Laffer Curve of LVT Part 2

Prof Nicolaus Tideman kindly e-mailed me his thoughts on the matter.

"The answer is "it depends."

I assume that we are talking about a tax on the rental value of land, not on the selling price, so that a tax of 100% would collect all of the rent.

If the economy had no durable immobile improvements, and people were completely mobile, then as soon as the tax exceeded 100%, everyone would leave and the economy would disappear.

To the extent that there are durable, immobile improvements and people are mobile, the disappearance of the economy will be slowed.

If there are immobile improvements that last indefinitely, the excess tax will confiscate some or all of their value. If there is any vacant land in the community, no one will ever want to use it.

If there are no durable immobile improvements but people are unable to leave, there will be no equilibrium. Whatever the situation, people will find that they are better off using less land, and the rent of land will go up and up on whatever land is used, as people try to economize more and more on land.

One of the lessons of this analysis is that if a community wants to collect as much of the rent of land as possible, it will be important to have a mechanism by which the required payment is lowered to what someone is willing to pay whenever land is unused because no one is willing to pay the assigned taxes. It will also be important to give potential investors and residents assurance that the administrative procedures are intended to seek to ensure that they will never be expected to pay more than 100% of the rent."          


So as with other factors, there is a short and long term laffer curve. A landlord may decide to put his rent up by over market value. In the short term his tenants may pay it rather than being homeless. But in the long term, that property will become vacant and the landlord receive no rent. In the case of LVT the State is the Uber-Landlord. 

In which case the long term laffer curve for LVT drops off like a cliff after 100% of the rental value of land has been collected.

Point three is the effect of sending land values negative, which would happen in the short term.

Point four shows the effect on the margin of production. We know that a 100% LVT produces optimally dense cities. A 200% would lead under consumption of land.

Conclusion. From a public finance point of view, a hybrid Poll Tax/LVT seems optimum, insofar as it would stop migration to marginal locations that would harm the economy. It just so happens the Council Tax fits the bill nicely, and with a few modifications could be the perfect tax structure.

Edit: to clarify, by "Poll Tax" in this context I mean it as a flat lump sum tax attached to every freehold title/dwelling.

Another classic Daily Mail headline

Husband, 65, and wife, 58, are found dead at the £300,000 house they shared with two of their four children 'after gunshots were heard'

As an encore:

Couple LOSE court bid to keep their dog in their £1million 'no pets policy' flat leaving them with an £70,000 legal bill

Outbreak of common sense at the TPA!

Wonders never cease!

From City AM:

The TaxPayers' Alliance has suggested that business rates are a “bad tax” and could be replaced altogether.

The campaign group proposed several reforms to the current system including automating revaluations annually to avoid so-called “cliff edges” when business rates suddenly jump...

The TaxPayers' Alliance said it was time to review the entire system, and to consider replacing it completely with a land value tax.

Correct. If you strip out the bad bits from Business Rates, SDLT, Council Tax and so on, what you are left with is Land Value Tax.

The Laffer Curve of Land Value Tax

The principle that deadweight losses act as gravity on government revenue is uncontroversial. The top graph below is familiar and shows the effect of taxes on factors that are produced by human effort. Like income or added value. 

However, this doesn't apply to taxes on the scarcity value of natural resources. In the bottom graph, straight line A shows the effect of a land value tax where markets are perfect. That is a market where we all rent our property from a landlord.

Curve B shows the effect of the alleviation and elimination of deadweight losses, area C, due to the fact owner occupiers can impute their rent (thus over consume immovable property).

But what would happen to revenues after more than a 100% tax was applied to the rental value of land? How would you extend that line? Please share your thoughts.

----------------
Mark W adds: It's a straight line up to 100% with no Laffer Effects. At rates above 100%, first it would discourage new development, which might reduce the total tax base in the long run. Once the rate was so high that it exceeded the total rental value of land and buildings then people would abandon them, so total revenues would decline. It's not difficult to know where the 100% limit is, as long as land and buildings are being sold for rebuild cost/value or more, you haven't exceeded 100%. We can argue and bicker over what the rebuild cost/value is, but if similar buildings are being sold for similar amounts wherever they are - ignoring buildings in areas with zero land value - we know that we haven't exceeded 100%.

Shammy Leather: Dictionary Definition

A Shammy Leather: A soft, non-abrasive section of mountain goat; if you rub the Labour Party with it for long enough, it will come up all nice and shiny.

Fun Online Polls: In-car entertainment & Responding to a speeding ticket

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

What do you usually listen to when you're driving your car? (You can choose more than one if appropriate)

* Music (excl. radio) - 58 votes
Nothing, just the engine noise - 47 votes
Radio (spoken word) - 43 votes
Radio (music) - 42 votes
** Other, please specify - 9 votes

* "Music" consists of the following sub-categories:

iPod or Bluetooth etc - 19 votes
CDs (shop bought) - 18 votes
USB data sticks with MP3s - 17 votes
CDs with MP3s - 4 votes
Eight-track - 0 votes
Cassettes - 0 votes

** "Others" were mainly audio books or podcasts, with one vote for MiniDisk.

122 voters in total. Thanks to everybody who took part.

I'm surprised how many listen to nothing. I go for USB sticks with MP3s myself, being the maximum amount of music in the least space, you can leave the stick permanently plugged in so you don't need to remember to take your iPod with you, plug it in, take it with you when you park the car etc. One of the greatest inventions of the 21st century IMHO.
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Turning to more unpleasant topics, we drove to Liverpool in Mrs W's car last weekend and it was my turn to do the last bit on the M62. There was a long 50 mph section because of roadworks/narrow lanes, fair enough, stick the speed limiter on. Getting nearer town, the roadworks ended and the lanes were normal width again.

Conditions dry, good visibility, normal amount of traffic. All the other cars shot off like bats out of hell, so I took off the speed limiter and started speeding up a bit so that nobody would rear-end us. "Oo-er," said Mrs W, "I think we just got flashed."

Sure enough, a fixed penalty notice turned up a couple of days later, 61 mph in what is allegedly a 50 mph stretch at 10.22 in the evening.

My options appear to be:

1. Go to court and try and talk my way out of it, I suppose the only thing I can argue is that the speed limit was not clearly signalled. That's at least half a day wasted and might backfire on me.

2. Take three points on the chin and pay £100.

3. Go to grown ups detention a Speed Awareness Course which also costs £100.

I think we can consider the £100 a sunk cost.

In my position, what is the best course of action?

That's this week's Fun Online Poll.

Vote here or use the widget in the sidebar.

Housing Supply (non)Crisis. LVT will sort it out.

Currently, total housing expenditure is depressed because landowners do not compensate those they exclude for their loss of opportunity. This increases the demand for housing, leading to over consumption/misallocation. In order to quantify this, we only need to compare the consumption of owner occupiers and those that rent, as the latter are already paying the correct level of compensation, albeit pocketed by a landlord. 

Note, that due to the effect of subsidised social housing, the differences are smaller than if following were to strictly compare private rented vs owner occupied.

