There's one law for them and another law for us (Part 94)

From the BBC:

The elections watchdog has ruled that the Liberal Democrats can keep £2.4m in donations which it had been suggested came from a man convicted of fraud.

Michael Brown was convicted of stealing more than £30m from clients last year. The court case heard he channelled money through a company called 5th Avenue Partners to the Lib Dems. But the Electoral Commission said there was no "reasonable basis" to conclude that he had donated the money.

Wot?

Whether or not "he" donated the money and what the source of that money was is irrelevant. The only question is whether 5th Avenue Partners Limited was carrying on a business in the UK, see Section 54(2) of PPERA 2000.

The first place you look when you're trying to find out about a company is Companies House Direct, which tells us that neither this company nor the similarly named 5th Avenue Partners (UK) Limited ever filed accounts, i.e. there was no reason for anybody to assume that they were trading in the UK, unless of course the company proved to the Lib Dems that it had already started carrying on a business but, being newly incorporated, had not yet filed accounts.

El Comm say that they examined an "accountants' analysis", I'd love to see that, as I am in this line of business myself. I'd assume it includes stuff like an 88(2) subscription for share capital, bank account details, rental agreements, employment contracts, PAYE and VAT registrations, payments for this, that and the other. You don't exactly need to be an expert to understand this, do you?

End of discussion.

UPDATE: Back in October 2006, a High Court, in a separate case brought by aggrieved investors, ruled that the company had not traded, although from the circumstances, what the judge meant was the company had not traded [in bonds on behalf of its investors]. Hmm.

According to El Comm, the Lib Dems managed to produce loads of evidence suggesting that this was an actual business. Ho hum.

If those are the arguments against, then I'm all in favour.

Hugh Orde, the president of the Association of Chief Police Officers rails against the idea of locally elected police commissioners over at the BBC.

I'd been in two minds about this idea so far, but (as the post title implies), if those are the arguments against, then I'm all in favour.

I'd suggest, in the interests of fairness, that the ballot paper include an extra option for "I don't want a locally elected police commissioner and would prefer them to be appointed by Whitehall".

That's that fixed. Next.

Back of the envelope stuff

Herman Van Rompuy

Because televisions use a different kind of electricity

From The Metro:

California will ban power-hungry televisions after it became the first US state to pass eficiency standards for sets... (1)

The commission estimates that TVs account for about 10 percent of a home's electricity use. (2)

The fear is that energy use will rise as people buy bigger, more elaborate TVs, put more of them in their homes, and watch them longer... (3)

"We have every confidence this industry will be able to meet the rule and then some," Energy Commissioner Julia Levin said "It will save consumers money (4), it will help protect public health (5), and it will spark (6) innovation."...

Californians buy about 11 percent of the 35.4 million TVs sold in the U.S. each year, according to industry figures. (7)

1) The first state to take bribes from a large TV manufacturer, which will mean existing stockpiles are obsolete.

2) That seems surprisingly high. Do TV's really use that much, or are US homes otherwise incredibly energy efficient?

3) They already watch four hours a day, allegedly. There's only so much you can watch, surely?

4) If consumers were concerned about saving energy, they'd buy a smaller set, surely? By all means, make it clear on the packaging how much electricity a TV set uses and what that costs per hour, but apart from that, people have to make up their own minds. If we go with 300 watts for an large-ish TV, and $0.12 per kWh price, that means a TV costs, er, less than four cents an hour to run. That's hardly terrifying, is it?

5) Wot?

6) Poorly chosen word, methinks.

7) Wot? California is about 11% of the population of the USA and they buy about 11% of all TV sets? Horrors!

Confused Thinking Of The Day

From this afternoon's Evening Standard:

Young professionals struggling to get on the property ladder are being offered knock-down rents in some of London's most sought after neighbourhoods...

In a groundbreaking £7 million scheme, Westminster council is targeting those who earn up to £30,000 a year but cannot put money aside for a deposit to buy a house because rents are so high. Tenants who sign up will pay heavily subsidised rents — up to 67 per cent off the market value. They will be expected to put aside the money they save for a deposit...

The council is buying 30 properties for the trial: tenants will be charged rents as low as £120 a week for period homes in areas such as Bayswater, Pimlico, Marylebone and Westbourne Park. That is less than a third of the £365 average market rent for one-bedroom flats in these areas...

All the flats involved in the trial are former council properties that Westminster is in the process of buying back from leaseholders for an average £230,000. The council is funding the project itself, but a spokesman said it was "negotiating" a grant from the Homes and Community Agency.

Philippa Roe, Westminster's cabinet member for housing, said ... she was "not too worried" if some tenants decided not to save while they lived in the flats, or spent their bonus payments on something other than a home. "It will help with our housing shortage anyway," she insisted.

Can anybody explain to me how any of this is supposed to make any sense?

