Well duh

From The Guardian 2 July 2010:

The evaluation concludes that, since the law [which makes it a criminal offence to pay for sex in Sweden] came in to force in 1999, the number of women involved in street prostitution has halved, whereas neighbouring countries such as Denmark and Norway have seen a sharp rise...

From The Daily Mail 12 November 2012:

Denmark is scrapping its tax on foods that are high in saturated fat after it emerged people were travelling across the border to Germany in search of unhealthy snacks for less.

Fun Online Polls: Voting tactics and QE insanity

The responses to last week's Fun Online Poll were as follows:

How do you make up your mind how to vote at elections?
I've always voted for the same party - 7%
I read the manifestos etc carefully and vote for the best candidate - 24%
I make up my mind in the voting booth - 3%
I cast a protest vote for whoever is most likely to upset the incumbent(s) - 34%
I don't bother voting any more - 18%
I've never voted - 2%
Other, please specify - 13%

That was a good turnout, thanks to everybody who responded. Of the "others", the best one was this: DBC Reed: I always read all the manifestos and end up voting for the same party (Labour). Which is somewhere between the first two options, I suppose.

I find the responses all very heartening, it seems there is plenty of room for protest parties.
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And lo to this week's Fun Online Poll, which relates back to the insane logic propounded by George Osborne last week.

No clues. Apply common sense and then vote here or use the widget in the sidebar.

I don't want to grow up

Here's the pale imitation:
Here's the original and best cover version (the original was by Tom Waits, but even though I heard that one first, I prefer The Ramones' version):

More QE insanity

From The Daily Mail:

The Chancellor has bagged a £35bn windfall that will reduce public borrowing by reclaiming the surplus cash sitting in the Bank of England's £375bn quantitative easing programme.

The change in policy will cut both the public debt and budget deficit, flattering the public finance figures when the Office for Budget Responsibility updates its outlook at the Chancellor’s Autumn statement next month.

Critics immediately accused George Osborne of fiddling the books, but the Treasury insisted that the move will draw Britain into line with the US and Japan, which also have big QE programmes.

Under the current arrangement, the interest paid on the gilts bought through QE is held by the Bank – effectively transferring the funds from one part of the state to another. As long as the funds remain at the Bank, though, the Treasury has to raise extra borrowing in the market.

Once past the idiot headline and opening paragraph, as the article says, this transaction nets off to nothing and "spending" this extra £35 billion merely means that the government has to borrow another £35 billion from elsewhere (assuming constant government spending - that is the real problem, not how it is financed).

It's like the underlying bonds themselves, they are a nullity, a nothing, an accounting fiction, a point which I'm relieved to say, seventy per cent of respondents understand. Those bonds are no longer real debts, what are real are the replacement debts of £375 billion which the government issued in exchange.

George Osborne might as well argue that the government can save itself £35 billion by cancelling the interest payments on the QE bonds now held by the Bank of England, that would be just as moronic. Describing somebody who points this out as a "critic" shows how desperate they are, these "critics" are merely stating blindingly obvious facts (even though many people oppose QE because they think it increases deficits - it does nothing of the sort, it is merely a way of financing or re-financing government deficit spending, whether past, present or future).

Via HPWatcher at HPC.

Killer Arguments Against LVT, Not (249)

Meanwhile, over at The Guardian, our Homey can't resist tangling himself up in ever more lies:

Hampton Court The point is renters would be better rewarded. They would end up paying less tax, however you look at it. Homeowners woud therefore have to pay pay more or their [sic] would be a tax shortfall (even if they didn't pay income tax).

He is doggedly sticking to part 1 of KLN #248 (and is swiftly distancing himself from part 2, the nonsense that "Landlords would pass on all the tax to their tenants."), but ho hum, let's look at facts and logic.

Thirty per cent of housing is rented (eighteen per cent social housing, twelve per cent private rented) and seventy per cent is owner-occupied.

