[Non-exhaustive lists] Spot The Difference

Here's a non-exhaustive list of things that we need more of in order to increase our real wealth, and hopefully overall contentedness:

Houses
Factories and offices
Ports and airports
Roads and railways
Coal mines and power stations
Pubs in which you can smoke
Lap dancing bars
Fox hunting
Legalisation, regulation and taxation of drugs
Free markets

Let's compare that with a non-exhaustive list of things that the Home-Owner-Ists, Greenies and hairshirters generally want us to have less of:

Houses
Factories and offices
Ports and airports
Roads and railways
Coal mines and power stations
Pubs in which you can smoke
Lap dancing bars
Fox hunting
Legalisation, regulation and taxation of drugs
Free markets

Ray Gosling

Tribute poster

Dr Adrian Wrigley of Systemic Fiscal Reform did this one for me:

Hmmm. I'm in two minds about this...

From The Grauniad:

The Royal Surrey County hospital bought NHS drugs cheap to sell at a profit in Europe, in a move defended as 'entrepreneurial', but deemed 'unethical' by health experts...

Last week, health minister Mike O'Brien, attacked "unscrupulous" speculators who are putting patients' health at risk by selling drugs intended for UK patients for higher prices abroad. O'Brien, who has called an emergency summit to deal with the growing problem, had in mind wholesalers and pharmacists, not hospitals when he drew attention to the sales...

Biddle denied that the trust sold drugs that were in danger of short supply to the NHS. But the foundation refused to give a list of the drugs which were traded. The trust said the list was "commercially sensitive"...

Experts said the issue was one of "ethics"."The foundation trust is taking advantage of the bulk purchasing power of the NHS to get cheap drugs and then selling them on for a profit," said James Gubb, director of the health unit at the thinktank Civitas. "The trust may say they are making money to invest for patients, but it's dubious ethically"...

Well, I'm in several minds, actually...

1) Sod ethics, this is about quality of care and cost to the taxpayer. Has anybody shown that patients were denied particular drugs purely because of this?

2) If the hospital makes a profit and spends that on patient care, then hurray! If they spend it on ever higher salaries for bureaucrats, then that's a different matter.

3) UK drugs companies benefit enormously from state-granted patent protection, have monopoly powers and are subsidised via R&D tax credits and other similar monopoly powers. No matter how much they whine about 'breach of trust' by the NHS, that's market forces for you.

4) Being forced to sell cheaply to the NHS so that the NHS can then export the stuff is just like a tax on drugs companies (like making property developers sell off thirty per cent of their output at cost to Housing Associations for 'affordable housing') - but the drugs companies are perfectly entitled to drop the prices that they charge their European customers, thus cutting out the middleman.

5) If the NHS can act as a monopsonist and get prices to UK hospitals down, that's a good thing, isn't it?

6) If The Grauniad is against it, that tilts the balance in favour of it.

Like I said, 'hmmm'.

More Council Housing Fun

Anonymous left this comment on Retraction Of The Week:

Why the hell should I, as a tax payer, and home owner, subsidise 'Social housing'? Council rents should be at the market rate.

*sigh*

This is is typical Tory/Home-Owner-Ist propaganda.

1. Average rents in the social sector, even after deducting Housing & Council Tax Benefit more or less cover the running costs, the cost (or net profit) to the taxpayer is negligible. In any event, it is far, far cheaper than paying Housing Benefit to private landlords (to which see 4. below).

2. By all means, allow the market to set rents, but the flipside of this must be to allow the market to set the quantity supplied as well.

3. If the NIMBYs allowed councils to get on with building more housing to rent out, then councils would continue increasing the quantity supplied until the rents had adjusted down to just above the actual marginal running costs (we can ignore interest on capital as the long-term capital gains cancel this out) - just like in any other free market. What we'd consider to be 'market' rents are actually far above the rents that would exist if the construction of new housing (whether social housing or for owner-occupation) were not kept way below the equilibrium by the NIMBYs.

4. Wasn't it the Tories who got the worst deal of all time for the taxpayer by flogging off the nicer council housing at a third of its market value (sure, Labour continued this policy with gusto, but the Tories started it)? Even worse, many of the original purchasers have long since moved out and are now letting it back to the very same council for 'market' rents.

5. I would turn the question round and ask 'Why the hell should I, as a taxpayer, and tenant, subsidise 'Homeownership'?' And I don't just mean direct subsidies via the banking system, I mean the far greater subsidy that results from the fact that taxes on income and production pay for all those things that the government does that enhance property values, like police, transport infrastructure etc, which result in tax-free windfall gains to homeowners (and enables landlords to put up the rents).

