Sunday 30 June 2013

Killer Arguments Against LVT, Not (305)

From The Economist, having explained the merits of LVT quite thoroughly first...

Economists are more divided about the “fairness” of property taxes than they are about their efficiency. For a long time the prevailing consensus was that property taxes were regressive because the burden would be passed on to tenants and workers.(1) Today another school of thought is more popular. It argues that in an efficient capital market the burden of property taxes is borne by owners of capital across the economy; and since capital owners tend to be richer, the tax is likely to be progressive.(2)

Nuanced judgments about progressivity are not what drive political opposition to these taxes. Voters hate property taxes because they are what economists call “salient”: the burden is obvious, easy to calculate and hard to avoid.

An intriguing new paper by Marika Cabral and Caroline Hoxby at Stanford University shows what a difference this makes. Most American homeowners pay their property taxes in one or two lump sums during the year. Around a third (mainly those with mortgages) have their tax payments bundled in with monthly mortgage payments. The economists find that how people pay their property taxes affects their tolerance for them.

The more people pay in lump sums, the lower property taxes are likely to be. For property taxes to become a much bigger source of revenue, governments must apparently ensure people don’t realise how much they are paying.(3)

1) Was it? I thought that proper economists had always agreed that such a tax was paid out of the rental income which the landowner would collect in cash from tenants or be enjoyed by an owner-occupier? Nothing gets "passed on". To whom can the owner-occupier "pass on" the tax? Nobody. To whom does a landlord "pass on" the tax if his premises are vacant? Nobody.

2) Firstly, land is not "capital", it is "land".

Secondly, of the total income of productive businesses, there is a Pareto distribution equilibrium that the employers/owners/shareholders (who own the "capital") gets about 20% - 25% and employees (who provide "labour") get 75% - 80%. Thirdly, most of that "capital" is just accumulated 'labour" so if a business owns a machine which cost £1 million, that means that the business has paid £800,000 for"labour" and 20% to the man who owns the business which makes machines etc.

Thirdly, it is quite simply the case that the distribution of land ownership by value is very, very skewed, far more skewed than "capital" which is in turn far more skewed that "earned income". Therefore a tax on the rental value of land is inherently more "progressive" than a tax on earned income, Poor Widows In Mansions notwithstanding.

Finally, we know that LVT would be highly progressive, or else the rich and powerful landowners and bankers would devote their propaganda efforts to supporting LVT, rather than attacking it mercilessly.

3) True, I suppose. But there is no reason why LVT cannot be deducted monthly from salaries, like existing payroll taxes, or withheld welfare payments, or rolled up until death in the case of pensioners.

Another sneaky idea of mine was "Georgism without LVT".

You simply have a fairly high flat rate of income/corporation tax, say 60%, collected via PAYE or via Self-Assessment, but for each household or business, it is capped at the amount of LVT they would be paying under an LVT-only system, so actually only low earners who own a home with a high rental value (or marginal businesses who own premises with a high rental value) would be paying the 60% marginal rate; everybody else would have a marginal zero per cent income tax rate, and the overall average rate would be a lot less than 60%.

On a very local level, that looks regressive, i.e. if all the houses on one street have the same LVT bill after deducting personal allowances - say £5,000 - then the household which earns £6,000 a year is paying £3,000 tax (50%), the normal household which earns £25,000 will be paying £5,000 tax (20%) and the high earner household on £50,000 will only be paying 10% tax, but so what?

On a national level, it is still progressive as the rental value of land in high wage areas is higher as a proportion of earnings, so in an area where the average household earns £50,000, the tax will be £15,000 a year or something.

And on a meta-level, clearly the tax is still "progressive" because in the absence of the tax there is an eternal feudal trickle upwards of wealth - anything which reverses this flow must be "progressive".

Saturday 29 June 2013

An Olympic Legacy


Last July, British Cycling saw one of its highest ever months of new joiners, with 2,400 people signing up, but that has accelerated since then with an average of 2,800 people joining in each of the subsequent nine months. In part, that’s due to Great Britain’s success at London 2012, but interest is continuing to grow.

The governing body says that “this unprecedented growth has been achieved through the continued development of new opportunities and support for anyone to start and to stay cycling – whether that be commuting, recreation or sport – ensuring that the inspiration created by our cycling stars is transferred into more people cycling at all levels, delivering on our vision of ‘inspiration to participation’.”

From the BBC:

The number of cyclists killed on Great Britain's roads rose by 10% in 2012, as the overall number of road deaths fell to its lowest since records began in 1926, according to official figures.

The number of deaths among cyclists rose from 107 in 2011 to 118 in 2012, the Department for Transport announced. But there was a total of 1,754 deaths on British roads in accidents reported to the police in 2012, it added. This was 8% lower than the equivalent figure for 2011.

BBC transport correspondent Richard Westcott said the cycling figures might be due to more people travelling by bicycle, mainly in London. It would lead to further calls for road designers to focus more on cycling safety, our correspondent added.

Friday 28 June 2013

"but the collapse in interest rates has left them making more than ever ...."

The king & queen of buy-to-let

Fergus and Judith Wilson, former schoolteachers turned buy-to-let property tycoons

Fergus and Judith Wilson, former schoolteachers turned buy-to-let property tycoons.

Former schoolteachers Fergus and Judith Wilson have 700 houses around Ashford and Maidstone, in Kent, bought using buy-to-let loans. "Life could not be better," they say. The typical rent they charge on a two-bed house has risen from £725 in 2008 to £850.

Many expected their debt-leveraged property empire to crash during the financial crisis, but the collapse in interest rates has left them making more than ever.

On average, they pay 2.25% interest on their loans, with some of costing as little as 1.65%, compared with the 5% rates first-time buyers typically pay.

"Properties that were breaking even or losing us £50 per month are now making as much as £900 a month profit," says Fergus. The average capital gain on his properties has been "£9,000 per unit over the past year", he says, suggesting he has made a paper gain of at least £6m. "For every £1 we are making in rent, we are making another £1 capital gain."

He expects home ownership in Britain to continue to decline to little more than half of all households, bolstering his rental business.

"There is such a shortage of property, it couldn't be better. Some of the tenants are telling me they have given up entirely on the idea of home ownership. Gordon Brown said we are 3m properties short in this country and he was right. Many young people have to get it into their heads that they are going nowhere in the property market. Thatcher sold off the social housing, which we could probably do with now, but that's all in the past."

He adds that most of his new tenants are migrants from eastern Europe. "Around 90% of what we're letting in Maidstone is going to Hungarians … It's a landlord's market for the simple reason that there is such a shortage of housing."

other uplifting tales covered in the same article, Meet the new class of landlords profiting from Generation Rent, include:

Renting the already rented - Dan Burton says he "got bored" studying at the LSE and stumbled into property after subletting spare rooms to student friends in 2009.

The secret millionaire with 672 houses - Kevin Green only started in buy-to-let in 2000 but has now amassed 672 properties.

The 'daddy' of multiple occupation - Jim Haliburton is the self-styled HMO Daddy, with a £10m-plus empire of 100 HMOs – houses of multiple occupation – with 800 tenants around Wednesbury, a depressed town in the West Midlands.

and The Tory minister's son with 40 ex-council homes - Charles and Karen Gow, KCG Property

"No doubt at all about what really killed him then" suggests Mail headline

Firefighter drowned during training exercise at Olympic white water rafting venue moments after he ate a McDonald's breakfast meal

  • Alan Soards, 38, got into trouble in the water and vomited up his breakfast
  • Lowestoft firefighter was on training day at Lee Valley White Water Centre
  • Inquest heard Mr Soards vomited his breakfast while being given CPR
  • Colleague had joked with him earlier that he would 'see his breakfast later'
  • Hertfordshire coroner records cardiac respiratory failure as cause of death

Tragic accident: Alan Soards, 38, died after inhaling his own vomit during a water rescue course in east London NEW Suffolk firefighter Alan Soards, 38, got into trouble during a training day at the Lee Valley White Water Centre in Waltham Cross and died after inhaling his own vomit, an inquest heard.