Clearly, landlords and tenants between them (however the tax is shared) would pay about thirty per cent of the LVT, and owner-occupiers would pay about seventy per cent.

If owner-occupiers thus are paying their fair share of seventy per cent of the LVT, I don't see why it is any concern of theirs quite how the thirty per cent of the LVT on rented housing is shared between tenants and landlords. That's of about as much relevance to them as the method that my neighbours use for pooling their incomes and/or sharing their household expenses is relevant to me: I don't have to pay for their food or utility bills, and they don't have to pay for mine.

You might as well argue that fuel duty, or cigarette duty, or income tax or any other tax is unfair to owner-occupiers because they pay about seventy per cent of those as well*.

As to tax shortfall, what is so difficult about the concept of replacing bad taxes on output, employment and profits (collectively 'income tax') with LVT on a £ for £ basis? If people pay £1 less in other taxes, they can afford to pay £1 more in LVT, I'm not sure why people struggle with that concept.
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* Of course, on closer inspection, you'd have to make lots of compensating adjustments here...

- Council housing is usually lower value than privately-owned housing in the same area, so less than eighteen per cent of all LVT would be from council housing; however, council tenants usually earn less than owner-occupiers, so they also pay less than eighteen per cent of income tax etc.

- Conversely, the income tax collected from the tenant and landlord of a home which is privately rented (assuming no Housing Benefit is claimed) is higher than that collected from the owner-occpiers of an identical home which is mortgage free, so shifting from income tax to LVT will reduce the overall bills of landlords/tenants.

- But then again, Housing Benefit is like negative LVT, so scrapping that and having LVT and a Citizen's Dividend instead would increase the tax take from (or reduce the net subsidy to) landlords/tenants.

- Further, tenants seldom over-occupy, they do not usually rent more than what they really need. Most second homes or holiday homes are owned by the people who use them, I've never heard of anybody renting a second home for fifty-two weeks a year just to use it for two or three weeks a year. So clearly, shifting from income tax to LVT would increase the tax collected from owners of second homes etc.

You can make infinite such adjustments plus or minus (some back up his point, some clearly disprove it) in ever decreasing circles, but the overall net impact is that the proportion of LVT paid by owner-occupiers would be within a percentage point or two of the proportion of all the other taxes they currently pay and which would be replaced.

Killer Arguments Against LVT, Not (248)

There was a another rich harvest of KLN's to an article in the Guardian yesterday. As I've said before, Home-Owner-Ism depends on DoubleThink, they will say anything to score a point, even if they have said exactly the opposite to score another cheap point a few minutes earlier:

To illustrate:

HamptonCourt: What's not to like? Erm, the fact that renters end up paying little or no tax, at the expense of homeowners. But then you don't like homeowners very much do you?

The second part of that is a good old fashioned lie. As it happens, there'd be more owner-occupation if we replaced taxes on earnings with LVT. That is a fact: owner-occupation in the UK grew at its fastest during the period when we had Domestic Rates and Schedule A tax. Since the pinnacle of Home-Owner-Ist economic policy ten years ago, owner-occupation rates have been falling again.

But would tenants end up paying little or no LVT..?

Glazelle: Short-sighted renters that can't see that the cost of LVT will simply be added onto their rent perhaps? (FWIW, I own property and have no issue with LVT, indeed I see it as progressive, by which I also mean "The way forward" as well as progressive as in taxation).

So there we have it.

When it suits them, the Homeys argue that tenants will pay NO LVT (and by reverse logic that this is an attack on owner-occupation, which it isn't). And in the next breath they are happy to argue that tenants will pay DOUBLE LVT, and then shed some crocodile tears for the poor tenants.*

The truth, as ever, is somewhere in the middle.

1. Tenants will, by definition, pay exactly the same amount of LVT as the owner-occupiers next door. Unlike the current tax system, it is the substance and not the form which is taxed.

2. Tenants (and first time buyers) will probably end up gaining most, not because they are tenants but because they tend to occupy smaller/cheaper homes relative to their earned income than current homeowners (or landlords) do.