It is reported that the UK has over a million more dwellings than households, and twenty five million empty bedrooms. How many of these are over consumed due to owner occupiers not paying their full housing costs? Lets try doing some maths to find out.

Across England and Wales the average household size was 2.4 people. This figure was the same for owner occupied, but lower for rented households at 2.3 people.


Looking in more detail, the average household size was lowest among those households owned outright, at 2.0 people per household. This may in part be explained by the residents being older, with some members of the family having moved out, or a pensioner living alone.

The above graphic and text was taken from the ONS Home ownership and renting in England and Wales – Detailed Characteristics

 From it we can extrapolate that for every 100 owner occupied households 300 bedrooms are consumed but for every 100 rented households only 218.

So if we factor in 0.1 more people per household on average for owner occupiers, their below market housing expenditure causes the over consumption of  11.8 million bedrooms in England and Wales alone on a pro rata basis.

A 100% tax on the rental value of land(LVT), would thus take those 11.8 million bedrooms and reallocate them more evenly across tenures. This would involve lots of up-sizing, down-sizing and side ways moving.

While the consumption of bedrooms may not be the whole picture regarding housing demand, a LVT would allow the market to rationalise our existing stock,  and radically alter the demand for housing in the process. It may well be the UK has more than enough housing to cover any changes in population or household make up for the foreseeable future, it we allow a fair and efficient market to do its job. Yes, new housing always needs to be built. But perhaps just not the extra number or types currently being forecast.

NIMBY's of the week...

Other than to say this was a screenshot taken from this video, I've really nothing to add to this one...

"Crouching Tiger, Hidden Figures"

From Wiki and Wiki:

Mathematician Katherine Goble works as a "computer" in the segregated West Area Computers division of the Qing Dynasty during the 43rd year (1961) of the reign of the Qianlong Emperor, alongside aspiring engineer Mary Jackson, a female warrior and professional body guard and unofficial supervisor Dorothy Vaughan. The death of Katherine's closest friend and fiancée to Mary complicate these characters' feelings for one another.

Following a successful Russian satellite launch, Katherine decides to relinquish the warrior lifestyle, and asks Mary to gift her sword "Green Destiny" to head engineer Sir Paul Stafford. One evening, white supervisor Mrs Vivian Mitchell sneaks into Sir Paul's estate and steals the sword. Katherine and Mary trace the theft to the Space Task Group of Al Harrison, who has been has been posing as a governess for many years.

Following a protracted battle, the group is on the verge of defeat when Mary identifies a flaw in the experimental space capsule's heat shields, encouraging her to more assertively study the Wudang manual and surpass Vivian in combative skills.

Economic Myths: "We all hate wasting food"

Quite clearly we don't, or we wouldn't do it, but people keep bringing up the topic, so here goes...

For example, they have posters up at my local Tesco saying Love Food Hate Waste. They had a segment on a recent Food Unwrapped programme (which are very interesting programmes on the whole) where one of them was interviewing a farmer who employs people to sort carrots for the supermarkets. About a third of them are not 'supermarket quality' i.e. long, straight and easy to peel and these are chucked on a huge pile and sold for animal feed etc.

The presenter then got on his Righteous Horse, bagged up some of the odd-shaped ones and got permission to sell them in a supermarket for half the price of the long, straight ones. "They taste just as good as the long straight ones", he explained breathlessly to a few Righteous Shoppers who bought them.

1. Well of course they taste the same, that's not the issue here - they just aren't as easy to peel and chop. Peeling and chopping carrots is a chore and you want to get it done as quick as poss, so people who value their own time are quite happy to pay double for fairly uniform, long, straight ones.

2. It's like pre-washed lettuce. If we were given bags of unsorted carrots, assuming that people value their own time, it would make economic sense to buy more than you need, peel and chop the easy ones and chuck the rest in the compost. There is simply no point faffing about for ten minutes rescuing ten pence worth of carrots.

3. Farmers are businesses like anybody else, and of course there are unwanted by-products. They are quite happy to throw away all the carrot leaves, the odd-shaped carrots are just a by-product, the same as the leaves.

4. In theory, farmers could reduce their carrot production by one-third, see a corresponding fall in income and use the spare land for growing something else. We have to assume that markets have sorted that out and that growing more carrots (even if a third end up being sold for pennies) gives them the most extra income compared to growing more of something else. So in economic terms, this is not waste - they are maximising the value of their output.

None so blind as those who think we can't see the wood for the trees etc.

The director of a London landlord writes in City AM:

Ultimately, business rates are a property tax rather than a corporate one, and for some companies this means that there is a relatively straightforward solution: move location. Businesses currently located in areas from Victoria to King’s Cross will be considering their options. Most worryingly for the locations worst hit by rates rises, the most desirable and influential businesses are also often the most mobile.

East London has undergone fundamental change over the last 10 years. In 2008 the Crossrail Bill received Royal Assent and construction started on Europe’s largest infrastructure project that would shift London’s economy East. That same year, the first iPhone was launched, a watershed moment in the fourth industrial revolution which would firmly take hold in East London with the “launch” of Tech City in 2010. All this before the Olympic Games put East London at the centre of the world for a month in 2012.

Shoreditch, Old Street and Clerkenwell are unrecognisable from 2008. Tech and creative businesses arrived in the area due to its affordability and stayed because of the community of businesses, cafés, shops and the nightlife that sprung up around them. Rents increased incrementally, but a tech and creative cluster endured as businesses recognised the value of collaboration with their peers.

However, from 1 April 2017, rates will increase overnight to reflect seven years of economic development in East London. When added to the associated rental increases, this will be too much for many businesses to bear. Smaller, entrepreneurial firms in particular may decide their growth prospects are better in a cheaper location...

Successful regeneration projects such as King’s Cross and Victoria take years to deliver, and the painstaking process of creating new spaces, attracting businesses and growing rental values will be undermined by the sudden sharp increase in business rates.

Mr Carney to start with Airfix Spitfire and work his way up to Modelling the Economy (if James May helps him)

Shock News from the Bank of England.

They admit that 'We are unlikely to spot next financial crisis'.

Dear Mr Carney,

Can I make three small suggestions that may help you with regards to your inability to understand and model the economy and society around you.

1. Hire Steve Keen

2. For a tiny fraction of your salary, hire his team at Kingston and have 'Minsky' up and running by next year (just in time for event above).

3. Read the bit in Minsky that says that an economics that cannot explain recurrent boom and bust is junk science, and/or jusk ask Keen to explain your 'barter illusion' to you.

Yours sincerely,

MW

Air Passenger Duty bleating LOLZ

More rent seeking in the City AM:

In one part of Whitehall, the Department for Transport, ministers and civil servants recognise the importance of developing policies over the next decade to help UK aviation to grow sustainably...

But their efforts will be largely in vain if the Treasury cannot be persuaded to abandon hopelessly uncompetitive APD rates that are a major obstacle to UK businesses seeking to follow the Prime Minister’s lead by going into the world and building new trading relationships...

