Prompted by this fine Daily Mash article...

Where I work, a lot of people carry round those poncey re-fillable water bottles. Twattishness of the highest order, but it's still an improvement on people buying disposable bottles all the time.

Somebody in our office didn't get that memo though. Instead of filling his bottle at one the water coolers which our employer so generously provides, he took a fresh plastic bottle from the fridge, decanted the contents into his refillable bottle, crumpled up the plastic bottle and threw it in the bin.

I misread this Met Police advert on the Tube