"Just one in eight people placed on flagship back to work scheme have found a lasting role"

The Daily Mail does the numbers...

Just one in eight people placed on the Government’s flagship employment scheme has been found a lasting job, official figures revealed yesterday.

Of the 1.2 million people who have started on the Work Programme since it was launched in June 2011, only 132,000 have had a job lasting more than six months – just 11 per cent of the total. But the Department for Work and Pensions insisted the true headline employment figure was 13 per cent rather than 11, as 118,000 people had not been on the scheme long enough to qualify as having had a lasting job.

The scheme, which has been personally championed by the Prime Minister, pays private sector firms such as A4e and G4S to find jobs for the long term unemployed.

Employment Minister Mark Hoban insisted the figures represented a ‘significant improvement’ in the performance of the £5 billion scheme to get the long-term unemployed back to work. In its first year it found jobs for just 2.3 per cent of people.

In the original version as published in the paper this morning, they neatly calculated that £5 billion divided by 132,000 is a nice round cost - to you, the taxpayer - of £40,000 per job.

If you apply common sense and assume that most of those 132,000 people would have found a job anyway, the true cost per marginal additional job is £100,000s of course.

Also noteable is the amount of Indian Bicycle Marketing coming from the Labour MPs, instead of saying "This is shit, we'd shut the whole thing down", they say "The Work Programme is a great idea but the Tories are running it really badly - if we were in charge, it would all be so much better." for which there is not a scrap of evidence.

Seven Days

(Just for a giggle, the numbers in the excerpt are hyperlinks to take you straight to the relevant footnote, like wot Wiki does.)

From the BBC:

Jobseekers will to have wait seven days before first claiming Jobseeker's Allowance (1) and may have to sign on every week, under new government plans(2)

Chancellor George Osborne also said those claiming unemployment benefits who did not speak English would have to attend English classes (3).

Jobseekers will also be required to have a CV before claiming benefits.(4)

1) The "seven day wait" is supposed to encourage people who have just lost their jobs to focus on finding a new job before they go and claim benefits instead, which has some superficial appeal until you think about it for a few seconds...

a) How easy or hard it is for somebody to find another job if they are made redundant, their contract comes to an end etc depends entirely on that person. There are some who will be back in work within a couple of days; there are some who will never have paid work again; and everything in between.

b) We can safely assume that those people who know they will have a new job in a few days will indeed focus on getting a new job, so to the extent that they even bother applying for dole money, we might as well make the process as quick and simple as possible, i.e. you turn up with your P45 and give your bank details to waste as little of their time as possible while they do their job applications. For those who will never work again, one week is not going to make any difference to the public finances, but it paying them dole from Day One will soften the blow ever so slightly.

c) It is the marginal cases which we have to worry about, the low-paid, low-skilled, temporary and part-time workers who hover between employment and unemployment. It is clearly better for them to be in work that out of it, so [easing] the transition from dole to paid work and [easing] the transition from paid work to dole are equally important.

d) So let's look at such a marginal person who is on the dole and is offered a three weeks' work on the minimum wage. That's £650 gross (let's ignore Working Tax Credits and PAYE), from which they deduct travel and other costs (call it £5/day) and three-plus-one weeks' dole money = £284, net gain £291, an effective hourly wage of £2.77. If they only stand to lose three weeks' dole money, the net gain is £362, a net hourly wage of £3.45 - so it's not hugely more, but might be enough to tip the decision towards taking the job in enough cases to produce an overall gain.

2) I was at the launch of Malcolm Torry's new book about Citizen's Income yesterday called Money for Everybody (hi to Katie, Dave and Geoff).

a) He gave a quick overview of how the UK's welfare system had developed over the years, and one key point is that of all the bright ideas politicians have come up with over the years, some good some bad, the ones that were adopted (good or bad, mainly bad) were always ones which increased the amount of bureaucracy and the number of civil servants.

(He gave the example of the Pensions Credit, which is savagely reduced if a pensioner has any savings (which in turn are subsidised by being in a tax exempt ISA and subject to a hidden wealth tax called negative interest rates) but then to soften this, there is a parallel Savings Credit to partially reinstate the Guarantee Credit which people lose if they have savings. Absolute madness.)

The bright ideas that were rejected, however good, were the ones which would have reduced bureaucracy and the required number of civil servants.

Ask yourself: does making welfare claimants waste an hour every week instead of every two weeks more likely to get a job? Not really. Does it require a larger number of civil servants? Yes. There's your answer to that.

b) One question put to him was how he saw the transition happening.

I suggested an answer myself; it is simply no big deal. Anybody on the dole (call it IS, PIP, JSA, ESA, whatever) just continues to receive their £71 a week but at the next signing on date, is simply given a PAYE code BR (i.e. no personal allowance) and told to get on with it. If they find work, there is no need to report anything to anybody ever again and they continue to receive their £71 a week - but they have income tax deducted from their whole wage (and NIC from most of it), so they more in tax than everybody else and in the weeks where they earn much more than £200, the tax and NIC withheld is more than £71 and they have effectively paid for their own dole.

There's no need to change anything else at all. Because of the maths, there'd be little incentive for them to claim Working Tax Credits if they work more than 16 or 30 hours etc. So WTC could remain on the statute books for ever, but nobody would ever claim it. Everybody who loses his job or leaves school without immediately starting work could get the same - £71 a week and a BR tax code. It might well be that these people end up a few quid a week better off than people who have been in work throughout, but that can easily be fixed by increasing the personal allowance for income tax and NIC accordingly.

3) This is a splendid idea. I wonder why nobody else had it first. Even better, make people pay a few pounds towards each class (by deducting it from their dole) and make them continue paying until their English is good enough.

4) What's the point of that? The people likely to find work again anyway will either already have a CV or be looking for the type of job where you don't need very much. And a CV is of absolutely no help to the no-hopers.

There's no harm in the people at the Job Centre helping people put a CV together if people ask for help - it certainly helps employers if every CV follows a standard format, which changes over time. I haven't updated my CV for fourteen years and I have no idea what they are supposed to look like nowadays.

But apart from that, making CVs compulsory is just yet another job creation scheme for the civil servants who have to check them, isn't it?

Thursday 27 June 2013

She might be broad of beam, but just look at that elbow/waist ratio...

Pinched from today's Evening Standard:

Well at least we now know what "a success" is ....

because the Work Programme is a success, 'giving hope' to the unemployed, as Minister for Employment Mark Hoban told us all on the 17th of this month, and today the Department for Work and Pensions published the Work Programme statistical summary June 2013  which summary contains the latest Work Programme official statistics on referrals to the Work Programme, attachments to the Work Programme and Work Programme validated job outcomes and the numbers of sustainment payments (but no consolidated information at all on "actual cash sums involved") made to Work Programme "Prime" providers up to 31 March 2013, which tells us that:-

From June 1 2011 to March 31 2013

• There were 1.20 million referred to the Work Programme and 1.16 million attached to a provider;

• 132 thousand Job Outcome payments were made to providers, which represents 13.0% of eligible Referrals. 
Work and Pensions Minister Mark Hoban hailed the figures, saying the Work Programme was helping those written off by system get back into work:  "That is a lot of lives transformed as a consequence of this programme, people who have been able to achieve their aspiration to look after themselves and their family,***" he told BBC News.
Unsurprisingly perhaps the Labour Party sought to pour cold water on this clear and obvious to all success :-
Liam Byrne MP, Labour's Shadow Work and Pensions Secretary, responding to today's Work Programme figures said:

"The Work Programme hasn't worked for over a million people.   Three years into the parliament and nearly nine out of ten people on this flagship programme have been failed. Worse of all, the government missed every single one of its minimum targets and in nearly half the country, the Work Programme is literally worse than doing nothing. No wonder the benefits bill is £21 billion higher than planned and no wonder the Chancellor himself was forced to attack 'under-performing' back to work programmes.   We can't go on like this. We desperately need a change of course starting with a compulsory jobs guarantee that would make sure everyone out of work long term would have to take a job after two years."
*** he probably means those lucky enough to actually have found some sort of work via the WP, but equally he could also be referring to the owners/shareholders in the Work Programme Prime Providers ...