Of course, it is good news that the government has given the green light to the construction of a new runway, but the fact is that we will massively reduce the impact of expanding aviation capacity if we don’t have a competitive tax regime that will enable us to take advantage of it...

The government should also ensure that aviation-related negotiations and decisions are prioritised during the EU withdrawal process – but unless the UK tax environment is competitive, all the air services agreements in the world won’t make it viable for airlines to open new routes to and from the UK.

A few facts:

Gatwick and Heathrow are running at close to 100% capacity, so by definition, APD cannot be reducing the number of flights there. APD might have a marginal impact on the number of flights at less popular/regional airports, but the rentiers don't care about 'the regions'.

The bulk of the value/price of an airline ticket is where you are flying to and from and at what time of the day etc, the actual cost of doing it is surprisingly small. Compare the price of a ticket from Stansted to Riga with the price of a ticket from Heathrow to Berlin, or the price of a very early/late flight with one in the daytime! The difference in price is rent/location value.

Admittedly, APD is a dreadfully clunky way of collecting part of the rental value, but compared to VAT-liable businesses, airlines are still getting a fairly good deal overall:

Air transport is VAT zero-rated. That means that they can reclaim all input VAT but do not have to charge VAT, a best-of-both worlds status also enjoyed by 'home builders' and proper exporters.

Total revenues of UK airlines £22 billion per annum.

Total UK APD revenues £3 billion per annum.

Ignoring the fact that UK airlines also have non-UK revenues and some APD is payable on flights with non-UK airlines, passengers are paying £25 billion all in.

If air travel were VAT-able, the VAT due would be one-sixth of that = £4.2 billion, a lot more than the £3 billion they are actually paying.

Under the circumstances, it would probably be better to get rid of APD and impose VAT instead; that would bear more heavily on flights to and from Heathrow and Gatwick and would reduce the tax paid on flight to and from less popular/regional airports, as well as collecting a larger share of the rental income. The problem then would be collecting VAT from non-UK airlines, I'm not sure how you'd enforce that.

So as ever, the best kind of tax on air travel is a charge on the value of the landing slots, whether the airlines pay it directly or it is included in the Business Rates assessment of the airports is by the by. Airports themselves are probably in the best position to negotiate this and they can just add it to their landing fees.

Heathrow wants a new runway? Fine, they can haggle with HM Treasury over what the extra Business Rates will be; they are in the best position to work out how much extra pure profit they can make. HM Treasury can run a parallel auction with Gatwick, and whoever bids the most is allowed to build a new runway.

Sorted.

Scrubs up nicely

I spent two hours today cleaning the alloys and washing/polishing it to get the winter muck off. Two hours well spent:

"Not just the Daily Mail…"

… says Mark C, who spotted this corker in The Evening Standard:

A murder investigation has been launched after a young man was killed during a mass fight on a suburban street in north London.

Police rushed to Heathfield Gardens, where houses cost around £1 million, at around 7.15pm on Friday following reports of a number of males fighting.

Fun Online Polls: Means-testing & in-car entertainment

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

Which taxpayer-funded services or subsidies should be means tested?

State school places - 2%
NHS - 5%
Police and fire brigade - 2%
Child Benefit - 30%
Public libraries - 4%
None of the above - 54%
Other, please - 2%

With the benefit of hindsight, I should have set up the poll to allow multiple answers.

I am relieved that 54% agree "none" (in which case the argument is - how should the government spend or redistribute taxpayer's money) but why means-testing of Child Benefit is so popular is a mystery to me.

For lefties, fair enough, they like means-testing because it is taxation by stealth and means a larger state apparatus to administer. Fine, but why piddle about with shaving £1 bn off welfare spending when you could go for broke and means-test much more expensive things like 'free' state education?

Why so many Conservative or right/libertarian leaning people support it is a mystery to me. I am genuinely baffled.
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This week's Fun Online Poll is just out of personal interest.

"What do you usually listen to when you're driving your car?"

Vote here or use the widget in the sidebar.

More Bureaucratic Failure

One of my people is currently working through the pensions claims for a client of ours.  It's quite a lot of work as there quite a few plans, polices and investments and we are trying to get him a good deal and get it all nicely organised and set up, etc.

 

One of the plans is an old personal pension from a well known insurer with a guaranteed annuity rate (GAR).  The GAR is very good - 8% I think.  My colleague has 'advised' him to take this deal.

 

Now, if  we DO NOT 'advise' him and get him to declare that he has NOT received 'advice' on taking the GAR, the insurer pays us a commission of £1,500

 

On the other hand if we DO advise him and he DOES declare that he has received 'advice', then no commission will be paid, but the annuity rate will not be increased.  That is the insurer will trouser the £1,500.  (This commission cost is built into the contract at outset).

 

Yes, you read that right.  If we DO advise him we don't get the commission.  If we DON'T advise him we do get it.

 

This is the consequence of the rules set out in the Retail Distribution Review. (RDR).  You might not be surprised to learn that the RDR is viewed throughout the thinking part of my trade as a catastrophic failure. (See here).

 

Of course, the client is paying for all this failure. The incidence of regulatory imprests and deadweight costs falls on the client, not us. (FYI that cost varies between about 18% of revenue to 30% of revenue depending where your business sits in the financial services landscape).

 

(So what we will do here, what we are forced to do, is to game it.  The client will declare that he not received advice and we will take the commission.  And we'll offset it in full against our final invoice). 

 

Kafka would be proud.

"Monopolies Are Worse Than We Thought"

Good article on Bloomberg, via Steve S.

No point me summarising, go and have a read.

Lies, damn lies and... City AM.

City AM finally jumps the shark (bottom of front page):

High property taxes put British businesses at a competitive disadvantage, despite the UK’s low corporation tax rate, said Jim Hubbard, policy advisor at the [British Retail Consortium].*

For every £1 a business pays in corporation tax, it must pay £2.30 in business rates.

That is a humungous lie, even by City AM's standards.

According to the UK government:

Total UK corporation tax liabilities 2015-16, £43.7 billion.

Total English Business Rates liabilities, 2015-16 £23.1 billion, round up to £26 billion for whole of UK.

If we also include about £10 billion in income tax paid by owners of unincorporated businesses, on average, UK businesses pay about 50p in business rates for every £1 of tax on net profits (corporation tax and income tax), less than a quarter of City AM's figure.

* The first part is clearly hokum as well. Ignoring the tax incidence point, UK retailers are not competing in any realistic way with non-UK retailers. The only reason some UK people go on shopping trips to France etc is because of lower alcohol and tobacco duties over there; business rates have absolutely no effect on the price paid by the end consumer.

Business Rates do make a marginal difference to the viability of heavy industry in low-value areas, but that's all part of the general Home-Owner-Ist plan.

They own land! Give them money!

Via @duncanstott, Oxford City Council is now offering:

Private Rented Energy Efficiency Grant (PREEG)

Grants are available to private sector landlords to contribute towards energy efficiency measures in your property including draught proofing, loft insulation, radiator foil and LED light bulb fittings.

