Wednesday, 4 January 2012

Behind enemy lines

From the BBC:

Families with children will be hardest hit by tax and benefit changes aimed at cutting the deficit, a charity (1) argues.

The Family and Parenting Institute (FPI) says the average income of households with children will drop by 4.2% between 2010-11 and 2015-16, the equivalent of £1,250 a year. Average household income however will fall 0.9%, or £215 a year, say the FPI... The figures, calculated for the FPI by the Institute for Fiscal Studies (IFS) (2), suggests much of the fall in income during these years will be due to tax and benefit changes, as well as other reasons such as falling incomes.

"This research confirms that families with children are shouldering a disproportionate burden," said Katherine Rake (3) of the FPI...

In reply the government pointed to policies that it says are already relieving the burden for families. "The prime minister acknowledged that families are facing difficult times so the government has taken practical steps to help them - cutting fuel duty, freezing council tax and cutting income tax for millions," said the government in a statement. (4)


1) Might that be a fakecharity? Why yes! I gave their accounts a closer look two years ago. But weren't Blulabour going to get rid of all the fakecharities which Nulabour set up? You might think so, as this lot appear to be a thorn in the government's side, but as I said two years ago:

We all knew that Labour would do a scorched earth policy before handing over the keys to the Tories, but they've pre-financed this particular bunch to continue the fight from behind enemy lines: of all that lovely taxpayers' money rolling in, they've tucked away £7,480,898 at the bank (balance sheet, page 15 of the accounts) to keep them going for a couple of years after Blulabour has taken over.

Their taxpayer-funded income in the years straddling the change of government, i.e. to 31 March 2010 and 31 March 2011 (see page 14 2011 accounts) was £8.5 million a year, half what it had been under Nulabour, but they still had £5.8 million cash as at 31 March 2011 to keep them going for a couple of years.

2) The IFS are pretty straight, I think we can take their figures at face value.

3) Who is "raking" it in, no doubt.

4) Totally irrelevant statement: those changes or freezes were incorporated in the figures anyway; and those changes or freezes apply to all households, not just 'families with children' (what the FPI actually mean is 'families with children on benefits').

Note also that the government is obsessed with freezing the least-bad taxes fuel duty and council tax, and claims to be reducing income tax while having massively increased stealth taxes on income such as VAT and National Insurance, which are far worse.

Reform of funding for old age care

From today's CityAM Forum:

It is easy to see why politicians want to delay reform [of the funding of old age care]. Many people believe that the state will cover the cost of care as it does with the "free at point of use" NHS. Yet the reality is different and many people only discover they need to pay for care when they or a family member enter it. It is a rare politician who will acknowledge that families have to pay for care and, indeed, that for the future system of care to be affordable contributions will have to increase.

The obvious source for contributions is the equity in assets like housing. Yet too often discussions on elderly care reforms are concerned with protecting children’s inheritances. So England persists with a system that is patently unfair, where too many people only find out they are required to pay for care in a moment of crisis. The political consensus favours people being caught short rather than admitting to the reality of hard choices.


The largest chunk of that "equity in housing" is of course not the bricks and mortar, which at best hold their value: depreciation and maintenance net off with normal price inflation. So what is the largest chunk and why? For possible answers, let us refer to two earlier articles...

March 2011: The importance of urban centres to progress – economic, cultural, scientific, social and political – cannot be underestimated. Across all continents, 23 megacities—metropolitan areas with at least 10m inhabitants—generate 14 per cent of global GDP, according to McKinsey. The world’s top 100 cities generate $21 trillion of GDP, 38 per cent of the total.

The 600 largest urban centres generate $30 trillion, 60 per cent of the total, yet house just 22 per cent of the world’s population. But what is most impressive is that the London urban zone is the world’s third largest by GDP, beaten only by Tokyo and New York.*


November 2011: The US’s share of population in larger metropolitan areas rose from 30 per cent to 55 per cent from 1951-2009, focused in suburbs. Relentless long-term decline saw our metropolitan areas’ population share fall 22 per cent from 1951-2009.

In the first part of the 2000s, almost 1m people left our large cities [in the UK]. Only high immigration prevented serious declines in population. This matters, as larger cities improve worker productivity. A meta-analysis found a doubling of urban population raises productivity about 6 per cent. So someone going from a town of 50,000 to a city of 800,000 raises their productivity 25 per cent – and vice versa.