Update : Thursday 27th pm.

The obviously deeply cynical Patrick Butler of the G, who rather than take the word of Mark Hoban and whatever other members of the Grand Alliance ranks who have been primed to go around telling everyone what a "roaring success" the WP is; has done some investigating and number-crunching of the published stats and, gosh, brave man wishes to dispute the Mark and Co version of what story those stats tell:-

The government's flagship welfare to work scheme has come under fire after official figures show it is still failing to help the most disadvantaged people into jobs.

Just 5.3% of people on incapacity benefit were helped into employment for at least six months by the Work Programme in its second year of operation, well below the government's minimum performance benchmark of 16.5%.

Providers also failed to meet the contractual benchmark for getting young people aged 18-24 off unemployment benefit and into jobs, and marginally missed the minimum target for getting jobless clients aged over 25 into sustained work.

Across the three jobseeker groups, successful job outcome levels stood at 24.9% against contracted levels of 27.5%.

Ian Mulheirn, director of the Social Market Foundation thinktank, even hinted that whilst the official figures represented "a big improvement on the first year of the programme, failure to meet the targets could put some work programme providers in danger of having their contracts terminated".  

But he quickly added, no doubt to reassure those ERSA members who had read that whilst quaffing coffee and biscuits, and suffered a choking fit; that "Poor performance against the DWP's minimum levels cannot be taken as evidence that providers are doing a bad job or that the scheme offers poor value for money: we simply do not know whether an alternative approach would fare better or worse in current economic conditions", and then went for some further muddying of the waters by concluding that "what it does show is that the scheme was poorly designed with serious consequences for long-term unemployed people"

"Ministers launched the £5bn work programme in 2011 with the explicit aim of getting 2.4m long term unemployed and sickness benefit recipients back into the job market".

Only 2.25 million short of "target" then ... and it would appear the improvement in WP outcomes will have to be "phenomenal" to get any where near it.  Something that Mark and Co appeared to acknowledge recently when they announced that get tougher with the unemployed who are 'making the Work Programme fail' regime

"And now in the newspapers, another repeat"

From The Daily Mail:

A staggering 63 per cent of newspaper articles about the BBC last year were repeats, it has been revealed.

Editors were forced to admit the majority of their coverage in 2012 was taken directly from the BBC's own press releases, raising questions about how their cover price is being spent and journalists' commitment to original thought.

The figure was unearthed by Freedom of Information requests to the newspaper groups about the make up of their reviews of programming on BBC1, BBC2, BBC3 and BBC4.

The average level of rehashed press releases from all four channels was 63 per cent - up two per cent on 2011. Amazingly, a third of of all articles about programmes on flagship channel BBC1 simply trotted out the BBC's own self-penned pre-reviews - a total of 2,793 in 2012.

The BBC also saw a huge leap in its own commentary on itself being faithfully republished by Fleet Street, with more than half of articles being word-for-word copies of viewer complaints, statements of resignations by senior figure and apologies for the Savile affair.

Rather infuriatingly, 32 per cent of articles in major newspapers were repeats of earlier articles criticising the number of repeats on the BBC.

Gaining Employment, LVT Style

From The Register

Game development firm OysterWorld is opening up a base in south Wales that will bring 60 jobs to the region in the next three years.
Wales beat out Canada as the site for the development, marketing and research centre, which will be backed by £1m from the Welsh government.
While I normally can't stand subsidies, that's not too bad a deal - £16K/job, for the sort of jobs that produce something that people want, in an industry that have people that make a lot of money. It's basically reversing a load of the income tax.

But what it's really doing is fixing the result of the problem, rather than the problem itself.

Income tax takes no account of how portable a job is. A bloke writing computer games gets taxed at the same rates as someone selling snowglobes of the houses of parliament. But one of these can go anywhere in the world and do it, the other has to be in London.

So, we throw money at companies to move to Humberside, Wales etc as a way of compensating for the problem. We adjust their tax to cover for the fact that we don't have Land Value Tax. The problem is that it's crude, complicated, means government is picking winners rather than letting the market work things out, requires lots of bureaucracy and corruption and only works for companies of a certain size.

If we had LVT, we'd be able to scrap all of this, all the rural development fund malarkey. Companies would move to former mining areas because well, they could get really cheap staff because the staff would be paying bugger all in income tax, and the UK would probably become a major location for startup businesses.

"Payday loans industry to face competition inquiry"

From the BBC:

The British Bankers' Association (BBA) has referred its members to the Competition Commission because of concerns about "deep-rooted problems with the way competition works".

The BBA said it found that customers found it difficult to identify or compare the full cost of loans and mortgages. It added that there were barriers to switching between lenders when loans were "rolled over".

'Unaffordable' loans

But the lenders involved said they are already changing their practices. The BBA said it was also concerned that competition was based on speed rather than cost.

"The competitive pressure to approve loans quickly may give firms an incentive to skimp on the affordability assessment which is designed to prevent irresponsible lending and protect consumers," the BBA said in a statement.

'Affordable' mortgages

The BBA also said that some of the business models of companies operating in the payday loans industry were causing concern, because they were "predicated on making loans which are unaffordable, leading to borrowers paying far more than expected through rollovers, additional interest and other charges".

"BBC apologises for The Voice final"

From The Evening Standard:

It was the final of the BBC's flagship talent show and all eyes were supposed to be on the contestants.

But it seems most viewers were disappointed with The Voice UK's finalists and what they enjoyed most was the presenter Holly Willoughby... and her revealing low-cut dress.

Today the BBC apologised after some viewers complained that Willoughby's racy black lace maxi dress was the only thing that made the programme half way worth watching.

More than 100 viewers contacted the corporation to voice their disapproval about Saturday's show, which was broadcast in the main before the watershed.

A BBC spokesman said:

"We're sorry if some viewers found Holly's dress to be the only thing which made the final bearable...

"We admit that it wouldn't have gone against audience expectations for a TV spectacle such as this to actually have decent performers doing original material."

But The Voice UK did get some support today. Holly's co-host on ITV's This Morning, Phillip Schofield, leapt to the show's defence.

Schofield tweeted: "139 complaints over Voice finalists. Let's hope those outraged on behalf of their kids don't take them to Spain or France this summer... God forbid they overhear the mindless crap you get on the radio over there before 9pm and be traumatised by it!"

Wednesday 26 June 2013

Max Keiser on Downton Abbey

From the last few minutes of yesterday's Keiser Report, Episode 462, after discussing Home-Owner-Ism:

I think it's based on the British character. Because here in Britain, people ascribe huge value to their home. "A man's castle is his home".

Everyone wants to be a freaking wannabe aristocrat with their big plant... Downton Abbey has done more damage to the psyche of this country than even the Sex Pistols allegedly did back in the seventies.

Downton Abbey is the most radically misinformed propaganda that one could ever imagine coming out of the psychosis of whoever produced that show, the BBC I would imagine... ITV, I knew that wasn't the BBC this time, it was ITV.

But there's a mentality there that if you own a home, no matter how badly you screw up the economy, no matter how much debt you go into...

Remember in Downton Abbey, the guy almost went bankrupt, as I recall in the later episodes... Lord Doodipuss almost went bust.

Prestidigitation - £8 billion apparently 'saved' - or at least "disappeared' in the blink of an eye .....