The benefits include:

* free energy survey

* 50% off all energy efficiency work for up to 5 properties

* helps you meet Energy Act requirements by improving the energy rating of the property

* ensures tenants live in a healthier property

Great for rents and re-sale values!

"Isle of Man Ferry crash forces cancellation of services to UK"

From the BBC and Wiki:

Seventies rock legend Bryan Ferry crashed into a pier on the Isle of Man as the captain tried to dock in strong winds

Experimental musical services from Douglas to the UK were disrupted after the singer, who sailed from Avalon, struck the pier in the midnight hour on Sunday. Locals reported hearing a siren shortly before impact.

The For Your Pleasure Steam-Packet Company confirmed no passengers or crew were injured although dozens were left stranded. Four Roxy Music re-union concerts in Douglas and Heysham were cancelled following the collision.

'Unfortunate incident'

Chief executive Phil Manzanera apologised to passengers and said it was an "unfortunate incident", adding the band would "do all we can to minimise the disruption... our loyal passengers can expect more than this."

A Roxy Music spokesman said that on arrival in Douglas Harbour, the ageing art school rocker "encountered significantly stronger than forecast easterly winds – it was like a hurricane".

Bums on seats.

The City AM at its innumerate best:

London’s theatreland will be forced to pay an estimated £31m in property taxes over the next five years once the government’s planned hike in business rates comes into effect in April.

The total rates bill for theatres in the West End will rise by nearly 40 per cent to £6.3m for the 2017 to 2018 year alone, according to figures compiled by City A.M.

They couldn't find anybody from theatre-land stupid enough to complain about this - as a general rule, one group owns the physical theatre building and a quite separate promoter puts on the actual play - so they recycle this rent-a-quote:

The New West End Company, a lobby group for the West End*, has warned that the dramatic tax changes could lead to job losses and reduced investment for the capital’s retailers.

* If you look at the company accounts, you will note that at least half their directors represent landlords, not retailers.

Let's try and put those numbers in perspective, shall we?

From The Stage (figures possibly a little out of date but not wildly wrong):

West End theatres have reported a 12th year of growth at the box office, but attendances to London shows have remained flat.

Overall, there were gross sales of £633 million in 2015, up 1.6% on the previous year, when box office revenue was £623 million. However, the 2015 figures are based on a 52-week year, compared with the 53 weeks in 2014.

In total, there were 14.7 million attendees to West End theatres, roughly the same as in the slightly longer period counted in 2014.

In other words, their Business Rates will be nudged up to about 1% of gross ticket etc sales. The VAT they have to pay is 17% of gross sales, so the Business Rates are nigh irrelevant.

Alternatively, it works out at less than 50p per ticket sold, that's their share of the location rent. The real theatre people know full well that they are getting off lightly here; if they put on an identical play somewhere out of town, they'd struggle to fill the house for an average ticket price of £43. That 50p is what theatre goers are paying extra for the experience/convenience of going to the West End.

The NHS has gone mental!

From the BBC:

Muslims with mental health issues could be helped by re-embracing their beliefs and religious teachings, it is claimed. Traditionally, therapists have shied away from talking about religion as part of treatment - and can often see it as part of the illness.

But an NHS project based on research by Leeds University is "showing some individual signs of success". Those behind the therapy say many Muslims do not get help because of stigma attached to mental illness…

Dr Mir has helped to create a new treatment, based on an existing form of cognitive behavioural therapy (CBT) called behavioural activation. Following a successful pilot involving 20 patients, it is being provided by the NHS via a mental health charity in Leeds.

Patients on the course are asked if faith was part of their life when they were well. Those who stopped their religious practice because of depression are re-introduced slowly using a self-help booklet, which highlights passages from the Koran that illustrate "even people with strong faith" can become depressed and that it does not mean God is displeased.

Brilliant. The cure to depression is wearing a headscarf and inviting your husband to beat you/making your wife wear a headscarf and beating her.*

* Delete according to gender of 'patient'.

"Britain's obsession with big cars sees car park scrapes up by a third"

From The Telegraph:

Family cars are becoming too big for parking spaces, figures from car makers show, as vehicles' expanding size is causing a rapid increase in car park scrapes and accidents…

The number of car park crashes soared by 35 per cent over the past two years, leading experts to warn that standard parking spaces are no longer big enough to accommodate this new, chunkier breed of automobile...

The average parking space is just 4.8 metres long and 2.4 metres wide, making it more than just a tight squeeze for many popular cars. Range Rover and Audi Q7 models, for example, measure five metres long and are more than two metres wide.

This has been at the back of my mind for a couple of months and is brought starkly home every time some idiot in a small tank nearly reverses into me (the tops of my cars are below the window line of many of these tanks!). Like so many perceived problems, it's a job for LVT-man:

1. Set car tax so that it is based on vehicle width rather than fuel consumption, which is already adequately dealt with via fuel duty. Wide vehicles are a nuisance to other road users and can pay 'rent' for road space accordingly, similarly they can reduce the car tax on narrower cars to nil, they are a bother to nobody.

2. Segregate car parks into spaces for "normal cars" and "Chelsea tractors". This is no different to having bike racks or dedicated motorbike spaces, which are usually in the most convenient parts of a car park.

3. If it's a 'free' car park, like at most supermarkets, replace the 2.4m wide bays with some 3m wide bays in the least-used areas i.e. furthest from the shop entrance or the parking ticket machines, or use the top storeys for Chelsea tractors etc.

4. If it's a paying car park, charge extra for the larger spaces. They want a quarter more space? Fine, then let them pay a quarter more than normal car drivers.

Sorted.

Why are there so many MX5 convertibles in Edinburgh?

I don't know whether there really are more MX5s in Edinburgh, but that was my impression from being there for a couple of days last October. You'd see two or three an hour, rather than one every few hours where I live (Essex).


Picture from Gumtree showing an MX5 Mk1 in front of the Forth Bridge, of little relevance to this post.

As others have pointed out, Great Britain is pretty much the optimum latitude for open-topped cars. If the sun is blasting down all the time, it gets uncomfortably hot and what you need is a roof and air-con; if it is below 10 deg C most of the time, it is too cold and you need a roof and heating. For open-topped driving, what you really need is daylight and a moderate temperature. And we have to make the most of what little sunshine we get.

The only explanation I can think of for the prevalence of MX5s in Edinburgh v Essex is the much longer evenings in summer. Assuming everybody gets home from work around six o'clock and likes to go for blast in the evening, for six months of the year, you get no daylight whether you are in Edinburgh or in Essex. Whether it got dark at three o'clock or at four o'clock is neither here nor there.

But during the summer, in Edinburgh you get up to an hour more daylight than in Essex; that makes a huge difference to the number of useable hours.

Economic Myths: Means-testing means smaller government and lower tax rates.

The lefties love means testing, because they love having lots of rules on who is deserving and who isn't, and lots of public sector meddlers to administer it all. They don't care about higher tax rates on higher earners, in fact they welcome them, and refuse to accept the concept of the Laffer Curve. Fair enough, at least they are coherent.

