Thursday 31 May 2018

Splendid bit of Indian Bicycle Marketing

With a startling lack of imagination, the Islamists have decided to have a go as well.

From the BBC:

The Muslim Council of Britain has reiterated a call for the Conservatives to launch an independent inquiry into alleged Islamophobia within the party.

The MCB has repeatedly demanded an investigation, and says there are now "more than weekly incidents" involving Tory candidates and representatives.

In an open letter, it tells chairman Brandon Lewis he must "ensure racists and bigots have no place" in the party. A Tory spokesman said it took all incidents of Islamophobia seriously.

I hope the Tories maintain a sense of humour and get Shrami Chakrabarti in to do a whitewash!

Anyway, this'll be fun! Most people can distinguish between criticism of Israel (the country) and straightforward racism towards Jewish people*. For some reason however, any criticism of Islam (a weird set of anti-democratic, anti-Western and anti-liberal beliefs) is immediately portrayed as straightforward racism merely masquerading as criticism of those beliefs, which it clearly isn't.

If it were, then those same racists would engage in Hinduism-phobia, Sikhism-phobia, Buddhism-phobia etc, which they clearly don't. Not even the EDL have been accused of those, the words don't even exist, let alone the actual -ism itself.

* Clearly, criticism of the actions of a country is always legitimate, whether correct or not, as is criticism of political, religious or other beliefs, whether correct or not. I spend a lot of time criticising what the UK government does and criticising Home-Owner-Ism, that doth not somehow make me racist, doth it?

Wednesday 30 May 2018

Housing Ponzi flowchart

Via @HousePriceMania:

Tuesday 29 May 2018

My dream crap car list.

I've had a Mazda MX5 (1998, Jap import, 1.6l automatic) and a Toyota MR2 (2000, pre-facelift, but with the body-coloured FL side vents) for just over two years now and, although they have ended up costing me twice as much as budgeted, I love them to bits.

If money and parking space were no object, which happily they are, here are cars 3 to 10 on my dream crap-but-lovable car list:

3. MG MGF, facelift version 2000-02, a VVC if you twist my arm, but not one with the silly spoiler.

4. Honda Prelude Mk 1 ca 1982. An automatic one comes up for sale every few months but all the 5-speed manuals appear to have rusted away. Failing that, I'd take a Honda Prelude Mk 3 (1987-91).

5. A Fiat/Bertone X1/9, preferably a Gran Finale ca 1988 and definitely a 1.5l. I sat in one once, it's far too small inside and not a pleasant place to be, but they are even far more beautiful in real life than in pictures. Preferably without the silly spoiler.

6. A late model TR7 convertible, or one of the handful of the TR8 convertibles still on the road.

7. An MG TF (2002 to 2005), not fussed about which year or model, but maybe a 160, just for the LOLZ.

8. For ironic reasons, a 1990s Lotus Elan M100 front-wheel drive, or even better the Kia-made version.

9. A VW-Porsche 914 (car that looks the same going forwards as it does reversing - heroically ugly), or a 916 because they are rare as hen's teeth.

10. Going with the ironic front-wheel drive theme, a Fiat Barchetta (basically an MX5 copy), to cap it all, available in left-hand drive only.

Anything I've missed? And which should I remove from the list?

Monday 28 May 2018

Economic Myths: "Younger generations to pocket £1trn of inheritance in next decade"

Prompted by @henrypryor, commenting on the headline that "Bank of Mum and Dad is ninth-biggest lender with £6.5bn loans":

The madness continues - mum & dad are lending money to their kids so their kids can afford to pay the prices demanded by mum & dad & their friends. It’s like a giant Ponzi scheme but but where the victims are your children.

The flip-side is nonsense like this:

Rising wealth and higher mortality rates will help raise the total value of inheritances to £1 trn over the next decade, according to a leading think tank...

A report by the think tank and estate administrators Kings Court Trust found that the 66% increase in intergeneration wealth transfers will be heavily driven by the rise in property prices over the next decade. Over the past 20 years, house prices have risen by 273%.

The next generation, will collectively, inherit pretty much nothing overall.

The point is that rising house prices make home-owners appear/feel wealthier but also make today's would be owner-occupiers actually a lot poorer.

Think about it.

If house prices halved to something sensible, like their long run range of between three and four times earnings, every would-be owner-occupier couple would be £150,000 - £200,000 better off as a result, today, right now, whether their parents are poor or wealthy, owner-occupiers or tenants. And parents wouldn't need to worry about 'helping their children onto the property ladder'.

For sure, there will be a few lucky people who inherit a Buy-to-let portfolio and no longer need to contribute to wealth creation (i.e. go to work), but on average, people will inherit a fraction of a house when they are in their forties, enough for a decent deposit, but still leaving them hugely out of pocket overall. They will have been paying rent for decades and they will still need to take out a large mortgage that will take them until retirement to pay off.