PMQs: Government has earmarked £11bn for housing investment, says David Cameron - video
Prime minister David Cameron tells the House of Commons during PMQs that house building is increasing at its fastest rate for more than two years. Cameron also explains to MPs that the government has earmarked £11bn for housing investment.

a short while later :-

Comprehensive spending review 2013: George Osborne's £3bn for housing - video
Chancellor George Osborne, announcing his comprehensive spending review for 2015-16, tells MPs of the government's £3bn of capital investment in housing and plans to extend a scheme to help troubled families. Osborne also praises communities and local government secretary Eric Pickles as a 'model of lean government' over embracing spending cuts.

"GCHQ surveillance: Germany blasts UK over mass monitoring"

From The Guardian, 26 June 1943:

The German government has expressed the growing anger of its military chiefs over Britain's mass programme of monitoring radio traffic and directly challenged UK ministers over the whole basis of GCHQ's Bletchley Park surveillance operation.

The German Reichsinnenminister, Dr Wilhelm Frick, who has described the secret operation by Britain's eavesdropping agency as "a rather unsporting way of conducting warfare", warned UK ministers that evil totalitarian states could not flourish when enemy countries penetrated their "veil of secrecy".

Reichsaussenminister Joachim von Ribbentrop sent two letters on Tuesday to the British Home Secretary, Anthony Eden, stressing the widespread concern the disclosures have triggered among the German armed forces and demanding to know the extent to which their military operations have been compromised.

It is the first major challenge to Winston Churchill's coalition government to publicly justify its mass radio monitoring operation, which was revealed in documents leaked to the Soviets by GCHQ officer John Cairncross.

A spokesman for GCHQ refused to comment, pointing out that he was sworn to silence by the Official Secrets Act until 1975.

Nick Clegg gives a master class in Indian Bicycle Marketing

Exhibit One from The Deputy Prime Minister's Office, April 2012:

Helping young people into work through the Youth Contract

We introduced a £1 billion Youth Contract in April 2012 to help young unemployed people get a job. The Youth Contract is a range of support to make it easier for businesses to give young unemployed people a job, training or work experience.

It will provide nearly half a million new opportunities for 18 to 24 year olds, including apprenticeships and voluntary work experience placements.

Exhibit Two, from Personnel Today, 25 June 2013:

A survey of 200 employers has found that the government has failed to win their support for the coalition's flagship policy for tackling youth unemployment, the Youth Contract. None of the employers polled by the Recruitment and Employment Confederation (REC) had used the programme to employ a young person to date.

Nearly half (46%) of respondents, who have responsibility for hiring decisions at their organisation, confirmed they had heard of the scheme, but did not intend to use it, and almost one in three (30%) were "not aware" of the Youth Contract.

Exhibit Three, from an inteview with the self-same Deputy Prime Minister in Lib Dem Voice, 24 June 2013:

We’ve got a much bigger issue, which is a generational issue as we all know, which is that the squeeze has fallen harder on the shoulders of the younger generation.

That’s why I’ve come to the view that one of the urgent bits of work we need to do both in government and more widely is look at the way in which we support particularly that generation of 16-24 year olds, the education-into-work group, who are very poorly served at the moment by a hotchpotch of different and often conflicting government initiatives which are very confusing, a pea-soup of acronyms, and the money is not well spent.

One of my top priorities over this summer is to really get to grips with this, because we’re spending hundreds of millions of pounds as a society and we’re not serving them well at all.

Emailed in by BobE.

Rainfall causes droughts - shock

Tim Worstall didn't fully understand that report explaining the possible causal link between increasing rates of owner-occupation and later increases in unemployment.

He highlights one possible explanation - that if a private tenant loses his job in one area and can only find work elsewhere, he is more willing to move to find a job. The report itself pours some cold water on this by pointing out that the unemployment rate is lower for owner-occupiers than for tenants (which in turn can be explained by the fact that if you have a mortgage and lose your job, you don't stay an owner-occupier for very long...)

Nonetheless, there is a lot of truth in his following assertions:

What's required is a large and fluid rental sector. Maybe the Labour left has the answer: carpet-bombing the country with “affordable” housing. Sadly, this really means creating local council and housing association housing. And that's an even more illiquid market than the owned-housing one.

I did once press a housing charity lady very hard on the question of how long it took to move from one subsidised house in one local council area to another in another. I had to press hard because I don't think she really wanted to reveal the answer: somewhere between two and five years seemed to be that time span.

Which he then uses to draw a completely incorrect conclusion:

So if home ownership increases the unemployment rate by reducing labour mobility, then council housing must do so even more.

1. We are agreed that labour mobility is good for employment and that renting rather than owning is good for labour mobility, so a "large and fluid rental sector" must be A Good Thing.

2. And we are agreed - on the facts - that the waiting list for council housing is very long. The fact that disproportionately many social housing tenants are unemployed is possibly misleading, as this is self-selection. If you are unemployable/unemployed, you are more likely to end up in a council house than as an owner-occupier.

3. And why is it so long? It is not because local housing officers are so woefully inefficient, it is because there is not enough of it, and once you've got a council house, you play safe and stay where you are rather than go through the Hell of trying to get another one somewhere else.

4. So if we built enough* council housing, the waiting list would be days or weeks rather than years. The sector would be "larger and more fluid"

5. Hey presto - problem sorted. Lower unemployment, lower rents (even in the private rental sector) and one in the eye for the Homeys!

So his closing argument is like saying that "rainfall causes droughts". It doesn't. It's lack of rainfall which causes droughts, I think you'll find.

* Social rents usually do not include an extra charge for location value which private landlords rather unethically demand, they are set just high enough to cover actual costs. But council housing is anathema to the Home-Owner-Ist élite because they can't earn any more from it. So supply is severely constrained for political reasons and is outstripped by demand.

So in this context, "enough" means that the quantity is increased to match demand and/or that rents for the more desirable council housing is increased to dislodge a few unemployable people in potentially high employment areas.

As long the rents actually received more than cover the running costs (which they very much do, even if you knock off the large number of tenants living for free), how is this a bad deal for anybody? If you turn up your nose at the thought of living on a council estate, so what, nobody's forcing you to apply for one.

Tuesday 25 June 2013

"Minister resigned following a row over his defence of a school which faced closure under his own policy."

Welsh Education Minister Leighton Andrews, that is, reports the BBC.

Of course, such behaviour - suddenly deciding to oppose government policy that previously received apparently universal support when it became "a constituency issue" isn't unknown outside Wales.

I have distinct recollections of various Ministers in the 1997 - 2010 administration somehow managing to overlook the "collective responsibility" idea and joining various "Save Our XXXXX" campaigns with increasing frequency in the run up to May 2010 and being called out as something beginning with "H" for it; but I can't recall any instance of a Minister in office being called out for opposing his/her own policy and actually acknowledging that their position has become untenable and resigning.

Combine the absurd with the vulgar*

Channel 4 have broadcast some riveting documentary-cum-car crash voyeurism shows in the past about people with OCD who can't stop cleaning and washing and who are paranoid about germs and mess. Gruesome but great fun to watch.

Channel 4 have also broadcast some riveting etc shows about people who are incapable of throwing anything away and live in a house full of junk and people who are never do any cleaning and live in a house full of filth. Gruesome etc.

I've often wondered why they don't merge the two concepts - cut out the middlemen they use to give these shows the veneer of respectability (psychiatrists, counsellors, professional cleaners/junk removers, blah blah) and just send obsessive compulsive cleaners round to the homes of the terminally messy.

Ta da... some of these clever TV people have had the same idea and Channel 4 now has a series based exactly on this concept called Obsessive Compulsive Cleaners, on Mondays at 10 pm (first show yesterday, which I happened to watch).

The cleaners and the messies got on surprisingly well. The messies moaned and groaned but at the end they appeared to be quite grateful; the cleaners appeared to enjoy the challenge and I suppose it's much more satisfying spending a day cleaning away ten years' of filth and really seeing a difference that it is spending all day cleaning away one day's worth of non-existent and imaginary filth from their own pristine homes and having nothing to show for it.