What winds me up no end is when Conservative voters pretty much agree with them, ostensibly because means-testing means smaller government and lower tax rates.

This is clearly arrant nonsense. Just as I was drafting this post in my mind, MBK conveniently sent me an article from the FT which gives some illustrations.

Bearing in mind that we can view the income tax-free personal allowance as a kind of universal benefit or a tax rebate, what happens if this is withdrawn from people whose earnings are above an arbitrary threshold..?

Among higher earners, arguably the most egregious quirk in the tax system is the tapering of the tax-free personal allowance on annual income above £100,000. For every £2 earned above this threshold, £1 of relief is taken away. Income earned in 2015-16 between £100,000 and £121,200 will therefore effectively face an additional tax rate of 20 per cent.

Combined with the higher income tax rate of 40 per cent levied on income above £42,385, “it isn’t anything more or less than an effective marginal income tax rate of 60 per cent,” says Paul Johnson, director of the IFS.

Patricia Mock, a tax director at Deloitte, says the 60 per cent rate — which has never been officially recognised as such — affects ever more taxpayers as wage inflation takes a higher proportion of salaries above £100,000. Official figures show the number affected rose from 588,000 in 2010-11 to a projected 791,000 in 2014-15.

Yup, the end result is that more people are paying more tax and suffering higher marginal tax rates. A sensibly advised high earner will do his best to avoid the 60% band and will shuffle his income around to either remain just under it, or right through it and out the other side, so HMRC has to employ more inspectors to monitor compliance etc.

Why do Conservative voters go along with this?

I accept that some people will say "Come off it, people earning £100,000-plus are doing all right for themselves, they can afford it" (and clearly they can), but the general principle applies all the way down the income scale. As we well know, the marginal rate on the first £20,000 is effectively 80% - 90% if you take into account foregone benefits, they are the ones I really feel sorry for.

Almost there, but still wrong

Open University expert, Alan Shipman says that the Government are looking at "the wrong part of the ratio" when it comes to the high house price to average earnings multiplier.

Whilst it's good to see that someone else is pointing out that it's not down to a lack of supply, it's still depressing that he has failed to grasp that it is interest rates that are the problem, not earnings.

No mention of LVT, either, unsurprisingly.

Fun With Numbers: Six surprising ways to cut your fuel consumption

From motors.co.uk:

8)* Buy a new car

If your vehicle isn’t becoming any more efficient after servicing, then maybe it’s time to think about getting another. It may seem counterproductive to spend money to save money, but buying a new car will save you money on fuel, tax and insurance. A new vehicle worth in the region of £10,000** could save you up to £12 a week on fuel.

Most of the suggestions are perfectly sensible. I've checked the figures, and yes, you can save about £500 a year on petrol if you replace a car doing 40 mpg with one doing 60 mpg (assuming 10,000 miles per year etc). The savings get proportionately smaller the more efficient cars are - going from 60 mpg to 80 mpg only saves £230 a year; going from 80 mpg to 100 mpg only saves £140 and so on.

IMHO, an annual saving of £500 on petrol does not justify buying a new car. You lose three-quarters of the value of the new car over the next ten years while saying £5,000 in petrol. That is just nonsense.

* Yes, they actually list ten ways to cut your fuel consumption, thus making a mockery of the headline.

** You don't get much of a new car for £10,000, do you? Half an MX5, one-third of a Ford Kuga etc. My approach is, wait for ten or fifteen years and buy one at a 80% - 90% discount to original list price.

As expected.

From the BBC:

The housing market in the UK is "broken", according to the government and more homes are needed to cope with demand.

So why don't we use all those properties lying empty across the UK?

In some places in the UK, whole streets are empty because the area is no longer somewhere people want to live. John Bibby from the charity Shelter explains that this is usually for economic reasons, such as local industries closing down.

The potential council tax on such homes, where the location value is nil, is clearly too high. In marginal cases, an exemption from council tax (and business rates) might be enough to tempt people back.

The key to rejuvenating an area has been observed time and again. Get a load of artists, musicians, craft brewers and specialist shops to open up, tempted by low rents and no taxes, then sit back and wait as it becomes 'cool', then higher earners move in, the little shops get replaced by High Street chains etc ('gentrification'). At this stage, the council can re-impose council tax and business rates, the artists and small shopkeepers are priced out anyway (or cash in and sell up), move somewhere else and start again.

Buy-to-leave is becoming a problem in inner cities, particularly London.

Wealthy investors from outside the UK buy homes in new developments, with no intention of living in them or renting them out, simply as an investment opportunity. The estate agent Savills estimates that two-thirds of foreign buyers are investors.

However some local authorities have attempted to clamp down on this with some success, by charging extra council tax on homes left empty for more than two years. In the borough of Camden in London this tactic has reduced the number of empty properties by 40%.

That statistic seems highly questionable to me, but let's take it at face value. In these areas, council tax is clearly too low. Bump it up and you get fewer vacants.
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If you replaced council tax, business rates and Stamp Duty Land Tax with straight Land Value Tax (just for starters), all this would happen automatically of course. Having a Citizen's Income would give low-earning artists, musicians etc an extra push to move there; they can merrily do their stuff without any hassle from the social.

The Disappearing Homes Conundrum.

From the BBC:

Tax changes will mean landlords may reduce the properties they have on their books, leading to sharp rent rises, surveyors suggest.

Rental prices could rise faster than house prices over the next five years, according to the Royal Institution of Chartered Surveyors (Rics).

This would be the result of more tenants chasing fewer rental properties, it said. Stamp duty and other tax changes have affected the buy-to-let sector.

I read this so often, I wonder whether perhaps they actually believe their own propaganda.

The whole thing largely cancels out. The way I see it, this will lead to a modest downward pressure on rents and selling prices...

1. Landlord decides to sell. This must mean to an owner-occupier, if landlord A can't make a profit, then he can't sell it to landlord B, because landlord B won't be able to make a profit either, especially as the extra 3% SDLT is an absolute cost and wipes out the first year's net profit.

2. Therefore those most likely to buy will be higher-earning tenants.

3. With fewer potential purchasers, the selling price will fall slightly. BTLs are no longer outbidding higher-earning tenants.

4. Fewer higher earning tenants means that the average income of remaining tenants is lower.

5. A smaller number of lower-earning tenants divided by a smaller number of remaining rentals = lower rents overall.

6. The other factor is that landlords most likely to sell up are recent purchasers with relatively large mortgages who will have first rented out these homes recently for full market rents. Landlords who have had the same tenants in for a longer time are more likely to be charging slightly below market rents, which means that average rents actually being paid goes down.

7. Landlords work on the basis of % yield, if they are happy with a 4% yield and rents and prices both fall by the same fraction, the yield stays the same and the number of landlords stabilises, albeit at a lower level.

Is that so difficult? According to various sources, rents seem to have plateaued over the last year or so. Whether this is the result of the factors listed above or "because of Brexit fears" we do not know, but there's certainly no hard evidence to support their nonsensical predictions.