Ergo, if something makes the next generation worse off overall, how can they be said to be 'inheriting' such colossal sums every year? The net result is that a minority will become ever wealthier and the majority will be poorer.
In case anybody is wondering why I hadn't posted anything for a week, it is because I was embroiled in 'GDPR compliance' most of last week, which means basically 'tidying up and filing every single bit of paper on your desk'. I had a bit of a backlog and there were about three-thousand of them, not that I counted but the pile was about ten inches high. This turned my brain to mush and the lovely weather doesn't help :-)

Tuesday 22 May 2018

Now THIS would have livened up the cup final a bit...

Good bull skills! A herd of 180 cows descend on a Guernsey football pitch as brave players try to shepherd them away

Rather ironically, they appear to be Jersey cows, who presumably swam across.

Monday 21 May 2018

Killer Arguments Against Citizen's Income, Not (16)

Those on the left (and authoritarians generally) say that a flat rate UBI of £4,000 a year, payable to each UK resident (or whatever the rules are) working age adult on a no-questions asked basis would a) leave existing claimants worse off (it wouldn't actually, if you leave Housing Benefit as a separate payment) and b) it's not right to pay it to wealthy people/high earners.

Fair enough. That does not change the basic principle, which is to get marginal withdrawal rates down as far as possible.

I set up a spreadsheet with HMRC's figures for taxpayers' income percentiles and my estimate of incomes of non-taxpayers. For a given total payout, there is of course a mathematical trade-off between how high the basic amount is and what percentage would have to be clawed back via PAYE codes. This reflects the political trade-off (low earners should/should not get more than £4,000) and the economic trade-off (the lower the marginal withdrawal/tax rate, the better for everybody, unless you are loony left wing).

The answers are:

£4,000 - zero %
£5,000 - 5%
£6,000 - 10%
£7,000 - 16%
£8,000 - 23%
£9,000 - 30%

Even paying £8,000 a year with a 23% withdrawal rate would be a vast improvement over the Universal Credit headline withdrawal rate of 63%, which is on top of any PAYE/NIC you have already had deducted.

Also, at £8,000 a year basic entitlement, there is clearly no need for Housing Benefit/council tax rebates any more, and is much the same as the current full state pension, getting rid of yet more layers of crap. Win-win.

Friday 18 May 2018

The Regional Skills Gap

Something else that has been bothering me for a while is the notion of the 'regional skills gap', as mentioned for example here.

Productivity and Skills for West Midlands Combined Authority (WMCA) region are one of the biggest challenges for the regional economy. GVA per head in the WMCA is currently at £19,423, nearly £3,500 [less than the UK average] for each of the 4 million WMCA residents leading to a £14bn output gap compared to the national average.

WMCA report that the components of the output gap highlight issues across all the productivity drivers with insufficient skills, too few in employment and the quality of the indigenous WMCA business base.

* Skills: % of number individuals with qualifications at NVQ4+: in the West Midlands Region is 27.6% against a national picture of 34.9%

* Employment: employment rate in the West Midlands Region is 67.2% against a national picture of 71.5%...

It is essential that Education and Business work together, not just through the Corporate Responsibility Agenda and supporting students develop the essential work ready skills but also to:

* Shape academic programmes and content to reflect the needs of regional sectors

*Identify the key growth areas across the region to ensure that training and development reflects the local economy

It's a bit like the notion that you can get house prices down in the South East by building more homes - it only makes sense if you ignore the fact that people can migrate freely within the UK.

If you assume that people growing up in the West Midlands intend to stay there, then sure, train them in things which will get them a job locally. But they won't.

It's a circular problem.

1. Those with the initiative to undertake education and training want to do whatever will earn them the most money, which is unfortunately not the productive sector but the non-productive sector, finance, insurance, real estate, legal and accounting (i.e. little old me).

2. The best paying jobs are in London, which is why, apparently, nearly half of recent graduates from UK universities move to London.

3. So the reason why relatively few people in the West Midlands have NVQ4+ qualifications is not because there's anything wrong with their education system, but because many of those with NVQ4+ qualifications bugger off elsewhere.

4. The less ambitious/less qualified remain in the West Midlands, inevitably, productivity and output declines, exacerbating the effect; businesses do worse, meaning fewer well paying jobs, meaning people are more likely to bugger off.

5. If the West Midlands offers more education and training, that makes it even easier for people to bugger off.

As an aside, Flipchart Rick did a post a while back called "Why a richer Africa means more migrants" explaining that this is effect is observable on an international level.

To paraphrase, few people from really underdeveloped countries emigrate because nobody wants them. Developing countries try to lift themselves with their own boot straps and invest what little surplus they have into improving their education systems - but that makes it easier for their people to emigrate (Filipino nurses, for example) instead of staying and helping grow the economy. So for some decades, this is a net loss to the country. It is not until the economy has developed to the level where there is less incentive for people to move abroad that their economies really benefit; but you can't grow an economy until the better-educated people stay there etc etc in a vicious circle.