My favourite character was the slightly Indian-looking lass who cheerfully admitted that she was probably addicted to the smell of bleach, and stood there scrubbing happily away at a filthy urinal while everybody else ran out of the building coughing with their eyes streaming.

* a line from "Some kinda love".

"Help to buy is a real achievement... has managed to unite every single economist I know in condemnation. It is going to push up demand while achieving virtually nothing in supply."

Jonathan Portes addresses an unreceptive audience

Peter Schofield, director general for the Neighbourhoods Group at the Communities Local Government department, defended the scheme.

He said: ‘The help to buy is all about new supply. The scheme has attracted so far 4,300 reservations in the first two months and private developers will be trying to build 10 per cent more each year to meet the growth in demand.’

What's the difference between "banks" and "debt collection agencies"?

A rallying cry of the Home-Owner-Ist élite over the past few years has been along the lines of this:

HOW DOES ONE shore up the balance sheets of Britain’s banks while encouraging more lending to cash-starved SMEs? Not since the riddle of the chicken and the egg has a puzzle so confounded the business, financial and political communities in the UK.

Corporate lending is essential for the expansion plans that are so vital to the economic recovery and job creation the government craves...

We know that the best source of cash for business expansion is retained profits and that the bulk of credit creation goes into asset price bubbles, but putting that to one side, where do people expect banks to get the money from? If a borrower is bringing forward consumption or investment, then somebody else (the ultimate lender) must be deferring it. That's where the money comes from.

1. Let's start from the other end and look at debt collection agencies. There are lots of different kinds of these with different names (discount house, debt factoring, invoice discounting) but let's just imagine a plain vanilla version. A productive business might not be very good at the nitty gritty of actual debt collection (sending chasing letters, applying to the County Court, contacting credit rating agencies and sending the heavies round etc) and it might see things as bad for customer relations, but on the other hand, it might want to provide goods or services on credit - gambling that the extra profits generated are in excess of the inevitable cost of bad debts.

2. So instead of selling strictly for cash only (coins and notes) and having a turnover of £1 million and net profits of £100,000, the productive business is happy to sell another £0.5 million on credit, increasing profits to £200,000 (marginal profits being higher than average profits). As long as no more than a fifth of those credit sales turn into bad debts, the business is happy.

3. The business then extricates itself from the messy business of debt collection by selling that £0.5 million to a debt collection agency for (say) £450,000 non-recourse up front and is ahead of the game. The debt collection agency in turn has to collect more than ninety per cent of those debts.

4. Now, perhaps that agency is so well run and has such a good reputation that the business doesn't actually need to receive its £450,000 immediately, it might be happy to leave the bulk of that on account with the agency to be withdrawn in stages as and when it needs it.

5. Taking a bit of a leap here and cheerfully ignoring the regulations on who is allowed to act as a "bank", imagine that Mr A wants to buy Mr B's house for £200,000 but doesn't have £200,000 ready cash (and Mr B does not want to immediately spend all that cash on another house). They could agree that Mr A moves in and pays Mr B the amount in instalments with interest over ten or twenty years.

6. But then Mr B is exposing himself to the risk of Mr A losing his job or being a bad payer, and then he has to go through the rigmarole of repossessing the house which is messy, expensive and unpleasant for all concerned. Or Mr B might decide in a few years' time that actually he wants £50,000 all in one go to buy himself a flash new car, but of course Mr A can't just stump up that amount of money.

7. There's no reason why Mr A and Mr B can't avail themselves of the agency's services. The agency collects the £200,000 in instalments with interest from Mr A over the next ten or twenty years, and because Mr B doesn't want to spend all the money at once, he is happy to leave his £200,000 on account with the agency, taking a share of the interest. And because the agency has entered into dozens or hundreds of such deals, the fact that a couple of the purchasers lose their job or turn out to be bad payers doesn't matter so much to the dozen or hundred vendors, it all averages out.

8. So there is a steady flow of cash income from the purchasers. Also, the cash withdrawn by all the vendors in any period will average out - some will want to make larger withdrawals to buy that flash new car, others will decide that they quite like earning interest and will not withdraw anything.

9. Having got this far, other people with spare cash (i.e. who have earned money but want to defer consumption) might think that placing their money on account with the agency to earn interest is a good deal, which increases the sources of cash inflow to the agency, and these deposits can be used e.g. to repay existing vendors.

10. Of course, if one man is deferring consumption/spending, somebody else must have brought forward consumption/spending, and the agency can now lend money to such people. The agency now no longer needs to wait until an individual transaction has taken place and a financial liability/asset has been created (like the sale on credit by Mr B to Mr A). By taking deposits and lending out the cash simultaneously, the agency is at the heart of the transaction (the acceleration and deferment of consumption/spending).

11. Once the agency's reputation is good enough, it won't need to wait to take deposits first - it can just give a "borrower" a piece of paper saying that the agency will credit the recipient (i.e. the business where the borrower spends his money) with that sum of money in his account, and the agency just has to gamble on those pieces of paper ending up in the hands of people who will not want to withdraw the cash immediately.

Q: How does this agency's activities now differ in any way from the activities of "banks"?

A: They don't. The two are exactly the same.

So when the cheerleaders say that "we want to get banks lending to business again", they are just saying that instead of everybody and every business consuming (or reinvesting) what they produce as they go along (a perfectly imaginable and stable state of affairs), they want one group of people to get into as much debt as possible (by bringing consumption/spending forward) and for another group of people to defer as much consumption/investment as possible (an unstable state of affairs).

Just sayin', is all.

Fair play to the Homey-In-Chief

From today's City AM:


Readers have been writing in to urge me to add names to my list of UK-based monetarists, Austrian and other economists, City analysts and politicians who foresaw the crash.

New entrants to my economic walk of fame include Lord (Howard) Flight, the Tory peer, City grandee and former front bencher who was disgracefully treated by his party (he warned of a coming crunch in his 2005 shadow budget), Jonathan Ruffer of the eponymous fund management firm, and Bernard Connolly, a brilliant economist who worked for AIG at the time but was ignored by his company (he now works for Hamiltonian Associates).

Writing in The Chaos Makers in 1997, Fred Harrison of the Georgist-leaning Land Research Trust, made an eerily accurate prediction:

“By 2007 Britain and most of the other industrially advanced economies will be in the throes of frenzied activity in the land market to equal what happened in 1988/9. Land prices will be near their 18-year peak, driven by an exponential growth rate, on the verge of the collapse that will presage the global depression of 2010.”

I’m not a Georgist and disagree with many of that philosophy’s tenets, but this was pretty spot on.

The HIC is definitely a Home-Owner-Ist and not a Georgist, but he's never actually said why he disagrees with it apart from the usual "attack on wealth" nonsense. Are things like taxes on output and profits, planning restrictions and recurring financial recessions not themselves "attacks on wealth"?

Monday 24 June 2013

Fun Online Polls: Syria & Indian Bicycle Marketing

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

Is arming the Syrian 'rebels' a good idea or a bad idea? Multiple selections allowed.

Bad idea - it will only benefit our arms manufacturers - 20 votes
Good idea - it will be good for our arms manufacturers - 18 votes

Bad idea - Arabs will just end up killing each other - 42 votes
Good idea - violent Arabs will be killing each other - 36 votes

Good idea - they will overthrow a dictator - 5 votes
Bad idea - the weapons will end up with Al Qaeda - 74 votes

Opinions on whether the first two likely outcomes - that this will (only) benefit our arms manufacturers and Arabs will just end up killing each other even more - are in themselves A Good Thing or A Bad Thing appear to be evenly split and thus both sides cancel out and can be ignored.