More landbanker LOLZ

From the BBC:

The chairman of one of the UK's top housebuilders, Redrow, has rejected accusations of land hoarding by the industry and called the government's housing White Paper "disappointing".

Steve Morgan said the planning system was the biggest barrier to new houses. The suggestion that housebuilders were sitting on landbanks in order to maximise profits was "completely incorrect", he told Radio 4's Today...

The company reported that completed house sales were up 13% in the six months to December 2016 to 2,459 compared with the same period last year and pre-tax profits were up 35% to £140m...

The planning problem stemmed from difficulties in moving from outline permission - where a council says land is OK for housing - to detailed permission, when the builder can start work.

"This can take normally one year, but up to two years," Mr Morgan said. Redrow has just short of 26,000 plots in its landbank. "At one-third of them, we just can't get on site."

Jolly good, so by his own admission, Redrow have built up five years' supply. They could be building on two-thirds of them = 17,000 homes, but they'd rather drip them onto the market at 5,000 a year. That's their profit maximising level of output, end of. Can't really blame them for playing the game, but at least they could admit it.

The planning process was also inhibiting supply by dissuading smaller builders from doing more.

"It's not so bad for the big builders like us, but small companies face a wall of bureaucracy. If I was starting out today, I could not build up Redrow as I did."

What happens to smaller builders? The Chairman's Statement in Redrow's 2017 interim accounts explains all:

In February 2017 we acquired Radleigh Homes, a regional housebuilder based in Derby. Radleigh Homes completed 188 homes in the year to December 2016 and has a pipeline of over 1,300 plots with planning, and a further 1,200 plots controlled under options in its strategic land pipeline.

Radleigh Homes is an excellent fit given its geographical location and its high quality market position, similar to Redrow. This acquisition will form the basis of a new regional division for the Group: Redrow East Midlands.

In short, smaller developers are even less bothered about building anything, the game is to build up a nice big land bank and then sell out to a major for £££loads. It was a private sale so the amount paid won't be known until somebody trawls through their next set of accounts. As a rough guide, Redrow has a market capitalisation of £1.75 billion* (at today's date) and Radleigh is about one-tenth the size.

* £1.75 billion divided by land bank 25,600 plots = a staggering £68,000 per plot.

It's "low-HANGING fruit", you bozo!

From the BBC:

"The National Police Chiefs' Council (NPCC) defended the practice of paying informants - or covert human intelligence sources as they are officially known.

Deputy Chief Constable Roger Bannister, the council's lead on the issue, said: "The intelligence provided helps to prevent and solve the most serious of crimes and is vital in bringing offenders to justice through the courts."

But Neil Wood, who worked as an undercover police officer and ran many informants, told Radio 5 live the tactic has its limitations when it comes to drugs.

"Nobody wants to inform on the drug lords because of fears of violent reprisals, so it's only the low-lying fruit that gets caught out - and the trade continues regardless. Nobody can call that effective. Overall it does little to bring down the level of overall crime."

RAF Escort Service

Not long after the Royal Navy escorted the Russian 70s, rust and smog ships through the channel, this RAF Typhoon has nothing to crow about either.

Fun Online Polls: Trump's travel ban & means-testing

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

Which general approach would you prefer for the UK..?

Trump-style travel ban for people from Islamist countries - 97%
Merkel-style welcoming all Arabs in, no questions asked - 3%

Even I, a trendy liberal metropolitan who dislikes everything about Trump, voted for the first option. Which just goes to show how out of the touch the most politicians and journalists are in this country.
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The meddlers are at it again. The Institute for Economic Affairs - of all people - has recommended means testing of nursery subsidies, as reported by the BBC:

The Institute of Economic Affairs study says the right to 15 hours free care a week has distorted the market price.

It probably has, subsidies always do.

It also argues regulations have made it more costly, with many families on average earnings spending more than a third of their income on childcare.

Agreed, but the regulations (i.e. barriers to entry) are a completely separate topic. As to the "more than a third" figure, see below.

The government says it is investing £6bn a year on the facility.

"Spending".

The report argues that despite this investment, families are still paying huge sums for people to look after their children.

Yes they are, that's not really the point. Mum simply compares the net cost of a nursery place with potential earnings after tax, travel costs. Nursery costs quite possibly swallow half or two-thirds of the extra earnings, but the household is still better off overall (plus most kids like being at nursery).

By and large, the tax deducted from Mum's earnings (and the wages of the nursery staff) and the subsidies net off to plus/minus nothing either way, so the final clearing price is probably not that far off a true tax-free market price.

The way early years care is funded means that those who need help the most do not receive it, while many affluent families are generously subsidised, the report found.

This is lefty jealousy bollocks through and through. It's the "affluent families" who are paying most of the £6 bn cost. They are losing out overall. How many extra bureaucrats do we need to decide who "needs help" etc?

As explained above, when Mum is thinking about going back to work, the upper limit on she is prepared to pay for nurseries is two-thirds of her net earnings.
So let's assume that nurseries set their charges at about two-thirds of local average net earnings. Clearly, there is no point for Mum to take a low-paying job, and if that is all that she is offered, then there is simply no point taking it. Does this Mum deserve extra subsidies to bridge the gap? That would surely be economic nonsense.

All of which reminds me of the stupid Killer Argument Against Citizen's Income we looked at yesterday.

It's tempting to means-test stuff in the vague hope it leads to smaller government and lower taxes. Clearly, it does neither. You need much larger government to police these things, and the effective tax rates on those whose subsidies are tapered away becomes penal.

For example, let's take a family with three kids at state school, cost to the taxpayer about £24,000. It would be tempting to say that any household with income over £100,000 should pay the cost in full (or send them private). That is an effective tax rate of 24%, on top of normal effective tax rate on higher earners of overall 50% = 74%. If we also means test NHS access, the right to call police and fire brigade, use of subsidised public transport etc, that effective tax rate ends up close to 100% and there is simply no point earning anything more than whatever arbitrary threshold they dream up.

Therefore, if the government, in its infinite wisdom, decides that something is worth doing, everybody should have the same entitlement, end of. The real discussion is, should the government be doing it at all, yes or no. With nurseries I think very much yes, but I can see there are arguments against.

So that's this week's Fun Online Poll, which things ought to be means tested?

Vote here or use the widget in the sidebar.

'We Are xxxx, Everybody Hates Us'

I do not follow German football myself, but I noticed this piece about RB Leipzig and it got me thinking. If you read the introduction it seems to be mostly about corporation ownership of a football team and how the ownership by Redbull is a danger to the existing German club system. But clearly it is also about the people/fans of Leipzig, a proud, former East German city.

The images of the yellow Dortmand fans do not suggest to me merely a management dispute about controlling interests in a company. Rather, it seems to suggest that Germany my not have digested the previous great unification in Europe: just as they push ahead with the new one. I'm not sure how well the East and West fits in 2017, and have not discussed the issue for years, assuming the two categories had no meaning anymore in Merkel's Germany.

Moving on, change the nation, and what do we have here? This all puts England's most hated football team into a perspective that I never gave any consideration to before. Millwall FC, somewhere, lost in South London. How did they ever rise to be understood by rival fans, and themselves, as the most hated team in English football? Mystery to me.