Thursday 17 May 2018

Killer Arguments Against LVT, Not (442)

From 1984: "To know and to not know, to be conscious of complete truthfulness while telling carefully constructed lies, to hold simultaneously two opinions which cancelled out, knowing them to be contradictory and believing in both of them, to use logic against logic, to repudiate morality while laying claim to it, to believe that democracy is impossible and that the Party was the guardian of democracy.

To forget, whatever it was necessary to forget, then to draw it back into memory again at the moment when it was needed, and then promptly to forget it again, and above all, to apply the same process to the process itself.

Here's a real life example, armchair twat @RomanchukBrian on the topic of LVT:

"So your plan is to have city centres consisting of 40-storey blocks surrounded by the ruins of abandoned buildings? And you are wondering why economists are not endorsing this?

"It's rarely been tried because it's a policy that is obviously a disaster. If it makes sense in *your* model, *your* model is wrong.

"The owning firm goes bankrupt and nobody is stupid enough to pay the LVT in a deliberately sabotaged city core? You end up with abandoned buildings.

"North American city planners have been struggling for decades to rejuvenate city centres. Imposing a tax to wipe out the economic viability of the core would not exactly help.

"And away from city centres, you would tax a small farm across the road from a new development with a couple dozen houses on the same amount. So you would wipe out those farmers as well."

As you can see, in *his* model he completely contradicts himself. His imaginary waves of destruction start with the outer fringes of the centre, leaving just 40-storey buildings in the very centre, which then in turn are abandoned for exactly the same reason that they were built in the first place... the waves spread outwards and ultimately, farmers are driven out of business. He didn't make the final leap and claim that with cities and farmers ruined, the entire tax burden would fall on the couple of dozen houses, which would also promptly be abandoned. Which is a shame really, as it would complete the circle of nonsense. If he'd stuck to one or the other extreme (either people rush to the centre; or people rush away from the centre) then it wouldn't be so immediately obvious that he is a complete idiot.

Logic* is alien to these people, as are actual facts - most economists do endorse LVT; it is not a hypothetical, whenever and wherever it has been implemented it has led to more development in city centres; and as land would be taxed on its optimum permitted use (which 99 times out of 100 is its actual use), the tax on the farmland would be very low, much lower than one the houses across the road. DoubleThink is so much easier when the mind is unclouded and unburdened by actual facts!

* The logic is easy. In an LVT-free world, the rental value, selling price and mortgage repayments if you want to occupy/own any particular plot are set by normal market forces - supply and demand etc. Taxes on earnings and output are arbitrary amounts taken from you by the government.

LVT is, from the point of view of the land owner/purchaser, exactly the same as an interest-only, variable-rate, non-recourse mortgage on the land element. The LVT simply replaces the mortgage repayments on the land element AND some or all of all the arbitrary taxes on earnings and output, making it a double-win for those who don't own any land and a break-even for most of those who do.

With a normal purchase mortgage, there is a risk that the interest rate increases and/or the potential selling price of the land falls, potentially getting you caught in a nasty vice. LVT completely de-risks this. The quasi-interest payments only go up if the land value goes up and as the LVT liability attaches to the land, not to you personally, you can never end up hugely out of pocket.

Wednesday 16 May 2018

Daily Mail on top form

Pensioner tells of terror as Virgin hot air balloon with 14 passengers crash-landed in garden of her £700,000 Hampshire country house

Killer Arguments Against LVT Not (441)

Here's a synthesis of a couple of wailing and bleating emails I've been sent recently, it's all boilerplate stuff:

Why go after little landlords like me? I've only got two buy-to-lets which I need for security in my old age (1). Would you rather I be a burden on the state?(2) If you want to get more tax, why not go after the big targets - home builders who own enough land with planning permission to build a million homes? (3) What about companies like Facebook or Google who make billions and don't pay a penny in tax?(4)"

Arrant nonsense if you actually think about it for two seconds.

1. Two is plenty. The trajectory is that one-third of households will be landlords with two buy-to-lets each and the other two-thirds of households will be their tenants. What security will the tenants have in their old age?

2. Old age pensioners get a state pension, and quite rightly so, it's a good template for a Citizen's Income. Are they all 'burden on the state'? I've not heard many people dare say it out loud or many landlords offer to waive their state pension entitlement. In any event, what happens when all those tenants retire and two-thirds of pensioners need housing benefit to keep their landlords in clover? Isn't that going to be a colossal 'burden on the state'? Landlords are already collecting nigh on £10 billion a year in Housing Benefit (twice as much as they pay in income tax).

(This segues into the Poor Widows in Mansions, who will be priced out of their homes and become a burden on the state. Glossing over the roll-up and defer option for that minority, if getting money from the taxpayer is a burden, then anybody who collects an old age pension without wanting to pay their fair share of LVT is also a burden on the rest of society).