Which leaves us with the tie-breaker question of whether arming the Syrian 'rebels' will lead to the overthrow of a dictator (good) or just fall into the hands of Islamists (bad) and on this one the answer is crystal clear.

There you go, that's how you formulate pragmatic foreign policy. Sorted.

Total number of people taking part = 120, total number of options chosen 195, average 1.6 each. Thank you everybody who took part.
Today marks another high point for the Indian Bicycle Marketing practised by the three main UK political parties.

They have now all timidly suggested that some universal pensioner benefits be "looked at" or means-tested or that wealthier pensioners simply waive their entitlement, and been duly lambasted by the other parties for their callousness. Bonus points to the Tories - IDS suggested it, his leader dismissed it, and two months later the Chancellor proposed it again, e.g.

September 2012 Nick Clegg: wealthy elderly should lose winter fuel allowance and other benefits

April 2013 Iain Duncan Smith calls for wealthy pensioners to hand back benefits

Later the same day in April 2013: Cameron dismisses Duncan Smith's idea that well-off pensioners should hand back bus passes, winter fuel payments and TV licences

Early June 2013: Labour would cut winter fuel payments for rich, says Ed Balls

Late June 2013: George Osborne to review winter fuel allowances for the elderly

The whole thing is a joke of course.

Universal benefits are the best kind of benefits as they are the cheapest to administer, and the Winter Fuel payments (known as Christmas Bonus in less PC days of yore) only amounts to £2 billion a year, so if we take them away from the top tenth of pensioners (ranked by current income? Total wealth? Value of home?) that would "save" £0.2 billion a year at the cost of making twelve million pensioners fill in yet another form at huge expense, so the net "saving" will end up at something like 0.1% of the annual government over-spend, but hey.

But it's a good illustration of how Indian Bicycle Marketing works, even though all three parties have a similar policy on x, y or z, they all:

a) Slag off the other parties for having such a policy, and

b) Defend their identical policy on a different but inherently flawed basis. Broadly speaking, the Lib Dems want to do it on the grounds of "fairness", Labour wants to "focus spending on the most vulnerable" and the Tories want to try and "reduce the size of the state".

Anyway sod it, vote here or use the widget in the sidebar.

Probably not the best trump card to play

Cynthia Bower, former Chief Executive of the Care Quality Commission (CQC)
"We had to learn on the job.”

Not exactly what you might expect after a career in the NHS which included Director of Primary Care at Birmingham Health Authority, Chief Executive of Birmingham Specialist Community Health NHS Trust, Chief Executive of South Birmingham PCT, Managing Director of Birmingham and the Black Country SHA, Chief Executive of NHS West Midlands, which lead to being appointed Chief Executive of the Care Quality Commission on a salary of £195,000.

I've been hung out to dry': Woman at centre of NHS cover-up scandal denies she deleted baby deaths report

EXCLUSIVE Regulator says she is considering legal action after being blamed for alleged cover-up, without having the chance to tell her side of the story - until now ...
She admitted the CQC inspection process had failed to uncover failings at the Morecambe Bay trust. “We should have registered it with conditions,” she said. But she could not say what action the CQC took to improve inspections. “Many changes were already in place. We had to learn on the job.” 

She said she was “taking legal advice” on how to respond to the allegations. “I am unemployable. I have been accused of suppressing a report about babies dying in hospital. Who wants to give me a job?”

A former director of operations at the CQC claimed yesterday he was sacked after raising serious concerns about the way the regulator was run.

David Johnstone said he was escorted off the premises then hit with a gagging order after putting together a plan to introduce fundamental changes in the organisation.

"Jordanian hate preacher Abu Qatada brands deportation plans 'extremist'"

From The Independent:

The Jordanian-born Islamist who has spent several years under a control order after calling for the UK secular state to be violently overthrown yesterday accused the Government of “extremist” behaviour after he was ordered to leave the country by the Home Office.

Abu Qatada, aged about 50, whose British-born daughter is due to give birth on Monday, said he was told a week ago he had to leave the country under immigration rules which allow for the deportation of foreign enemies considered a threat to national security, or whose presence is not considered “conducive to the public good”.

He has lived in the UK for 20 years. He told The Independent on Sunday that he has lodged an appeal, arguing that his right to family life under the Human Rights Act will be breached. “It’s very serious,” he said. “Our whole lives are entangled here. We work together, we produce Jihadist leaflets and pamphlets together. The judge in her summing up said that I had contributed to life in this country. We weren’t expecting this.

“It seems an extremist and fundamentalist thing to do. My understanding was that the Government was for the people and now it seems we have to justify ourselves to the Government rather than the other way round. It’s very costly and stressful.

“My daughter is very stressed and due to give birth. It feels like bullying tactics.”

RICS reports on

"what government and industry should do to drive investment in affordable housing and ultimately build the right homes for everyone in the UK". 

The Rics commission of experts was set up to come up with recommendations for policymakers. It said one of the problems was that current government initiatives had focused on creating demand for new homes almost exclusively for those able to buy. "There is a new 'help-to-buy' policy but no new 'help-to-rent'," it stated, adding that more needed to be done to develop a better supply of rental housing.

The commission took evidence from the property profession, the not-for-profit housing sector, investors, developers and other bodies, and said its report was designed to help policymakers address the country's housing crisis in the short term.

The Commission took evidence, and has provided recommendations, in key areas:

  • Effective subsidies
  • Improving stock quality
  • Regulation
  • Land availability
  • Facilitating investment in the rental sector.

• Doubling the target for releasing public land for residential development in England, from 100,000 new homes to 200,000, by 2015. The government should then identify enough land for a further 250,000 homes during the next parliament, said the report.

• Requiring developers to start building work within three years of planning consent being given.

• Replacing the right-to-buy scheme with a "portable home ownership discount" for tenants. They would build up this discount during their tenancy, and would be able to use it to buy a different property. "This recommendation would keep low-income homes in the rented market and make more available for the most vulnerable. It would also give those who aspire to own their home, and who display a capacity to save, some choice over where they buy," said the report.

• Exempting people over 65 from stamp duty when they downsize from a larger property to a smaller one, "in order to encourage them to move home".

• Allowing local authorities to generate extra income by introducing new council tax bands. At present, the highest band is H, for properties worth more than £320,000 in April 1991. The commission suggested new bands above H should be introduced, though still using 1991 values in order to ensure the minimum amount of change is required. The report said that 100% of the extra income generated above Band H should be ring-fenced for funding new affordable housing.

• Changing the rules to allow people with "Sipps" – self-invested personal pensions, where individuals make their own investment decisions – to invest in new-build residential property, provided it is let on commercial open market terms and managed professionally.

"Tesco-style NHS plan 'ridiculous'"

From the BBC:

Calls to create a 24/7 "NHS Tesco" are ridiculous, according to the leader of the British Retail Consortium (BRC).

Mark Porter said it was simply not possible when the health service could "barely manage its current healthcare-only model".

Mr Porter spoke out at a BRC conference amid calls to provide the same choice of grocery and household items in hospitals at weekends and nights as is available at major supermarkets.

Fresh wounds for you

Delegates at the same meeting also passed a vote of no confidence in Health Secretary Jeremy Hunt.

The NHS has made 24/7 care one of its key priorities in its review of urgent and emergency care and is hoping to improve the patient experience with a broader retail range.

Mum's gone for a knee replacement

Data shows that mortality rates increase during out-of-hours provision. Last week NHS England highlighted figures that showed if the same standard of care could be provided seven days a week more than 4,400 lives could be saved each year, increasing the potential footfall at its in-house supermarkets by up to ten per cent.

There have also been suggestions everday value items - such as bread and milk - should be made available to people who drop in at three o'clock in the morning for a non-emergency operation such as a knee or hip replacements, for example.

Live less well

But Mr Porter told the BRC's annual conference in Edinburgh:

"Like many supermarket managers here, I feel personally offended by the terms in which this debate has been couched.

