Can anyone recall the case and the name of the Judge who, in about 1750, held that when an individual deposited his own money into a Bank, that money became the Bank's money. It was a loan to the bank. Not a 'deposit' or bailment.
Asking for a friend.
"The growth of the Internet will slow drastically, as the flaw in 'Metcalfe's law'–which states that the number of potential connections in a network is proportional to the square of the number of participants–becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's."
Paul Krugman (Of course it is).
But why are we surprised? This man has admitted that he got into economics because he believed in fairy stories. Specifically Asimov's cod science of 'psychohistory' which forms a key part of the plot of the Foundation Trilogy.
Looking up a youtube video on Fractional Reserve v Full Reserve Banking I observed that the video was sponsored by 'compare lifetime-mortgages.co.uk who advertise 'no repayment mortgages' and a factoid that house prices have gone up by 41.09% since Q1 2010.
Irony somehow doesn't quite cut it.
From The Guardian:
Two years ago, Lisa Charles and her family moved from their lifelong home in the town of Newtok, Alaska, to Mertarvik, a 30-minute trip by boat or snow machine depending on the season.
Lisa is a member of one of the US’s first communities of climate transplants, though she is also Yup’ik, a mother of seven, a nonprofit employee, and a political volunteer. Melting permafrost has rapidly accelerated the erosion of the land under Newtok, bringing houses precariously close to the water’s edge.
Going by the photos in the article and Google maps, both the old village and the new village are sited on an archipelago of low-lying islands (or is it a peninsula riddled with streams, lakes, bays and inlets?), which itself is in the middle of an estuary with constantly changing coastlines/river flows; the new village (lower right hand corner) is even closer to the water's edge than the old one (top, centre):
Further to my post of two days ago...
Let's assume in their neo-lib fantasy world, we abandon planning restrictions and everything in a radius or two or three miles around each town is zoned for residential development.
For simplicity, let's assume that all land in this zone is owned by one feudal landowner, who hitherto has just been selling off the odd acre here and there to developers to expand the town. Which is exactly what Prince Charles and his ancestors have been doing for centuries. His ancestors were doing this long before they invented planning laws, and if he really wanted planning permission, does anybody think he wouldn't get it?
Why does he drip feed it? To maximise the total value that he and his heirs can wring out of it. He might sell off the most valuable fraction of a percent each year (the parts immediately adjacent to the towns) but his remaining land, in particular the bit that is now adjacent to the expanded towns, goes up in value by a larger percentage.
Does the fact that he could theoretically sell all his land to developers or anybody else tomorrow mean that he will do so, and that tens of thousands of homes would be built? No, why would he? Developers have a steep input cost curve, if they try and increase output, their input costs rise dramatically, which reduces their gross profit, which reduces the amount they are prepared to pay for land. And they don't want to depress selling prices short-term by flooding the market. So they are only prepared to pay full price for small amounts of land each year.
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Does it make much difference, if any, if the land surrounding the town is divided into smaller and larger farms, each with a different owner? No, why would it? Collectively, their wealth-maximising strategy is to do the same as the monopolist, i.e. drip feed it, starting with the most valuable bits.
Let's look at three farmers who are thinking of offering some land to developers.
1. Farmer A owns land adjacent to the developed area. Homes in the area sell for £250,000, each home costs the developer £100,000 to build and he expects £50,000 profit per home. At ten homes per acre, he is prepared to pay max. £1 million per acre for the land.
2. Farmer B owns land a mile out of town, same numbers as above, but it will cost the developer an extra £40,000 per home to build/widen the narrow track out of town (or pay the council to do so under a s106 agreement) and connect it up to the normal utilities a mile away (water, sewage, utilities, internet etc), which will involve also sorts of hassle, costs, ransom and wayleave payments. So the developer is only prepared to pay £600,000 per acre for this land.
3. Farmer C owns land two miles out of town, it will cost £80,000 per home to hook it up to the town two miles away, developer is prepared to pay only £200,000 per acre.
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Which Farmer is most likely to sell and/or which land is a developer most likely to buy and actually build houses on it?
1. Farmer A has an offer of £1 million on the table. That land has reached its maximum value - it's next to the developed area and can't get any closer - so future increases in value will be minimal (might even fall temporarily if a developer buys other favourably situated land and builds a new estate there). A developer who buys it will be able to get the houses up and sold, recoup his outlay, and bank his £50,000 per home profit fairly quickly. There are few uncertainties involved here.