3. At present, the home builders aka land bankers own land with planning permission for a bit less than a million homes, and I agree that politically, they are an easy target. But the UK's private landlords own five million actual homes - the land and the finished building. The total value of the land bankers' land is a tiny fraction of the total value of the landlords' land and buildings. Who's the bigger target here?

4. UK landlords collected gross £50 billion in rent last year, the banks took half in interest, minus bits and pieces, leaving them with £14 billion in net rental income. (Skip back a step - two-thirds of landlords' net rental income is taxpayer-funded Housing Benefit!). Facebook made worldwide profits of £4 billion-odd. Even we could identify (and tax) the UK element of Facebook's profits, it'll only be a hundred million or so. UK landlords' net rental income dwarfs Facebook's UK profits by a factor of a hundred-to-one. Ditto Google, Apple, Amazon and the rest of them. Who's the bigger - or easier - target here?

Tuesday 15 May 2018

Outbreak of Common Sense

A new report by the TaxPayers’ Alliance details the enormous savings to British taxpayers by legalising cannabis. The UK could save at least £891.72 million a year in reduced spending by police, prisons, courts and the NHS through pain relief treatments.

Yes, this is all old hat and sane people have been saying it for years, I'm just pleasantly surprised that the TPA, the staidest and most small 'c' conservative of all pressure groups would even broach the topic.

(A list of their recent donors might give a clue as to why the sudden change of emphasis...)

Sunday 13 May 2018

Many Killer Arguments against Citizen's Income are equal and opposite to Killer Arguments Against LVT.

Let's take two main Killer Arguments Against Citizen's Income first:

1. If you set the CI rate 'too high', far fewer people will want to work. Implicit in this is the acknowledgement that if you set the CI at the correct rate, it will have little impact on people's willingness to work, and it ignores the fact that in real life, paying out a CI tends to increase people's willingness to work, especially if it replaces the bulk of the existing UK welfare system, which discourages from taking low paid work and rather bizarrely, subsidies wealth (farmland subsidies, housing benefit for private landlords, higher rate tax breaks for pension savings).

2. Faux Libertarians, self-appointed hard core Georgists and many on the left (whether LVT sympathisers or not) argue that paying out a CI will just go into higher land rents.

The equal and opposite Killer Arguments against LVT are:

3. 'What about the semi-retired whose home has appreciated massively in value, due to circumstances outside their control? They will be 'forced' to move into a ghetto'. Implicit in this is the acknowledgement that the gain is entirely unearned. In many cases, these people 'want to leave their valuable home to their children', for whom the gain is an unearned windfall gain on two levels.

4. 'Landlords will just add LVT to the rent and/or housing costs will increase and/or LVT will not make housing more affordable'.

5. 'If you impose LVT, the wealthy will all flee the expensive areas, so revenues will collapse'. This is inherent nonsense, it's like saying if the government offers 'free' education for kids and a 'free' NHS, high earners (and mugs) won't send their children to private school or take out private health insurance. Be that as it may, if the rental value of the top couple of percent of homes flattens off at (say) £30,000 a year (instead of £100,000s for the swankiest streets in Westminster), this only reduces total LVT revenues by a few percent or so.
Stage one, under the Six Thinking Hats technique is to put your white hat on and write down everything you know.

As it happens, and as a matter of fact, the entire cost of cash welfare payments (state pension, Working Tax Credits, child benefit, disability benefits, housing subsidies), plus the cash value of the tax free personal allowance and tax breaks for pensions saving is approx. equal to the total site premium of all UK land (housing, commercial and farmland) i.e. about £250 billion a year.

So the obvious thing to two is keep welfare spending roughly constant, but with no, or much less, means-testing, and much flatter and simpler (such that most households are little better or worse off on a completely static basis) and pay for this out of LVT receipts.

This means that existing taxes on housing and 'wealth', plus the worst taxes on output and employment (VAT and NIC) which currently raise £250 bn (after deducting dead weight cists) a year or so can be scrapped. This would leave us with two flat taxes - LVT and flat income tax (I am indifferent between a) a low flat rate and no personal allowance vs. b) a higher flat  rate and a higher personal allowance).

Then for administrative simplicity and to reduce fraud, error, under- and overpayments, we net off each household's LVT bill and CI entitlement at source.

Simple maths tells us that the average household in the average home in an average area will have an LVT bill that equal to their CI entitlement and simply pays and receives nothing. The cost of buying or renting the average home, from their point of view falls dramatically.

We also know that the least desirable areas in any country have a site premium/land rental value of zero. This applies to housing and commercial premises in the poorest areas and, to be honest, most farmland.
To put some hard numbers on it, here's a chart of the site premium - measured at today's rent levels - of an average 3-bed semi (or large-ish terraced house or large flat) in the first 96 percentiles of English and Welsh postcodes. Rents go pretty vertically upwards after that, up to £100,000s a year!