3. So if taxes are shifted £1 for £1 from earnings to land values, tenants and first time buyers will gain (say) £1.50 on the income tax side and lose 75p on the land value tax side. The Poor Widow In A Mansion will gain 10p on the income tax side and lose £10 on the land value tax side, etc.
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* Remember always: tenants are already paying the LVT (the location premium) as it is included in the total rent [cost of maintenance + location premium = total rent].

In the first instance, the landlord will be asked to pay the LVT. He is perfectly entitled to try and add it to the rent if he wants, but it seems unlikely to me that tenants will be willing to pay twice over for the location premium [cost of maintenance + location premium + location premium (LVT) = total rent]. That is quite simply not how it works, the LVT or the location premium is calculated as [total rent - cost of maintenance].

For sure, if taxes on earnings are reduced by £200 billion then a lot of that will flow through into higher rents, so it will look as if the LVT is being passed on, but that is not true. The location premium is dictated by average net earnings in any area, so if taxes on earnings go down, then the location premium (and the LVT) clearly go up.

"Punters shocked how Zumba prostitute turns out to be an honors student, charity fundraiser and great mom"

From The Daily Mail:

The shocking claims that a Zumba prostitute in Kennebunk, Maine used her dance studio as a place for charity fundraising has thrown the tight knit New England community into a state of disbelief.

Married men who made furtive visits to the accused Alexis Wright say she's the last person they thought would get caught up in headline-grabbing charity fund-raising events benefiting Toys for Tots and breast cancer research, since she was a top class hooker who promised them anonymity.

The charity fund-raising case involving the bubbly 'masseuse' and more than 100 disgruntled 'clients' has made international headlines from this seaside town of 10,000 known for its cold beaches, uptight housewives in charming homes and Tom's of Maine toothpaste, as well as the nearby 'Summer Toilet' which President George H.W. Bush once used when in office.

"The slow death of Native America: How will the great melting pot adapt to the millions of white, black and Hispanic voters who swept Obama back to power?"

From The Daily Mail:

For Native Americans struggling to understand their defeat at the polls, the most chilling statistic in this week’s presidential election was this: Mitt Romney won the biggest share of the white vote that any Republican White House contender ever has — and even he still lost.

In an election battle that was defined as much as anything by race, Mitt Romney won the support of 59  per cent of whites, but just 27  per cent of Latinos, 26  per cent of Asian-Americans and 6  per cent of African-Americans - but only a handful of votes from Native Americans. The Native American candidate, while winning the support of nearly all Native American voters, failed to carry a single state.

Four or five centuries ago, being unpopular with immigrant minorities would hardly have stopped a candidate from one of the larger tribes or groupings from trouncing a white or a mixed-race candidate. But back then, people of European, African or Latin-American descent accounted for only 1 per cent of the population. Now they make up nearly 99  per cent of the electorate, and that figure is predicted to remain unchanged.

They own land! Give them money!

From City AM:

MORTGAGE lending climbed rapidly through the third quarter and into October, two sets of data showed yesterday, as the Funding for Lending scheme finally appeared to be having an impact on lending. This came in tandem with a reversal in the downward house price trend of the past few months, revealed by another set of statistics.

The third quarter saw £4.2bn of buy-to-let mortgage lending, the Council of Mortgage Lenders said, an increase of eight per cent on the previous quarter. And the number of house purchase loans jumped ten per cent into October, hitting 54,713 on the Esurv mortgage monitor, the highest monthly rate since January this year.

And the housing market seemed to be showing “signs of life” (1) after this credit infusion – prices edged up 0.1 per cent on the month, according to LSL property services, making the average price 2.3 per cent higher than in October last year...

And data from Rightmove seemed to confirm this judgement about first-time buyers – who are set to make up just 25 per cent of the buyer mix in 2013, well below pre-crisis standards, commonly at around 40 per cent.(2) “The list of challenges to get onto the property ladder seems to be getting longer rather than shorter,” said Rightmove director Miles Shipside.