1. This makes a mockery of the whole "right to buy" idea, which was Home-Owner-Ism taken to extremes. Westminster Council sold these flats off at undervalue over the years, and now they're buying them back for full market value (or probably slightly above), at a net loss of around £200,000 to the taxpayer, also known as "privatising gains, socialising losses".

2. In an ideal world, they would never have sold it off in the first place, and increased the rents in the more desirable areas to market value, and used the money to build more social housing a bit further out of town.

3. What's done is done, so Plan B must be to use that £7 million to build a hundred new flats a bit further out of town. Sure, rich people will end up in the nice areas and poor people in the not-so-nice areas, but that's the whole point of being rich, isn't it?

4. She does not appear to have given any thought on how to prevent people sub-letting and pocketing a huge profit at zero commercial risk. If they are really hell-bent on buying them, would it not be better to let them out for market value and spend the money on building some new flats?

5. But the crowning piece of nonsense, IMHO, is the idea that buying an already existing flat "will help with the housing shortage". There is no net increase in the number of flats. And if a higher income household can't buy this flat, then they will buy another one nearby and push up prices even further, surely?

The Internet is truly a most wondrous thing

Via Statcounter, I re-traced a Google search for the phrase in six months times, and was pleased to note that one of my posts was number five out of 279,000,000. The number one result was an article in The Times headed Climate change catastrophe took just months, which I couldn't resist reading. Assuming the reported findings to be correct, or at least sincerely held, they do put the whole thing into perspective:

Six months is all it took to flip Europe’s climate from warm and sunny into the last ice age, researchers have found...

Other research has shown that rapid climate flips are normal. In its 4.5-billion-year history, the earth has experienced at least four main ice ages, of which the last, the Quaternary, is still continuing. Within each ice age, however, there are periods when ice advances or retreats, and in the past 60,000 years alone the earth is thought to have warmed or cooled by up to 7C at least 20 times. The current interglacial period has lasted about 10,000 years.

My thesis being, before we believe anybody's predictions about what the weather will be like in the future, we should expect them to be able to explain these sudden swings in the past. And before they can explain the past, we need to know what actually happened, to which said research has hopefully contributed.

1984 (20) Home-Owner-Ism (2)

From 1984 by George Orwell:

The Party is not a class in the old sense of the word. It does not aim at transmitting power to its own children, as such; and if there were no other way of keeping the ablest people at the top, it would be perfectly prepared to recruit an entire new generation from the ranks of the proletariat. In the crucial years, the fact that the Party was not a hereditary body did a great deal to neutralize opposition.

The older kind of Socialist, who had been trained to fight against something called 'class privilege' assumed that what is not hereditary cannot be permanent. He did not see that the continuity of an oligarchy need not be physical, nor did he pause to reflect that hereditary aristocracies have always been short lived, whereas adoptive organizations such as the Catholic Church have sometimes lasted for hundreds or thousands of years.

The essence of oligarchical rule is not father-to-son inheritance, but the persistence of a certain world-view and a certain way of life, imposed by the dead upon the living. A ruling group is a ruling group so long as it can nominate its successors. The Party is not concerned with perpetuating its blood but with perpetuating itself. Who wields power is not important, provided that the hierarchical structure remains always the same.

... which pretty much sums up Home-Owner-Ism.

To recap, Home-Owner-Ism is the belief that "property prices can only go up"; that the government should levy taxes on economic activity but not on privately collected quasi-taxes (income and gains from property ownership); if necessary, it should levy additional taxes on economic activity to reinflate the house price/credit bubble; and that the only relevant consideration for town planners is whether a development will adversely affect property values in the surrounding area, even where the wider social and economic costs of refusing to allow a development vastly outweigh the benefit to local property owners.

The Home-Owner-Ist economic model is almost as flawed as Socialism, so the system collapses every ten or twenty years (i.e. when the house price/credit bubble bursts). Just like Socialists, instead of re-examining the model, the Home-Owner-Ists blame it all on the banks (for going bust and for paying bonuses instead of lending to 'hard-pressed first time buyers'). However, unlike Socialism, which in the long run is always replaced by something closer to democracy or capitalism, Home-Owner-Ism has so far seldom been called into question and appears to be self-perpetuating.

When I criticise their ideology, the Home-Owner-Ists reply "If you think that being a home-owner is such a good deal, why don't you just stop whining and buy a house? There's a free market in houses, isn't there?".

Sure, there's a free market in houses in the same way as there is a free market in taxi drivers' licences in London - the point is that the underlying subject matter of either market is the right to participate in a very un-free market. Without the non-price rationing or implicity subsidies, houses simply would not cost as much as they do.

And, like the Inner Party in 1984, Home-Owner-Ists couldn't care less how unaffordable housing is for their own children or grandchildren - it is only important that Home-Owner-Ists remain the dominant group, and not who the actual members of that group are.