The Daily Mash on top form

GOVERNMENT plans for more rented housing have been welcomed by renters who like paying other people’s mortgages.

Killer Arguments Against Citizen's Income, Not (7)

The morons seemed to have reached peak idiocy, they are going round in ever decreasing circles without bothering to look at facts, maths or logic, let alone reading and thinking about what they just wrote.

David Smith's gibberish also published in yesterday's Sunday Times:

The flaw in a UBI also comes down to simple maths. If you pay everybody a fixed amount, including the very many who currently receive nothing from the government (1), the cost of the policy (2), could be enormous (3)...

There is no easy way around these problems (4). A UBI means giving money to people who do not currently get it (5), and who do not really need it (6), with the only way of making it affordable being to reduce the benefits going to those who are in genuine need (7). If that was politically unacceptable, as it would be (8), then the consequence would be higher overall spending, and significantly higher taxes to pay for it, neither of which we need.(9)

1) There are actually very few such people. People in full time jobs get a personal allowance for income tax/NIC, which could be replaced with a CI of equal value. Pensioners get a state pension. Parents/minor children get Child Benefit/Child Tax Credits. Unemployed and carers get ESA, IS, Carer's Allowance etc. Students get modest grants and soft loans.

Out of fifty million adults, there are only about two million who get nothing, which appears to be stay-at-home married mums married people with no income and no children at home, whose spouse earns a reasonable amount.

2) It is not a net "cost", it is redistribution. The cost is the admin costs (much lower than current system) and the deadweight cost of taxes on earnings/earnings-based means-testing of benefits.

3) How much the gross cost is depends entirely on how high you set it. The net cost will always be £nil.

4) They aren't "problems", except in his fevered imagination.

5) See 1). He has not done his homework.

6) Sure, people with full time jobs don't "need" it, but they would break even. For those thirty million adults, the extra PAYE from losing the personal allowance nets off with the CI they now get (i.e. about £70 - £80 a week). Marginal tax rates are unchanged. In practical terms, we can just ignore this vast group and assume they get no CI and just retain the tax free personal allowance.

The only significant group who would now get something are the aforementioned non-working spouses, the effect of this is much the same as a transferable personal allowance, which is what 99% of civilised countries have.

7) The Tories decided to have an absolute cap of £500 a week for benefits paid to a household. As only a few thousand households get that much in actual cash benefits, in reality, this is a cap on Housing Benefit paid to private landlords, so inadvertently, they have done The Right Thing.

We can retain the £500/week cap. With a sensible CI, an unemployed couple would have to have about ten children to get £500/week, in which case their Housing Benefit would be reduced to nil, sorted.

8) Nonsense. The £500/week cap was widely supported, including by me.

9) Nonsense. See above. Most of the CI payments would be financed by the very person receiving it, it is a wash, it nets off to nothing.

The disadvantage of trade deficits

I don't subscribe to the mercantilist "imports bad, exports good" world view, but this comment by Dinero a couple of days ago is not quite correct:

It's worth noting that the partner that is running a deficit in bilateral duoploist trade partnership is the one that is running an advantage as they are receiving goods in return for IOUs.

I explained the downside of the UK's trade deficit (from the UK populations point of view) here.

The UK's trade deficit is about £100 billion a year. What do the foreign exporters do with the GBP they accumulate? They like buying up things in the UK which will provide rental/super-profits/unearned income: shares in UK companies, commercial land and buildings, 'privatised' utilities, high-end London residential, student accommodation and things that will entitle them to government-guaranteed payments (Sizewell B, farmland, UK government bonds etc.

This is a vicious spiral of course. Every year the UK as a whole is poorer by the amount of rent which seeps abroad, enabling foreigners to buy more UK rental streams ad infinitum...

As ever, this is a job for LVT-Man:

So what would happen if we got rid of these subsidies; started taxing rents/monopoly income more and production/wages less; and reduced public sector deficit to zero? Foreign manufacturers and farmers will still be happy to sell us stuff, they are geared up to producing and selling as much as possible.

What will they do with the GBP they receive for what we import? They are welcome to buy land, but most of the value will go back to the UK Treasury as tax instead of seeping abroad as rent. So they will spend much more of their GBP on UK produced goods and services. Or maybe they will sell us less stuff while buying the same amount from us. Either way, it would do wonders for the balance of trade.

Just Askin' is all?

Here

As this is an absolute admittance that cutting taxes and regulations increases economic growth why not do it anyway?

Land bankers' myths gradually starting to unravel.

From The Daily Telegraph:

Developers will be ordered to use planning permission or lose it under government plans to speed up the building of hundreds of thousands of new homes. Ministers will next week publish proposals encouraging developers to build on plots more quickly rather than sit on land which has already been earmarked for new properties…

The news comes as it has emerged that the number of empty homes in the UK is at its highest level for 20 years, calling into question whether the countryside needs to be concreted over for new developments. The "housing surplus" has nearly doubled from 800,000 empty homes in 1996 to 1.4 million homes at any one time in 2014. These “empty homes” are typically second homes, or vacant properties which are either left empty or are awaiting for tenants or home owners to move in…

Currently builders lose planning permissions after three years unless work has started. However, they can maintain planning permissions on sites simply by “digging a trench”, sources said. This means that more than 700,000 homes which have been granted planning permission since 2006 are yet to be built. Under the new plans permission would be linked to the completion of homes by certain dates, rather than the starting of work…

A report last year by Civitas, a think-tank, disclosed how developers and landowners used a controversial relaxation of planning rules in 2012 to hoard planning permits rather than build more homes. More than two million planning permits were issued between 2006 and 2015 – a rate which would be enough to build an average of 204,000 new homes a year but foundations were only laid on 1.3 million of them.

Daniel Bentley, editorial director at Civitas, said councils had approved more than 200,000 homes a year for the past four years, and yet last year there were still only 164,000 new-build completions.

He said: “This would be a really bold step by ministers and suggests they are not prepared to tiptoe around developers anymore - for too long planning permissions have been granted with no obligation to build. This has meant that landowners and developers have been able to secure huge windfalls and then maximise their profits still further by drip-feeding new homes into the market at the highest prices they can.”

They're still making the following flawed assumptions:

1. That nudging up new supply (relative to existing housing stock) from half a percent to three quarters of a percent will make the blindest difference to rents and house prices. Even if it did, it would do nothing to reduce inequality, it would merely shift the gains from one favoured group to another at the expense of the same people (i.e. younger people).

2. That The Hallowed Green Belt must be preserved at all costs. Just look at the picture and caption at the start of the article! You wouldn't even notice 57 new homes in those thousands of acres of rolling countryside.

3. That's there's nothing we can do to encourage more efficient use of existing land and buildings.

But it's a start at least.

"The La La Land That Time Forgot"

From imdb and imdb:

In Hollywood in 1916, during the World War, a British passenger ship is torpedoed by the German U-boat commanded by Captain Von Schoenvorts and sinks.