1) Great news! When prices are up, this is a sign of life! Would we apply this logic to the productive sector? Is it not considered a good thing that the real price of new cars has fallen by three-quarters over the past half a century, taking quality and longevity into account? Or does this mean that the car industry is on its last legs?

2) Not only are FTB's a smaller percentage, they are a smaller percentage of a much smaller number of buyers overall. It's called a buyers' strike. And of course, the banks prefer lending that lovely cheap taxpayer-subsidised "Funding For Lending" money to those who are already "on the property ladder", (those with large deposits) so if anything, this scheme, like all such schemes, tend to concentrate land ownership in fewer and fewer hands. Which is probably a blessing in disguise, because it concentrates mortgage debts in the same fewer and fewer hands, but hey.

What 'income inequality', exactly?

From The Daily Mail:

An average earner was paid £7.78 an hour in 1986 – calculated at 2011 prices – which had gone up to £12.62 last year, an increase of 62 per cent.

By contrast, the average pay of someone in the top 1 per cent of the earnings league went up from £28.18 an hour to £61.10 an hour, an increase of 117 per cent.

Those in the top tenth of the league saw their pay rise from £14.78 an hour to £26.75 an hour, an increase of 81 per cent.

At the bottom, the lowest 1 per cent of earners saw their pay go up from £3.48 an hour to £5.93, an increase of 70 per cent.

1. Now, as a completely separate debate, I could point out that some of the hyper-earners deserve every penny, if J K Rowling sells millions and millions of books and DVD's, then she can keep every penny of her millions and millions of pounds, nobody is forced to buy them (I do, as it happens). Ditto Premier League footballers, nobody is forced to buy a season ticket or subscribe to Sky Sports (and I certainly do not). And there are plenty of high earners who are just rent-seekers (quangocrats, directors of large companies, bankers etc.), i.e. add little or no value and create little or no wealth (and possibly destroy it). I don't exclude myself from the latter category, by the way.

2. But be that as it may, the ratio between bottom and top percentiles is only a factor of ten. Is it not possible that, broadly speaking, some people are simply ten times luckier than others? The lucky ones will claim that they are hard working, diligent, skilled etc, and possibly they are, but there is still a large element of luck, not only in being born and raised with those innate abilities, but also being in the right place at the right time to be able to use them. The best coal miner in the world would struggle to make a living in the UK today; and heck knows what would have happened to Mark Zuckerberg had he been born twenty years earlier. If we improved the education system, this might go some way to evening things out, remembering always that 'social mobility' means mobility downwards as well as upwards.

3. The ten-to-one ratio is flattened enormously by the tax and welfare systems, plus the value of all the stuff which everybody gets "for free" (NHS, state education, refuse collection, the right to vote, use a public library etc), so if you adjust for this, the ratio is probably more like four-to-one. Whether you consider this A Good Thing or A Bad Thing is up to you, that's just the way it is.

4. There are diminishing returns to scale and/or higher earners/spenders get worse value for money. A £200,000 Ferrari does not make you ten times as happy as a brand new £20,000 family saloon, which in turn does not make you ten times as happy as a fifteen-year old midnight blue Golf Mark II for £2,000. Plus higher earners who send their kids to private school get shafted by the system.

5. The real inequalities of course, and those which are impossible to justify on any sort of level, moral, economic, whatever, are inequalities in the amount of national wealth (primarily land rent):

(a) which some people can enjoy or collect (heavily subsidised and lightly taxed), and
(b) which other people have to pay through the nose for.

So with income inequality, even if the ratio between top and bottom were a hundred or a thousand, at least there is no such thing as negative earnings potential (because nobody is forced to pay to do a job). But with "land", about half the population is paying to live somewhere, so actually they have negative land wealth; most of the other half is enjoying owner-occupation, and the top few per cent are collecting from the bottom half.

If we are going to worry about inequality, that's where we ought to start (and probably finish). Once that's sorted out, everything else will pretty much fall into place.