If paid out in full as a reasonable Citizen's Income (children £40/wk, working age adults £80/week and pensioners £160/week), then the CI entitlement of an 'average' household (one and a quarter pensioners, or two adults and one child) would be £10,000:

Households in the cheapest ten percent of homes will gain a few thousand pounds more CI than they pay LVT, maybe enough for a bare subsistence level. The break-even point is three-quarters of the way up; households in the top ten per cent most expensive areas will have to pay LVT in excess of CI of £15,000 or so, a bit less than they would be paying in rent. There is no reason to expect any mass internal migration, it will all just settle down.

Pensioners who want to stay put can go for the roll-up option; young people who are much more mobile will make the usual trade-off between higher wages and higher rents etc.

The one-third of 'young adults' who are currently 'forced' to stay at home and their long-suffering parents will be laughing and can split the gains.
Now, let's skip to the blue hat and think things through:

Even if KCN 1 and KLN 3 had substance, they cancel each other out. If the semi-retired couple want to stay living 'in the family home with all the treasured memories and pass it to their children', then all they have to do is go back into paid work; or ask their potential heirs to do a bit more overtime and pay it for them. LVT encourages work! So therefore LVT must be a good thing, from the point of view of the idiots who argue that a CI discourages it.

Even if KCN 2 and KLN 4 had substance, they cancel each other out, even though superficially they say the same. They must cancel out, or else rents would increase to £infinity which is clearly nonsense. There comes a stage at which people say, sod the extra bedroom; the bigger back garden; the shorter commute, we'd rather spend the money on a new car, nicer holidays etc. Even if the landlord can hike the rent all he likes, then LVT increases, the CI increases and an average household wonders what all the fuss is about as it still breaks even.

KLNs 4 and 5 clearly cancel out. It is impossible for rents to increase and collapse simultaneously.

Even if KCN 1 and KLN 5 had substance, they cancel out. Let's say all the foreign kleptocrats abandon their central London homes and all the semi-retired trade down, that means LVT revenues fall, so the CI falls in equal measure. The average family is barely affected (maybe a couple of hundred quid a year worse off). But people willing to work who were previously priced out of moving to somewhere nicer, or to somewhere where they can earn higher wages, now find it easier to trade up. So many 'average' families end up better off.

Those who thought they could game the system by moving to a low-rent zero-LVT area, banking the CI payments and living on a bare subsistence level (not bothering to work) now find that they have less 'free' money to live on, so are more likely to be willing to work. Hey presto, housing is, in aggregate, even more affordable for working people and more people want to work.
To cut a long story, there is an equilibrium to all this, and there are at least two fixed points.

i. Start in the middle, with an average income, average sized household in an average home in an average area, for whom the answer is always "zero". This is a fixed point. And then work outwards in any direction (smaller or larger household; better or worse area; bigger or smaller home; higher or lower earnings etc).

ii. Another fixed point is low-rent, zero-LVT areas. It is impossible for landlords in the worst areas to increase rents; the unemployed and unemployable; those wanting to game the system end will be getting a CI that is just enough to pay the bricks and mortar rent and to live on. There is no surplus to go into higher rents! That nails down rents/LVT at the bottom end. At the top end, the additional rental value/LVT bill cannot be any more than the extra wages that people can earn by living in a commutable radius of where the best paying jobs are (plus or minus a bit for subjective amenity value).

Here endeth.

Friday 11 May 2018

Reader's Letter Of The Day

Emailed in by the author:

CAN someone explain why anyone who criticises a religion risks prosecution, while insulting a political party is OK?

The idea that religions have benefitted humanity more than political parties is very debatable.

For example, various Muslim groups in Syria are responsible for a hundred thousand deaths in recent years, and over a million refugees.

As for the Church of England, that is traditionally referred to as “the Tory Party at prayer”: i.e. the C of E has spent most of life ingratiating itself with the rich and powerful.

In contrast, it’s political parties that arguably have brought the really big benefits: e.g. the Labour Party helped give us the NHS and state pensions. Religion cannot match that achievement.

It’s the height of cheek for the anti-free speech non-entities in Westminster to tell ordinary people what they can and can’t say about religion.

Ralph Musgrave, Durham

Thursday 10 May 2018

This unexpected response was mentioned in 'Freakonomics'.

From the BBC:

Fining parents for taking children out of school in term time in Wales has had no effect on overall absence rates, a review has found. It shows the number of unauthorised family holidays actually increased after fixed penalty notices were introduced in 2013...

Several respondents said that the level of the fine was too low to encourage behaviour change. They said this was particularly the case for unauthorised absences for holidays in term time because some parents preferred to pay a £60 fine compared to the price of going away in the school holidays.

One respondent said "in this deprived area many families cannot afford the costs of a holiday out of term time. If they can, they soak up the cost of the fine as part of the holiday cost (which means the fine has zero effect)".

This phenomonen was mentioned in the book 'Freakonomics', here's an article from 2013 explaining it:

In Haifa, day care centers almost uniformly closed at 4pm, and simply depended on the good intentions of parents to pick up their kids on time. Somehow, this worked: parents picked up their children on time and rarely, if ever, came after 4:30pm.