* Well duh, London pop. 7.8 million, Tokyo 12.8 million, New York 8+ million.

Tuesday, 3 January 2012

China takes one small step towards solving over-population crisis

From The Telegraph:

China has declared its intent to send a man to the moon, aiming to become the first nation to reach the lunar surface since the last American mission in 1972...

Bob Crow does irony

From today's CityAM:

COMMUTERS returning to work today have been hit by yet another hike in rail fares, after the average ticket price rose by 5.9 per cent with the new year, sending season tickets rocketing...

The fare increase on Transport for London services levels out at an average of 5.6 per cent, lower than was expected due to an extra £136m secured by mayor Boris Johnson from the government. The Tube, which carried a record 1.1bn passengers last year, will see its fares climb by an average of six per cent...

Transport trade union RMT’s general secretary Bob Crow called the price hikes "daylight robbery on the tracks" with "fat profits for the train companies while the public pay through the nose."


From The Guardian, three months ago:

Tube drivers in the capital will see their pay go over the £50,000-a-year mark under a four-year wage deal negotiated between London Underground and union leaders... Under the deal, staff will get a 5% pay increase this year followed by RPI inflation plus 0.5% in the subsequent three years.

Industry sources said that if RPI inflation stays reasonably high, some tube staff will receive a pay rise approaching 20% by the end of the settlement period... The RMT said the issue of a payment for working during next year's Olympic Games in London was separate to the four-year wage deal.

General secretary Bob Crow said: "We saw major movement from LU and we now take this improved offer back to our local reps. In these days of austerity we have shown … trade unionism is the best defence from attacks on jobs and living standards. I doubt you will find a better offer than this anywhere else in the public sector."

Monday, 2 January 2012

I'm from the European Central Bank and I'm here to help.

Most Western films are really about rent seeking

JT and RA set the hare running in the comments to an earlier post about Fiat Currencies In The Movies, so just to summarise...

1. The underlying theme of Western films set pre-1850 or thereabouts is usually white settlers versus Red Indians (aka Native Americans), and the underlying theme of those set post-1850 is usually about established white settlers/small holders fighting off Large Evil Businesses, such as railroad companies, mining companies or property developers (sometimes they are about white settlers fighting off outlaws, but as like as not, said outlaws are in the pay of the LEB's).

2. See e.g. Once Upon A Time In The West, Heaven's Gate or Pale Rider. They used exactly the same basic plot in Nowhere To Run, which is a Western in a modern setting, and property developers are the stereotypical baddies in modern children's films such as The Borrowers or Hannah Montana: The Movie (" there is a firm battle developing with the residents of Crowley Corners and a team of developers who are planning to destroy the meadows and build a shopping mall on the site"). The final bit of Miss Potter follows the template as well.

3. There were a couple of documentaries on television recently which fit into the overall scheme:

a) The one about Abraham Lincoln says that before the Civil War, he was not so much anti-slavery or pro-emancipation (that was later forced upon him by events) but anti-slave, i.e. anti-Negro. He assumed that because all the land had now been appropriated, there was a limited pool of money left over available for wages of labourers and that it was better for the poor white Europeans to earn these wages than for the rich landowners to import even cheaper labour from Africa (again, whether he was subconsciously anti-landowner or just racist or a bit of both was unclear).

b) The one about Wyatt Earp said that all the fighting and tension in Tombstone was between the middle class urban people/farmers and the cowboys, who were the lowest of the low, as they had turned up too late to be given any land for free and led a semi-nomadic existence carrying out acts of brutality on behalf of the big landowners who employed them. Earp himself was just a lawman of no particular political views, but we see the same as with Lincoln, it's not clear whether the real struggle was against the landless minions of the large landowners or against the landowners themselves (one of the people whom Earp shot dead was such a large landowner).

4. So, in movies as in real life, whether the baddies are Native Americans, slaves, cowboys or large landowners (railroad and mining companies are of their very nature large landowners), all these battles are about land ownership and not just land but rents; there was no danger that the disorganised cowboys would obtain title to land by terrorising the townsfolk of Tombstone, but by so terrorising, they certainly depressed the rental value of the land. This is the Faux Libertarian contradiction: no, we don't want the government restrict our actions; but yes, we do want the government to restrict the actions of others because, er, we were here first.