The survivors Mia and Sebastian join a few crew members that have also survived and convince them to take over the submarine that has come to the surface. Mia is an actress who moved from small town Nevada and dropped out of college five years ago to pursue her dream. Sebastian is a jazz pianist, his style of jazz in the vein of traditionalists like Charlie Parker and Thelonious Monk.

They sail together but they end lost in the middle of the ocean. Partly because of their individual struggles and partly because of the situations, their initial couple of chance meetings are antagonistic ones. After many incidents, the two team-up with the German crew to survive and arrive in Caprona, a land that is not charted in the maps.

However, there are many obstacles to a Mia/Sebastian happily ever after. Soon they realize that the land has dinosaurs, pterodactyls and Neanderthals. They capture a native, Ahm, and they learn that his dream is to open his own jazz club, most specifically in what used to be a famous jazz club that has since been converted to a tapas bar cum salsa dance club.

They see the chance to re-open it and leave Caprona. The pursuit of their individual dreams may take all their energies, with nothing left for escaping from the island. Will they succeed in their intent?

Short lists

1. Mancunian TV presenters called 'Cox'.

2. Ginger-haired German tennis players who were very successful in the 1980s and 1990s.

3. Current UK prime ministers/first ministers who are men.

Outbreaks of common sense in right leaning think tanks!

Exhibit One: Philip Booth (of the Institute for Economic Affairs) in today's City AM:

Cafod argues that we should remove our trade barriers without expecting anything in return from other countries. There is much to be said for this. Our trade barriers hurt British consumers and poor-country exporters and, ultimately, harm UK industries with an export focus. For example, we still have very high tariff barriers of up to 30 per cent on processed foods such as coffee and chocolate. We should just remove them...

Trade deals have become extraordinarily complex because most trade barriers relate to regulation. When it comes to agriculture, for example, regulation of GM foods is used to keep imports out. In financial services, we make enormous efforts to make already complex national regulatory systems internationally compatible. This all requires a great deal of commercial expertise. The result can be a marathon process and trade deals that create regulatory regimes that benefit incumbents and large firms.

Outside the EU, the UK government can be more relaxed about not using trade deals to harmonise regulation except, perhaps, in extreme cases of health and safety. Products and services that abide by UK regulations can be clearly labelled as such and consumers can then make their own choices.

We cannot go on negotiating trade deals that resemble the Encyclopaedia Britannica. Such deals should go the same way as the hard copy of that great set of books. We should give an intellectual and political lead so that countries such as India and most African nations might follow. Such a policy would enrich consumers and disempower elites.

He doesn't specifically say "Sod this, let's have unilateral free trade" but I think we can assume that's what he meant.

Which is what I and others have been saying here, free trade agreements (which sometimes take ages to sort out) are themselves a hindrance to free trade, not least because a free trade agreement with any one particular country automatically means less favourable terms for other countries. Far better to start with unilateral free trade as a general assumption and - if needs be - impose embargoes now and then.
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Exhibit Two: David Bentley (of Civitas) in The Times (via MBK):

[The government's] goal is to increase the amount of land brought forward for development and the speed at which it is built on. There are various proposals for achieving these objectives and one fundamental obstacle to both: the right of landowners to hold back potential sites and squeeze as much profit from them as they can.

Securing planning permission for homes on greenfield sites usually results in an enormous windfall for the landowner. These are often life-changing sums for a farmer, say, who happens to occupy the land that is needed for new homes due to the expansion of the local town or city.

The average hectare of agricultural land in England is worth about £21,000; with permission to build homes on it that rises to about £2 million (excluding London, where values are very much higher still). If the owner does not think they are getting a good enough price, they can sit tight and wait while the market rises, as it usually does, or someone comes along with a better offer.

But the right to extract every last penny from sites like this — enshrined in the 1961 Land Compensation Act — is to the cost of the rest of the community. The more the developer pays for the site, the less money there will be for infrastructure or social housing, and the more the new homes will have to fetch to turn a profit...

Underlying the housing crisis is the issue Mark Twain was addressing: that land is inherently scarce and inflates in value as the population grows and more people come to draw on it. The question is, who should benefit from this progress?

He's falling for the "increasing supply will push down prices" myth but at least he's grasped some of the basics. I don't like his suggested solution to this either, as Richie in the commenters says: "Three words, 'land value tax'.", but hey, it's a start.

Crikey! Alaistair Heath Talks Sense Shock

Here

I quote:-

The solution is a fourth approach, a toughened-up version of the British way. We should be proud to be the country of Sir Mo Farah, Sajid Javid and Sadiq Khan, a nation so at ease with itself that we encourage Muslim state schools. We should continue to embrace refugees fleeing persecution, and pursue a controlled, yet liberal, migration policy.

But we should terminate the old politically correct, cowardly attitude that allowed scandals such as Rochdale, do a lot more to root out extremism, extend economic and educational opportunities, encourage interfaith engagement, recruit more Muslims into the Armed Forces and combat ghetto-isation.

Our mission is to show the world how to host a thriving, prosperous, integrated Muslim minority which can fully buy into core British values while practising its faith. Realism and hard, patient work, not digital hysteria, are the only ways to defeat the demagogues.

Well, I think it's sense. Do you?

Fun Online Polls: USA military spending & "gifts for Islamists"

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

Without Googling first, how much is the USA's annual military spending?

$100 billion - 3%
$200 billion - 4%
$300 billion - 7%
$400 billion - 14%
$500 billion - 19%
$600 billion - 52%

You are surprisingly well informed, more than half got it correct. When I first read that figure in an article or reader's letter somewhere, I assumed the person was wildly exaggerating for effect, I had to look it up to believe it.

IF you want to put that sort of insanely large figure in context, it's about equal to the entire military spending of the rest of the world put together, or three-quarters as much as the UK's entire government spending in a year (schools, hospitals, pensions, welfare, the lot).
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This week's made-to-order Trumpage was the travel ban.

Did he do this purely as an ineffective stunt or does he genuinely think it will reduce the likelihood of terrorist attacks? The thinking man's Katie Hopkins points out that Trump was merely enacting something that the previous president had already set in motion.

The vocal minority promptly jumped on their chairs and started shouting. Britain's leading Muslim politician (or the Muslims' leading British politician, as they like to see it) said the international community must show “moral leadership” by speaking out against Donald Trump’s travel ban and even the normally temperate Amber Rudd said Trump travel ban is a 'propaganda opportunity' for Isis.

Ho hum. What bothers me is the asymmetry of all this.

Mrs Merkel in Germany tried the opposite tactic and welcomed in a million Muslims. She was rewarded with an overall increase in crimes against women and spate of terror attacks, culminating in the Berlin Christmas Market attack.

Merkel's policy looks like a "gift to Islamists" to me, so how can Trump's polar opposite policy also be a "gift to Islamists"? Or is the world so f---ed up that both are?

It's a tricky question, so I will turn it round for this week's Fun Online Poll and ask which policy people would prefer for this country.

Vote here or use the widget in the sidebar.