2. Farmer B has an offer of £600,000, but if the town expands a mile towards him over the next decade it will be worth £1 million. So if he hangs on for a decade, his compound growth is 5% per annum. Maybe he wants to sell anyway, but whoever buys it (another farmer, a developer, a speculator) will probably decide to hang on and bank the 5% compound until the land has reached its maximum value. The large developers do this, and they explain in great detail in their published accounts how these carefully chosen marginal sites are steadily ticking up in value.
3. Farmer C has an offer of £200,000. If he is lucky and the town expands towards him, in thirty years it might be worth £1 million. So if he hangs on for thirty years, his compound growth is also 5%. Maybe he wants to sell anyway, makes no difference, same as 2.
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So Farmer A is most likely to sell, and whoever buys it might as well get those new houses up and get his money back ASAP, there is no advantage to hanging on. This also happens to be the most efficient strategy in economic and environmental terms as well (lowest costs, least additional car use, least land being covered with roads etc).
While the developer is busy building and selling these homes, no developer is going to be particularly interested in buying land from Farmer 2 or Farmer 3 - they'd risk having to sell for lower prices and will face higher input costs (on top of the high connection costs).
More nonsense from Centre for Cities, the opening sentence contradicts the headline just to warn you that you are about to ride the rollercoaster of flawed logic:
No, landbanking does not cause the housing crisis – here’s why
Landbanking is caused by the current discretionary planning system. A new flexible zoning system will end landbanking and the housing crisis.
So, er, landbanking does not cause the housing crisis (which is not a crisis, it's deliberate); but the planning system causes landbanking... which in turn causes the housing crisis?
The key paragraph appears to be this:
The rational strategy for developers is to build at a slow rate which maintains high prices for their product and avoids swamping the local market with new supply. Crucially, this behaviour is possible because every other competitor faces the same bottleneck on accessing land for development. They are not able to swoop in, buy another piece of land, and quickly build and sell homes for a cheaper price... If a new flexible zoning system were introduced those behaviours would disappear.
Land is land, whether it is owned by a farmer, a speculator or a home-builder/land banker; whether it has planning; is likely to get it or is just a long shot. Whoever owns it is the landowner. They all have the same incentive, to drip-feed it onto the market.
It's like having money in the bank which is earning interest (those were the days!). You only withdraw what you need when you need to, and you leave the rest in the bank. You don't earn interest when you withdraw it, you earn interest by not withdrawing it. In the same way, landowners maximise their long-term wealth by not selling land while it is steadily increasing in value (earning interest).
So in their neo-liberal fantasy world, let's assume the government grants blanket planning for all land within a mile or two of each town or city, enough to build tens of millions of homes.
What is the profit maximising strategy of Barratts et al now? It is to continue drip-feeding their existing land bank onto the market*. No change there.
Once Barratts et al have used up their land banks, they'll have to go to farmers and speculators to buy more. And the farmers and speculators will adopt exactly the same profit maximising drip-feed strategy. So the 'land' bottle-neck just moves up one level and the 'labour and materials' bottle-neck is unchanged.
It's not a cartel or collusion, all landowners have the same incentives and they all behave the same. If one landowner breaks ranks and decides to sell all his land and buy a Ferrari or a yacht, it will just be bought by somebody else with exactly the same drip-feed incentives.
* It's not just that new-prices fall slightly if they build 'too many', it's also that their inputs are very inelastic, a small increase in demand for labour, bricks, timber sees wages and prices shoot up. I remember chatting to plasterers and electricians in east London in the years after Canary Wharf was completed and they reminisced fondly about earning silly amounts of money at the time.
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They also trot out the usual nosense about seventy percent of homes in Austria being 'self-built'. They are nothing of the sort! It's a tax reduction strategy - instead of buying land-plus-house from a builder as one package and incurring stamp duty and VAT on both elements, people buy the land from the builder as one transaction (stamp duty, but no VAT) and then get the same builder to build the house (VAT but no stamp duty) as a separate transaction. And it's not like houses in Austria are cheap either. So they haven't given it much original thought.
From the BBC:
Thousands of current and former Tesco workers have won a legal argument in their fight for equal pay. The European Court of Justice has ruled that an EU law could be relied on in making equal pay claims against their employer.
Tesco workers, mostly women, have argued that they failed to receive equal pay for work of equal value with colleagues in its distribution centres who are mostly men. They said this breached EU and UK laws.
1. Why is EU law relevant? It could only be relevant for pay periods up to 31 January 2020, and I'm not sure whether courts would ever retrospectively give people pay rises.
2. A sane and rational person would assume that distribution centre workers get paid a bit more (it appears to be average £13/hour rather than average £10/hour for shop workers) because the work is physically or mentally harder; requires more specialised skill and experience; involves less flexible shifts, more early/late shifts and night shifts; involves a longer commute etc.