"Alcohol protects men's hearts"

From the BBC:

The study was conducted in Spain, a country with relatively high rates of alcohol consumption and low rates of coronary heart disease. The research involved men and women aged between 29 and 69, who were asked to document their lifetime drinking habits and followed for 10 years...

The researchers from centres across Spain placed the participants into six categories - from never having drunk to drinking more than 90g of alcohol each day. This would be the equivalent of consuming about eight bottles of wine a week, or 28 pints of lager.

For those drinking little - less than a shot of vodka a day for instance - the risk was reduced by 35%. And for those who drank anything from three shots to more than 11 shots each day, the risk worked out an average of 50% less.

You might think that the bansturbators aren't going to take this lying down. And they are not. The BBC article contains rent-a-quotes from three bansturbators, and not a single one from anybody representing anything like a brewery or a pub. Would it have been so terrible to get a quote from somebody saying "We told you so", even if just for the comedy value?

The People's Republic China: probably the most badly run conglomerate in the world, ever.

There was a 'debate' on yesterday's Newsnight on BBC2, featuring the eternally insufferablePaxo, some horrible American diplomat lady and two economists (who were both of Chinese extraction, not sure if that's relevant). The debate was, superficially, about whether China* will be the economic superpower of the 21st century, the fact that the country has built up over $2 trillion in foreign currency reserves, yadda yadda, on which, inevitably, Paxo and the American lady had nothing new to add.

As we all well know, China's population is about 1.3 billion, and when faced with stupendously unimaginably big numbers like $2 trillion or 1.3 billion, it's always helpful to divide one by t'other. What it boils down to is that each Chinese citizen has a savings pot of $1,500, i.e. bugger all in the grander scheme of things. That's dealt with the basic maths.

As further background, there was an article in today's FT that said that China has been accumulating foreign currency reserves (three quarters of which are in US bonds) at the rate of $300 billion a year in recent years, which is about seven per cent of their nominal GDP, or alternatively, they've accumulated currency reserves equivalent to half a year's GDP over the last decade or so.

One of the economists made an interesting point (I can't find it in the clip). He argued that part of the reason why China constantly intervened in the currency markets to keep its currency down, was not just an insane mercantilist export subsidy, it was because a quarter of Chinese still work in agriculture (a surprisingly large figure, but appears to be correct). If they allowed their currency to appreciate, then their markets would be flooded with food produced far more cheaply by Americans, Canadians, Australians and a lot of the small farmers would be out of work.

A couple of caveats; allowing your currency to float freely and lifting import barriers are two separate issues; and the Americans subsidise their food exports, but glossing over those, this is a ver-e-ery interesting train of thought...

1. Let's imagine that China is not a "country" but a large conglomerate, with 1.3 billion shareholders and about 1 billion employees/slaves, does it not strike anybody that it is stupendously badly run (not to mention all the human rights abuses, mass corruption etc)? The workers get treated like shit and the shareholders get no return on their investment (although the senior management team, the Communist Party members, may be living the high life).

2. Like the congolmerates of yore, they make the fatal error of using the profitable side (manufacturing and exporting) to subsidise the unprofitable bit (agriculture).

3. And like paternalists the world over, they think that 'saving' is in and of itself A Good Thing, and that forcing people to 'save' (by paying them artificially low wages) is therefore also A Good Thing (a bit like the crap in the UK with forcing people to save for a pension - all that happens is, they still haven't paid off the mortgage by the time they retire and the Stock Market is just a big Ponzi scheme). Wrong, pay people their full wages, free up the markets, liberalise planning laws and people will invest of their own accord, and probably in far better investments that US bonds.

4. What sort of a cretinous policy is it to not only subsidise your own exports (i.e. give money to richer countries like the USA, Europe), but then instead of investing the the meagre profits back in China to improve people's lives - whether in housing, new factories, combine harvesters, environmental stuff, safety measures in coal mines - they lend it all back to the USA again?

5. China had to invest in USD, i.e. lend it to the USA, to keep their currency low of course. But as and when they withdraw that money, they will find that the USD relative to the Chinese currency will fall, and the value of US bonds will fall, so they'll be lucky if they get back half what they invested. So basically, every Chinese factory worker has been slaving away 24/7 for a decade and the best he can hope for is the equivalent of $750? That's his performance related bonus? That's his return on investment?

6. In summary, in a decade, economists and management consultants will be holding up China as a good illustration of how not to run an economy, and Mercantilism (or 'State Capitalism') will hopefully be popped in the drawer labelled 'Failed economic ideologies' along with Socialism and Corporatism (and, if I have my way, Home-Owner-ism), and we'll wonder why people ever saw them as a potential 'global economic powerhouse' etc. A bit like we'll be wondering why anybody was so daft as to believe in global warming.

* I shall follow custom and refer to The People's Republic of China as "China", as opposed to The Republic of China, or "Taiwan", the civilised bit that has a low corporation tax rate and proper Land Value Tax.