Why were parents rarely late? As Uri will tell you in our book, being late meant relying on the generosity of one teacher, who would inevitably stay late to look after your child. Being late meant facing that same teacher and having to apologize to her for the inconvenience of waiting.

All of which prompted us to wonder: what would happen if these day care centers stopped relying on generosity and started relying on a financial incentive — like a fine — to discourage parents from showing up late? Few would have predicted what we found: introducing a financial penalty for showing up late actually caused parents to do just that. Parents stopped showing up on time entirely.

To come to our surprising conclusion, Uri ran an experiment: Out of 10 daycare centers across Haifa, they randomly chose six and introduced a small fine for parents who showed up more than 10 minutes late in each of them. In day cares where the fine was introduced, parents immediately started showing up late, with tardiness levels eventually leveling out at about twice the pre-fine level. That is, introducing a fine caused twice as many parents to show up late. What about the remaining four day care centers that remained fine-free? Tardiness didn’t change at all.

The picture that emerged from this experiment, co-authored with Aldo Rustichini, was that parents had a whole set of non-financial incentives for being on time – incentives that were completely incompatible with money. Like, for example, avoiding the guilt of inconveniencing the day care workers. As soon as parents had the option to pay a small fine and avoid that guilt, they took it en masse.

Wednesday 9 May 2018

Reader's Letter of Last Week

From The Metro:

If the Supreme Court finds that Daniel and Amy McArthur discriminated for refusing to do a 'gay cak' (Metro, Wed), does this mean halal butchers can be forced to provide port to customers if asked?


Possibly not the best analogy, but surely there is a Muslim cake shop somewhere we could use as a test-case? Ask them to lace a cake with alcohol and decorate it with a pig?

Tuesday 8 May 2018

A painted Boris Johnson is right twice a day

From the Daily Mail:

Under the [customs] partnership, officials would track shipments into the UK and collect tariffs for Brussels on goods ending up in the EU. Mr Johnson said this would simply lead to more red tape.

"It’s totally untried and would make it very, very difficult to do free trade deals," he added, "If you have the new customs partnership, you have a crazy system whereby you end up collecting the tariffs on behalf of the EU at the UK frontier.

"If the EU decides to impose punitive tariffs on something the UK wants to bring in cheaply there’s nothing you can do...

"That’s not taking back control of your trade policy, it’s not taking back control of your laws, it’s not taking back control of your borders and it’s actually not taking back control of your money either, because tariffs would get paid centrally back to Brussels."

If you think about it, it is indeed a really stupid idea that will make things more complicated, not simpler. As he says, if the EU wants to tax imports, that's for them to sort out. And in turn, we can set our own tariffs (preferably at zero, but that's another debate) on things we import.

In any event, EU member states and the UK, like most countries, have the concept of customs-free transit. So if goods from Country X are taken off the boat here and put straight onto another boat to Country Y, they are not subject to any UK tariffs and Country Y just treats those goods as if they had arrived directly from country X. Which would sort out most of the perceived problem.

Monday 7 May 2018

Killer Arguments Against Citizen's Income, Not (16)

Bill Bonner, with whom I agree with on most things, comes out with a KCN: "He who does not work, neither shall he eat." Yes, it's St David again, although it turns out he was just quoting St Paul.

Bill goes on to expand on this, to show how the idea of a basic income contradicts ancient wisdom,

It was an old idea, another of the precious insights, condensed and hardened – like diamonds – by time and experience. It takes work to produce food. A society that doesn’t work will soon go hungry. But since it now takes fewer and fewer people to produce the food we eat, many people have come to the conclusion that this gem of wisdom has been rendered obsolete by technology. Maybe we don’t all have to work, after all.

What Bill fails to notice, however, is that ever since mankind moved from a hunter-gatherer existence to an agrarian economy, society has supported a significant proportion of the population who have not worked, but have generally eaten rather better than the workers: the elite. This non-working elite of aristocrats and priests had been going thousands of years by the time St Paul made his pronouncement, so, unless St P was being ironic, he failed to appreciate that his was one rule for the poor, with someone else's rule for the rich. One wonders if St David's rule applied to him as well, or just the brothers.

So there's nothing new in having a proportion of the population being paid "to do nothing". It's just a slightly different stratum of society.


Former Confederate states more likely to impose death penalty.

A table in an articke at the BBC got me thinking.

The fifteen states who have executed most people since 1976 (in order of number of executions, not adjusted for population size) is as follows:

North Carolina
South Carolina

Oklahoma and Arizona didn't become states until long after 1865. They were then federal territories (proto-states) which allowed slave ownership, so the chances are they would have joined the Confederation, but we'll never know for sure, so that gets it down to thirteen states.

The thirteen Confederate states were

North Carolina
South Carolina

and possibly, depending on whom you believe,

** You are left with exactly the same list of eleven states if you remove Ohio and Indiana from the first list, and Kentucky and Tennessee from the second. Interestingly, those four states are a contiguous bloc (arranged north to south), so they appear to have swapped places.