*/sigh*

Short Commercial Break (2)

We agreed that between ten and twenty per cent of the advertising we see is taxpayer funded here, there was a wonderful juxtaposition during an ad break on Sky News yesterday.

The first adverts was about how easy it is to get an NHS Quit Kit (to help you stop smoking); the next one was for NiQuitin; then there was one asking people to donate £20 to the WWF in order to help save a tree (with Sky generously offering to 'match' viewers' contributions) and prevent 'the catastrophic effects of climate change'; and the advertising break rounded off with an advert for Qatar Airways flights from Hong Kong.

Sort of puts it all into perspective, really.

More Tory spoof poster fun

Make your own here.

More VAT and Employer's NIC fun

Let's imagine a law-abiding* sole trader with a turnover of £60,000 a year and minimal expenses - a painter and decorator, a mobile hairdresser or a gardener or something - whose taxable profits are therefore about £60,000. He or she is given an opportunity to double the size of the business to £120,000 a year, which would involve employing two people on a salary of £20,000 each, thus leaving him, one would assume, an extra gross profit of £20,000 a year.

The sole trader is fairly naive about tax. He thinks he'll have to pay over 40% income tax on the extra £20,000, so he'd end up better off by £12,000, which he thinks makes the expansion worthwhile. And if we only had a flat income tax, he would be right, of course.

His accountant explains to him that it doesn't work like that. He would have the hassle of registering as an employer (and dealing with PAYE deductions, statutory maternity or paternity pay and so on) and registering for VAT (yet more form filling and faff), which costs money and hassle, and his profit and loss account will look like this:

Turnover £120,000, less 7/47 VAT = £102,128, less 2 x [£20,000 salary plus £1,828 Employer's NIC**] = £58,472, so before income tax he would actually be £1,528 worse off (even ignoring all the extra form filling and red tape). And in any event, he isn't just paying 40% income tax, he's paying 41% income tax plus Class 4 National Insurance on his net profit.

So the sole trader doesn't bother.

Bonus round: what is the maximum annual wage that the sole trader can pay each of the two employees he needs to be able to double his turnover from £60,000 to £120,000 if he wants to end up £12,000 better off, after all taxes?

Click and highlight to reveal: £10,300 (to the nearest £100)

Bonus bonus round (h/t Man Widdecombe): assuming the two employees are aged 22 or over and are working 40 hours a week, which other law would the employer then be breaking?

Click and highlight to reveal: The National Minimum Wage

* 'law-abiding' inserted for the benefit of TFB.

** £20,000 minus 52 x £110 threshold = £14,280 x 12.8% = £1,828.

Is it 'cos he is black?

From The Grauniad:

Dizaei faces expulsion from Black Police Association

Senior sources in the group say conviction for corruption of former Metropolitan police commander means he has breached its code of conduct... Once a formal decision to expel him has been made, Dizaei – who is serving his sentence at Wandsworth prison in south-west London – will have a right of appeal...

Meanwhile, in a parallel universe...

I've always been pretty agnostic about inflation, but over the past couple of decades it appears to have been broadly agreed that low price inflation of about 1% or 2% a year is 'about right', and who am I to argue?

Enter stage right: The Home-Owner-Ists who are busily tearing up the economic rule book. Danny Blanchflower, former member of the Bank of England's Monetary Policy Committee now says that high inflation is A Good Thing.

Quiet Guy at HPC sums up his logic thusly:

Blanchflower argues that we should try to generate inflation to protect people in negative equity - even while acknowledging that the nation will face a drop in living standards as a result.

This is possibly one of the most blatant attempts to explicitly support homedebtors I have ever come across. Blanchflower repeatedly states that we should be shaping our monetary policy to help people in negative equity by letting inflation rip - whatever the consequences. Scary stuff.

See also, the two main parties agreeing behind the scenes that they'll hike VAT to 20% (increasing receipts from £78 billion to £91 billion per annum - making countless businesses unviable* and throwing hundreds of thousands onto the dole queue) while simultaneously promising to freeze Council Tax (total receipts, after deducting Council Tax Benefit, about £20 billion per annum). These are approximate figures only as I can't get the Public Sector Finances Databank (Excel) to open properly.

* It is impossible for all VAT-registered businesses to 'pass on the increase to the consumer', so their total net turnover after VAT will go down by 2.5%.

2.5% x approx. ten million people employed by VAT-registered businesses = 250,000 jobs. And of course those businesses won't be paying corporation tax or PAYE any more, and there'll be another 250,000 on the dole, or even worse, in freshly created government make-work jobs. So they'll be lucky to increase overall tax receipts minus additional welfare costs by a fraction of that £13 billion static increase. Twats.