3. Clearly, if Tesco paid male shop workers more than female shop workers (or male distribution centre workers more than female distribution centre workers), this would be wrong, that does not appear to be the case. Similarly, if Tesco had a blanket policy of not employing women in their distribution centres, that would also be wrong, but again, that does not appear to be the case.
4. What if Tesco employed a similar mix of men and women in both shops and in distribution centres? Would anybody be able to allege indirect discrimination then? Methinks not.
Tesco, the UK's biggest retailer, and law firm Leigh Day, acting on behalf of the workers, sought clarification from the Court of Justice of the European Union. They asked the court to rule on a specific aspect of European law... Under EU law, a worker can be compared with somebody working in a different establishment if a "single source" has the power to correct the difference in pay...
Kiran Dauka, a partner in the employment team at Leigh Day, said: "This judgement reinforces the Supreme Court's ruling that the roles of shop floor workers can be compared to those of their colleagues in distribution centres for the purposes of equal pay."
5. That sounds like a stupid interpretation of a stupid rule to me.
Pam Jenkins, who works at Tesco, said: "To get a judgement confirming shop floor workers can use an easier legal test to compare their jobs to male colleagues in distribution is uplifting. I've always been proud to work at Tesco, but knowing that male colleagues working in distribution centres are being paid more is demoralising. I'm hopeful that Tesco will recognise the contribution shop floor workers make to the business and reflect that in our pay."
6. Be careful what you wish for - the most likely outcome here is that Tesco will employ even fewer people to work on the tills and have more of the self-checkouts. I personally much prefer being served by a human being, but at my local Tesco, they only staff about three out of about ten tills, so the queues are awful and I grudgingly use the self-checkouts (knowing that however indirectly, I am putting some poor sod out of work).
The legal test for comparability is only the first of three stages within Asda's overall pay claim, which is expected to take several years to conclude. Leigh Day is also handing similar equal pay claims against Sainsbury's, Tesco, Morrisons and Co-op, which are not as far advanced.
7. This bit makes sense, the whole thing is a wild goose chase and a gravy train for the lawyers. Judges are always happy to drag things out on their behalf, in case they ever want to go back into practrice.
Spotted by TBH in The Daily Mail (of all places):
Anybody predicting the average house price would rise 10 per cent during the lockdowns would probably have been laughed out of the room as the pandemic hit... If the Bank of England and the property industry itself isn't capable of predicting the future of house prices, who then would be bold enough to do so?
Well, one man is happy to give it a try - and what's more, time and time again he has got it right.
Fred Harrison, a British author and economic commentator, successfully predicted the previous two property crashes years before they occurred - and his 18-year property cycle theory says that house prices should continue to boom before crashing in 2026...
He is able to make these predictions having identified an 18-year cycle that he has mapped out from hundreds of years' worth of data.
As much as I love Fred, that's not quite true. The oldest article I found about the 18-year boom bust cycle was circa 1905, which covered US recessions going back to before it was even the US. But he certainly rediscovered this phenomenom.
What would stop a crash from happening in 2026?
In short, Harrison believes nothing will stop the crash from happening unless dramatic government action is taken to prevent it.
'Nothing can stop the crash of 2026, other than if prices were limited to long-run affordable levels, but governments refuse to contemplate that prospect,' he says, 'If people are happy with the booms and busts, there doesn't need to be a solution.'
The best 'solution' according to Fred and many others being to tax land values a lot more and labour and enterprise a lot less, of course, but it's The Mail and they didn't report that.
Totay's list: "Leaders of political parties with names that sound like 'Natalie Bennett'"
1. With an early lead, it's Natalie Bennett herself* of course, setting the bar very high for all the hopefuls out there.
2. Oof! What's this? Out of nowhere, almost certain to bag second place, it's... Naftali Bennett, all the way from Israel!!
* Natalie also has the honour of being on a short list with Julia Gillard. One was born in Australia and led a UK political party and the other was born in the UK and led an Australian political party.
See here for more politician-name-related tomfoolery.
The examination boards purport to offer a service, in setting and marking exams and awarding grades, however, in reality, all they are doing is rent-seeking, monetising their grade-awarding powers. This has been highlighted by the decision of the government that children "should not sit exams" in academic year 20/21 and that the grades should be awarded on coursework. However, the only way the exam boards can assess children on their coursework is to look at the results of, er, exams, except these are tests set by the educational establishments themselves, not the exam board. Despite the fact that the exam boards now have to do almost no work prior to awarding grades in GCSEs and A levels, their charges remain the same.