Ho hum, coincidence, causation or correlation..?

We know that the US justice system is incredibly racist and can assume that the former Confederate states are the most racist states. So I think it is correlation, i.e. having been a Confederate state and executing a large number of people have the same common cause.

Sunday 6 May 2018

In their own words.

While googling around for something else, I chanced across an article in The Guardian:

Fionnuala Earley, residential research director at estate agents Hamptons International, said: “House prices have completely outstripped income growth.

“The biggest factor is that in the run-up to the crash, interest rates were low, so you could afford to service a bigger mortgage then.

"There was also low inflation on essentials like food, fuel, transport and utilities, so people had more money in their pockets and were able to gear up for bigger mortgages.”

Yet again, the Homeys cheerfully admit that most of the gains of economic growth go into higher land prices.

Saturday 5 May 2018

Adam Ruins Everything: Why you should tell co-workers your salary

He makes a good point here about information assymetry:

Janis Joplin "Me and Bobby McGearchange"

The first verse/chorus is in G, at 1 min 16 secs they shift up a tone and do the rest of the song in A. Funny how I've only just noticed:

Friday 4 May 2018

Killer Arguments Against Citizen's Income, Not (15)

Sobers appears to think that he can win an argument by repeating things which are not just untrue, but he knows to be untrue, from the comments here:

1) There's a difference between working because you want to (and enjoy it) and because you have to pay the bills. I don't have to work, but I do. But equally I know I don't have to so there is never the stress of having to. Its entirely different. Give people who currently have to work the chance not to, even for a slight pay cut, and many will grab it.


We are not talking about a "slight pay cut", we are talking about the loss of your entire net earnings, as you would keep the UBI either way.

With the current welfare system, the difference in net income between a low/median paid job and a full-on maximum benefit claim (if you can wangle it) is negligible.

So a UBI would be a lot less of a disincentive to work than the current system. By some twisted logic, he is claiming exactly the opposite.

A sensible UBI would be somewhere between £70 - £120 a week, similar to current benefit levels (depends on what you do with Housing Benefit). I think just about everybody would prefer more than that.

2) They are usually working in the black economy while claiming benefit, so such work is untaxed and unofficial, so not necessarily relevant to a UBI argument. Would such people take official taxed employment if they received a UBI instead of illegally claiming benefits? Maybe, maybe not. Particularly not if the marginal tax rates were higher - the incentive to continue in the black economy would be greater than today.

Kick off with a crass generalisation, which is not true.

How and whether we can collect tax from people currently working cash in hand is a quite separate topic and not relevant to the debate.

Having looked at the numbers in depth, like everybody else interested in the debate, Sobers knows perfectly well that there would be no overall increase to marginal tax rates, so I don't even know why he says that.

And clearly, with a UBI and no means-testing, the total marginal withdrawal rate would fall from 80% - 90% at present to nothing more than the basic rate of tax plus NIC (call it 32%).

Which in itself, is less of an incentive to work cash in hand.

3) While it's possible, it's not very nice, and would involve giving the State a massive control over your life.

Total and utter crap. Most parents receive Child Benefit, nearly all pensioners get a state pension, cash in the bank every month, job done.

If on the other hand you could stay exactly where you were living, and have a UBI drop into your account each month with no strings attached and no hassle of dealing with the benefit system (which is a job in itself at times), then the work/not work calculation is far easier, it comes down purely to £££ vs leisure time etc, than a complete life upheaval (which going onto the current benefits system would entail).

Somebody on welfare, whether that's £71.30 p/w Income Support or £71.30 p/w UBI has plenty of "leisure time" and is pretty much struggling at the margins. Most of them would prefer to have paid work.

4) So? My argument is that if you set a UBI too high many people will choose to live on it and stop paying any taxes, thus meaning those who do must pay higher taxes to compensate, and so on in a downward spiral.

That appears to be his Killer Argument. "If you set it too high", FFS. Nobody has ever suggested anything other than set it at a sensible/affordable amount i.e. in the range £70 - £120 p/w.

5) Again so? If loads of people stop paid work, live on their UBI and do voluntary work, the tax take again drops, and taxes have to go up on those still working, as above.


The current welfare system discourages work (paid or otherwise). A UBI is neutral about it. Ergo, with UBI more people would be in work (paid or otherwise).

My argument has nothing to do with puritan ideals, I'm not arguing that people should work for the good of their souls, I'm arguing that a UBI set too high will necessarily destroy itself. Its an entirely practical, not moral argument.

Again the "too high" mantra. This is the third time he has trotted this out.

This is a futile argument, you might as well argue against having a minimum voting age on the basis that if you set it "too high", only a few old age pensioners will be allowed to vote and if you set it "too low" then parents of young children will effectively get extra votes. Or against speed limits, on the basis that if set "too high" they will have no effect or set "too low" the country will grind to a halt.