"Like many of you I work nights and weekends as well, at time when much of the private sector is fast asleep and GPs are tucked up soundly in their beds.

Every little hurts

"Let us be clear. We all want making impulse purchases at weekends and evenings to be as easy for in-patients as it is for everybody else on weekdays.

"But the calls we sometimes hear for an NHS Tesco, full service, 24/7, are just ridiculous when the health service can barely keep its vending machines stocked up properly."

"Carey refuses to promote Kick-Ass 2 ... after Sandy Hook shootings prompted rethink"

From The Daily Mail:

Former Archbishop of Canterbury-but-one, George Carey has put his ethics ahead of his career by refusing to promote the second Kick-Ass film, saying he cannot support that level of violence.

The current Chancellor of University of Gloucestershire and the London School of Theology made the decision to pull out of the film's media promotions in the wake of the Sandy Hook Elementary School shooting last December.

The 77-year-old did not play the role of Colonel Stars and Stripes in the R-rated film, a vicious ex-mafia member turned crime fighter who leads a team of other heroes.

The violent nature of the film seems to have left a mark on the soft-spoken Englishman, who is a advocate of ecumenical links with the Roman Catholic Church, and according to his personal tweets he will now no longer be promoting the film on principle.

The father-of-four wrote on Twitter: 'Kickass was filmed a month b4 Sandy Hook and now in all good conscience I cannot support that level of violence.'

He added a few minutes later: 'I meant to say my apologies to others involved with the film. I am not ashamed of it but recent events have caused a change in my heart.'

The movie will be released in the UK and the US on 16 August.

US treasury bonds continuing to plummet nicely

As I pointed out yesterday, the US Treasury Bond future has fallen by about a tenth in the last two months and is still dropping like a stone.

According to the CME Group. At the time of posting, it's value has fallen by another one-and-a-half per cent since Friday's close (it might well bounce back in the next few minutes, hours or days, who knows?).

According to the BBC, longer term UK bonds are also down by about one-and-a-half per cent so far on the day.

In the real world, this is not as dramatic as it sounds, it means that US long terms interest rates have ticked up by another 0.1% since Friday or something, but assuming that the selling price of other "fixed income" assets like housing moves in tandem with bond prices, this all looks very promising...

Sunday 23 June 2013

Soundbites they just can't let go of .....

"I don't want pensioners to be impoverished. I want pensioners to have a standard of living that reflects the fact they have worked hard and saved hard all their lives."

Said our illustrious, and now we must all acknowledge, mega-tough Chancellor, on the Andrew Marr programme today; immediately seeking to make some suitably reassuring noises given that he had indeed just said that the commitment on pensioner benefits applied only to this parliament, and, without making any commitment to funding pensioner benefits beyond the 2015 election, acknowledged that "we have got to look at how we can afford them ....  all those pensioner benefits - not the basic state pension - all those other pensioner benefits, of course we have got to look at how we can afford them". 

The other oft repeated soundbite is of course "hard working, hard pressed families" and no doubt the Comprehensive Spending Review announcement will be littered with reassurances and explanations that, whatever is being proposed; whatever is being cut, it is all being done in the interest of "hard working, hard pressed families", who, we should surely assume in addition to working hard are saving hard too.  Or might be,  were "saving" in just about all its forms being pretty hard for a lot of people and additionally hardly "rewarding" at the moment.

Big question, can one be a member of both groups at the same time? Can pensioners continue to be "hard working"?  If someone reaches pension age without ever having been "hard working" - perhaps because of some physical condition or illness, or simply because they inherited a bucket load of dosh and never had to worry about working - do they still deserve the same reasonable, protected standard of living too?  Just asking ...

The start of the return to normalcy?

Here's the chart for long term US interest rates over the last ten years from

The recent increase doesn't look too spectacular, interest rates are still very low in historical terms although you might fear/expect/hope that they'd go back up to three or four per cent in the next year or so.

What looks a bit more spectacular is the price of US Treasury bonds (futures price from

When interest rates go up, then bond prices go down - which has fallen by about ten per cent in the last two months. That's a heck of a loss from a supposedly safe investment:

Everybody is explaining this/blaming this on the fact that Bernanke hinted that he might slow down the pace of QE if the economy starts picking up a bit.

In other words he has not said he is going to reverse QE, he has not suggested that he will stop QE, he merely hinted that he would reduce the monthly amount of QE if x, y and z happens.

That's how fragile all this is. And with bit of luck, when America finally sneezes, Britain will catch cold and interest rates will go up to something sensible again, like 2% above inflation.

Saturday 22 June 2013

Yeah! Citizen's Income booklet has been updated for 2012-13 figures.

The 2012-13 version with explanations is available here.

There's generous .....

"It will also allow residents to put out two extra bags on the first collection day after Christmas, although householders are told: 'You will need to provide these bags yourself'".

Part of a tale being reported by the BBC concerning the bid by Monmouthshire council to become the "fly tipping champions"  "domestic recycling champions" of Wales

Good rant

For reasons best known to himself, DP posted a persiflage of a typical Home-Owner-Ist rant in the comments here, it's a wonderful example of exaggeration, obfuscation, outright lies, obvious misunderstandings, true but irrelevant facts, and just to brighten everbody's day, some really incorrect financial maths (which even everyday evidence does not support)...

Or at least I assume he meant it as a persiflage, surely nobody believes this guff, do they?

The Intergenerational Foundation seems to be a precursor to an organisation that would wish to equip everyone with a red crystal in the palm of his hand, which turns black after a specific time, whereupon the individual would be required to present himself to be terminated. Unless his name is Logan. And he feels like running.

Baby boomers have worked hard to build the world the current youth enjoy, not all of whom share in the zeitgeist of generational envy. The youth of today look forward to a world of opportunity and consumption undreamed of by my parents' generation who actually fought in the last world war and endured the privations and real dangers to life and limb of the War.

Professor David Myddleton pointed out at a Libertarian Alliance conference that the UK suffered an average daily military and civilian death toll due to enemy action in excess of 200 people throughout the War.

I stand upon the shoulders of giants when it comes to my consumption. The youth of today stand higher than I, and they have their future to look forward to - a future which someone even now is shaping in their garage/basement/bedroom in ways which will leave your flabber well and truly gasted.

In the palms of their hands the youth of today hold power that two generations ago required the might of a great nation to supply. Their iPhone could complete the entire war work of the eight thousand plus people at Bletchley Park in a short time - hours? Days?

If you live longer, you die richer. Consider someone dying today at 89 and another at 69. Assuming they worked hard all their lives and invested wisely and achieved a rate of return on their investments of 7% per annum and their first 69 years exactly matched in constant money terms. The 89 year old would be 4 times richer, simply by living 20 years longer. A 99 year old following the same pattern would be 8 times richer than the 69 year old and twice as rich as the 89 year old.

Longevity also increases wealth. Ruby red crystals in everyone's palm?

You support the YPP - Young People's Party. When do members become too old for the YPP? What happens to the old YPP MPs? Councillors? EU Regional Assembly Members? When will you be too old for the YPP? Just asking.

Friday 21 June 2013

Short lists

Nobody even attempted the previous short list: "Titles of songs by the Velvet Underground which were later used by Led Zeppelin for completely different songs"

The answers were of course "(The) Ocean" and "Rock and roll". Glad to have cleared that up.

Next topic, I happen to know somebody who is in one of these minority religions, I think it's a Christian sect, I asked her whether her boyf was also from that church and she replied, yes of course.

I was about to ask her whether they belong to one of those sects where you are only allowed to marry other from the same sect, when I realised that her riposte would simply be that all religions or religious "communities" demand this, which is probably true, so I didn't bother.

So that's this week's Short List: "Religions where there is no pressure to get married to somebody from the same religion". I'm buggered if I can think of any, but perhaps there are some.
That then led me to wondering why this might be.