Killer Arguments against Citizens' Income, Not (14)

In the comments to the last post on CI/UBI, Sobers wrote:

You're assuming those who currently net payers-in will continue to pay into the pot at the same level for those who are net recipients. If the amount is set at a level that allows a reasonable lifestyle (say at current benefits cap level for a family of 4) then significant numbers of people will say 'F*ck it, I'm not working 40 hours a week to get only a few £££ more, I'm going to take it easy and take the UBI and do nothing instead'.

However, once again, what we observe in real life tends to contradict how many people think human beings behave based on the prejudices handed down to them.

1) Landlords, non-exec directors, the heirs of rich parents and other people with unearned incomes still work, on the whole, even when their incomes mean that they don't have to. Some don't, obviously, but surprisingly few.

2) People are regularly had up for working when claiming benefit. Why should they risk breaking the law and being prosecuted, when they could simply adopt the attitude "I'm going to take it easy and take the dole and do nothing instead"?

3) It is possible for almost anyone to game the system and end up with enough to live on and a council house rent free, but the vast majority don't. If we are all inherently lazy, why not?

4) If the terminally lazy give up work to subsist on their CI, that means there are more jobs available for the industrious. Who wants a lazy bastard working for them anyway?

5) Voluntary, unpaid work - it's a thing!

This assertion has more to do with puritan ideas embodied in the Rule of St David, "He that does not work, neither shall he eat" than it does with actual observations of human nature or economics: the lazy should be forced to work for the good of their souls, and sod the wretched employer who has to try and wring some value out them in return for what they pay them.

Thursday 3 May 2018

YPP (London) meet up, Friday 4 May

1. It looks like nice enough weather for a Friday meet-up tomorrow.

2. We'll be at The Brewmaster nr Leicester Square from 5.20 until 6.30 or so, if you think you'll turn up later than 6.30, please get in touch or 07954 59 07 44.

Leicester Square Tube Exit 1, turn left and left again into the alleyway (St Martin's Court). We put a yellow YPP leaflet on the table so that you can find us.

3. Topic (light hearted). I missed the deadline for getting on the ballot paper for the local elections yesterday, so it was the usual toss-up between voting for UKIP or Green. I would have voted UKIP this time but they weren't on the ballot paper either, so I voted Green. For whom did everybody else vote?

"Why every estimate of UBI that simply multiplies the number of recipients by the amount received is simply wrong"

Good article by Scott Santens which save me the bother of grinding some numbers to illustrate the point.

In his example, even though the income tax rate/withdrawal rate is 40%, the actual net transfers as a % of total income are only 12.5%. The lower the initial inequality of incomes, the lower is the net transfer amount.

Includes good quotes from Milton Friedman and Greg Mankiw explaining why negative income tax and UBI come to exactly the same thing.

And while this is good fun mathematically, if you look at the UK's tax and welfare systems and how they interact and take away all the to-ing and fro-ing, overlaps, lacunas and administrative hassle, the end effect is not that far off a UBI anyway, so shifting to UBI would involve no additional net transfers whatsoever.

Wednesday 2 May 2018

Killer Arguments Against LVT, Not (440)

I did some calculations for the Labour Land Campaign a couple of years ago showing that if we replaced all existing taxes related to housing, private wealth etc with a fiscally neutral Land Value Tax, it would work out at about 0.7% of what each house is worth.

Unsurprisingly, if you can be bothered to look at actual numbers, most people's lifetime bills would not change much; it's just that taxes imposed at random intervals (SDLT, CGT, IHT) would be replaced with a small additional annual amount, it's all swings and roundabouts.

Tory head office got hold of the workings somehow, with entirely predictable results.

Squeal, piggies, squeal.

Tuesday 1 May 2018

"Based on ONS data, immigration has put English house prices up by 20% over the last 25 years"

I must admit that I have downplayed the impact of immigration on house prices and rents, clearly, it must have had some impact. AFAIAC, it's just a population increase. As we well know, even at pathetic modern UK house building rates, supply has more than kept pace with demand. The real reason is the phasing out of Georgism Lite.

Via FullFact, who link to the ONS press release concerned:

Immigration has contributed 21% towards house price growth in England, according to analysis by the Ministry of Housing, Communities and Local Government. But MHCLG also says the data doesn’t provide a complete answer and should be used cautiously. It found that income growth is the biggest driver of increased house prices.

English house prices have risen by 320% on average over this period... When factoring in inflation, according to the Consumer Price Index, the increase amounts to 137%.

People still throw this in my face when I try to explain about Georgism Lite. One cretin on Twitter linked back to the ONS figure and said, there, that proves it, it's all down to immigration.

I asked him, OK, even if the 20% figure is correct (it does seem plausible - even though FullFact do their usual and point to other research showing the impact was negligible or even negative at local level), how do you explain the other bloody 300% or 117% or however much can't be explained by immigration/population increases?

* Deafening silence*