1. The superficial answer is, that people in any religion consider themselves to be superior to 'everybody else'; the Catholics think they are better than Protestants, the Hindus think they are better than the Sikhs or Muslims; the Muslims (actually an inferiority complex, not a religion) want to wipe out all other religions; Jewish people like to keep themselves to themselves (and appear to think of themselves as a 'race' who share a religion, rather than just a bunch of people who happen to share the same beliefs, i.e. they are not a proselytising religion, which goes for Hindus as well) etc.

2. But actually, in practical terms, the reason for this is that religions are a meme. The ones which survive are those who lose least members and gain most new ones, and the main transmission mechanism for this is that most children adopt the religion of their parents. This is why the more extreme sects encourage their members to have as many children as possible.

3. Now, as we know from watching TV programmes about On The Origin Of Species, genetic selection only works if the subsequent improvements are kept within a species. So lions become better at catching zebras and zebras get better at running away from lions.

4. Obviously, lions and zebras are separate species so they can't interbreed. That is the definition of a "species", it's any group of animals which can breed with each other (I think). So each species gets a bit better at something specialised.

5. If there were only one type of omnivorous animal on an island, the species as a whole would neither get better at hunting nor at escaping. If it did the former, they would eat each other all up and the species would die; if they did the latter, they'd either starve to death or revert to vegetarianism, in which case they would lose both their hunting and escaping skills.

6. So, if we see the members of each religion as a sub-species of human, there is an advantage to having lots of kids (my wife knows a Moonie couple who've had five or six) but it is also vitally important that those kids follow the religion of their parents (or else their is no point in encouraging them to have as many kids as poss).

7. We know from observation, that if both parents are the same religion, about 80% of their kids will end up following the same religion - they are indoctrinated to think of themselves as somehow better than everybody else and will tend to marry somebody from that religion - not to do so would be 'unclean'.

8. We also know that if parents are from different religious backgrounds, it soon becomes clear to their children that neither parent has an automatic claim to be following the true path of righteousness (either the sabbath is on Friday, Saturday or Sunday, you can't believe in more than one). At least one of their parents must be in the wrong and quite possibly both. And out of courtesy to each other if nothing else, such parents are less likely to push their children one way or another, even if they continue to believe or practice.

10. So let's say, a third of the children of such mixed couple parents will follow neither religion, a third will follow the father's and a third the mother's (slightly different for most Jewish people, where it's only the mother's religion which counts).

11. Taking all religions as a whole, whose collective interest is that as many people as possible are religious, it must be quite clear that mixed marriages is a huge negative sum game for them, i.e. if two Catholics marry, they'll be under pressure to have as many kids as possible to create as many new Catholics as possible; if two Muslims marry, the same applies. Let's call it five kids each, of whom four will follow their parents' religion (i.e. 80% x 5).

12. But what happens if each Catholic marries a Muslim? Neither couple is under particular pressure to have as many kids as possible , because the Catholic relatives of the Catholic partners fear that the kids will become Muslim; and the Muslim relatives of the Muslim partner fear the same in reverse.

13. So mixed couples will have slightly fewer children. And not only that, of the fewer children they have, only a third will become Catholic and a third will become Muslim.

14. So in numbers terms one Catholic couple = five kids = four new Catholics and one Muslim couple = five kids = four new Muslims. Hooray! More power and influence and wealth for the ministers etc.

But if there are two mixed couples with three children each, of whom one-third end up non-religious, one third Catholic and one-third Muslim, those four adults only produce two new Catholics and two new Muslims. Boo! Instead of four new members over whom the ministers can exert power and from whom they can suck donations, they only get two new members.

15. Just sayin', is all.

And given all those "alcoholic drinks being sold for less than bottled water" claims we can surely only conclude

that Britain has by far, the most  incredibly expensive bottled water across the entirety of Europe, too

Britain has some of the highest prices for alcohol and tobacco in the EU and shoppers pay more than average for milk, cheese and eggs, according to official figures from the EU statistical office, Eurostat.

Booze prices in Britain are 43% above the EU average, while cigarettes cost 94% more and are the third highest in the EU, only just behind Ireland and Norway.

General food and non-alcoholic beverage prices in Britain are 4% above the EU average, and milk, cheese and eggs are 7% more. However bread prices are 11% below the average for Europe.

Not Red Ed nearly gets it; government misses the point

From The BBC:

Labour leader Ed Miliband is to accuse some property developers of hoarding land and failing to build the homes that the country needs.(1)

In a speech on Saturday, he will say too many firms with planning permission for projects are "sitting on land" as it gains value,(2) instead of using it. Labour is considering giving councils more powers to penalise firms which do not proceed with building projects.(3)

The government said confiscating land "will not help build a single house".(4)

1) Clearly, it is hotly disputed how many homes "the country needs". The Homeys claim that there are quite enough homes (because they've all got one - which raises the question of whether they actually need them) and that if more were built, "they will all go to immigrants"  and "the countryside will be concreted over" and so on. Let's put that to one side for now.

2) Correct.

The land bankers are among the biggest beneficiaries of Home-Owner-Ism, which is a bundle of government economic policies which have the single aim of driving up the selling price of developed or developable land. They make far more money by sitting on land as it rises in value than they do from the tricky and risky work of actually getting houses built.

Obviously, it was Not Red Ed's own party which took Home-Owner-Ism to extremes in the 1997-2010 period, even Thatcher looks moderate in comparison, but there you go, bygones.

3) Here's where he goes off piste.

Like all politicians, he wants to invent a new clumsy mechanism instead of using an existing tried and tested one - which would simply be to slap all sites with planning permission with some form of annual Land Value Tax, which in practice means Council Tax or Business Rates.

They could just put each plot with planning permission for a house into Band H and charge them £3,000 a year Council Tax for it (or corresponding lower amounts for flats) or they could apply Business Rates to the plots, which VoA can estimate as 5% of the current cost/value (easily ascertainable). This is what the VoA does do for other improvements to existing buildings if the actual rental value of that improvement is difficult to establish (I know that because I had to ring them on behalf of a client and ask).

4) Maybe, maybe not.

Nobody says that actually confiscating land in itself (or allowing planning to lapse after three years) will increase house building (even though the Homeys would see that as A Good Thing). It is the THREAT of confiscation that will lead to more house building.

And even if a council confiscates land, i.e. lets the planning lapse and then does a Compulsory Purchase Order for the new lower value, what is the council going to do with it?

The chances are it will re-grant the planning and then sell it on again. For sure, if it sells on a plot of land with planning subject to a £3,000 annual Band H charge, the upfront price will be adjusted down by the amount of the future tax, but the total amount a developer is willing to pay and which the council receives will be much the same either way.


Whatever the "problem" is, the first question to ask is "Will LVT-Man fix this for us?" and it is surprising how often the answer is "Yes".

Thursday 20 June 2013

Man wrestles runaway tractor to a halt; bull attacks house

Two of my favourite themes cropped up again today:

Emailed in by Paul H, from The Telegraph:

Amateur video shows a runaway tractor, which had escaped from a farming equipment exhibition in Malaga, charging at a car before setting its sights on a pedestrian.

The man, who is wearing a red shirt, just has time to square up to the stampeding vehicle as onlookers shout out in warning. Incredibly, he manages to avoid being caught by the tractor's wheels and, grabbing it around the steering wheel, wrestles it to a halt.

Witnesses then rush to the man's aid and help keep the tractor still while its ignition key is removed.

From The Daily Mail:

A young bull ploughed into the back of a family home - feet from where a 16-year-old girl was stood [sic].

Bexi Hebbourn was seconds away from being hit when the escaped animal careered through the back wall as she took washing to an outhouse. It brought down tonnes of masonry and brickwork at the exact spot the teenager was about to enter...

Neighbours described the moment of impact as like 'an earthquake'. The accident happened on Old Hall Road in Ulverston on a route often used by farm workers to drive cattle to and from the town.