5. The key scene in Once Upon... is where Cheyenne asks what is so bloody important about the dry acre of land to which the heroine's murdered husband had staked a claim and which the evil railroad company is trying to prise off her by fair means or foul. Charles Bronson's character explains patiently that because of the topography, the acre is in the likely path of the coming railroad, and because of a nearby river or spring, it happens to be exactly in the right place for building a train station.

OK, replies Cheyenne, what's so important about a train station?

Bronson then explains the concept of agglomeration. Once the station is built, that is the best place to build an inn (the murdered husband already had an inn sign carved) or to have the post office. It's also the best place to build shops, because the goods can be picked up straight from the station, so other settlers will want to live near the station; those who live further away will visit the shops, post office and stay overnight at the inn; the existence of the station (built at the railroad company's expense and ultimately funded by its passengers) is enough to trigger a whole new little town, and once the town is built, the land will be worth millions. 6. In other words, the murdered man merely wanted to steal a march on the railroad company and collect all these rents for himself by staking his claim where he did. He had ordered enough timber for the first few buildings, so effectively, he was trying to blackmail the railroad company and they get their own back by killing him, which triggers a further cycle of violence.

In the film, the railroad company is portrayed as the baddies, because they employ the more violent minions, but in economic terms, they are as bad as each other. More to the point, the LEBs who are called upon to play the baddies in film after film are clearly rent seekers, they want to make easy money by owning certain locations or mining rights, but aren't the heroes in these films fighting for the same thing, i.e. rents?

7. To what extent all these Western films represent what actually happened, I do not know, but there must be some truth in them. Now, as a thought experiment: what would have happened if the Founding Fathers had followed Tom Paine's sage advice (in turn based on what Queen Elisabeth had actually done for real in England two centuries earlier) and stopped these rents falling into competing private hands (which is what triggered all the unpleasantness) by having the government collect them, spending a little on things which enhance rental values (i.e. law enforcement, irrigation, railroads, whatever) and dishing out the rest as a Citizen's Dividend?
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UPDATE (for my own future reference), there's also a scene in "The World's Fastest Indian" where Anthony Hopkins' neighbours complain that he never mows his lawn and this depresses property values. The only film which shows the downsides of new infrastructure, i.e. the negative impact on land values elsewhere, is "Cars". The cars live in a sleepy little town on the old Route 66, which has been dying off since the new interstate was built.

Fun Online Polls: Make up your own question & How much money is there in the world?

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

Make up your own question...

Kim Jong-Il - 40%

Osama Bin Laden - 12%
Donald Neilson 12%
Colonel Gadaffi - 8%
Other, please specify - 28%


The winning questions were:
UKIP Webmaster: Who is no ronger ronery in herr?
John Pickworth: Whom would you like to marry?


And the winning 'Other' was:
Richard Allan: Justin Bieber
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Just to see whether everybody was paying attention (see recent posts here or here), this week's Fun Online Poll asks "Taking assets and liabilities into account, how much 'money' is there in the world?"

Vote here or use the widget in the sidebar.

Grant Shapps doesn't do logic

From the BBC:

Plans to make it a criminal offence for council tenants to sub-let their homes are to be unveiled by the government. A consultation will also detail plans to force thousands of tenants earning £100,000 or more to pay market rates. An estimated 160,000 tenants sub-let their homes, which is not currently an offence...

Housing Minister Grant Shapps said: "For too long this country has turned a blind eye on the multi-billion pound problem of housing tenancy fraud and abuse. This year the coalition is determined to end that scandal. Why should someone on a six-figure income enjoy a fantastically subsidised council rent, whilst those in real need languish on the waiting list? And why is it so easy to get away with sub-letting your council house at market rent and simply pocketing up to £1,000 a week at taxpayers' expense?"


From Dash 24, two weeks earlier:

The housing minister Grant Shapps plans to increase the cap on discounts for council tenants to buy their homes to £50,000, while pledging to replace every sold home with a new affordable one. Mr Shapps said the restrictions on discounts over the past few years have made Right to Buy (RTB) meaningless in many parts of the country, with fewer than 3,700 sales last year compared to a peak of 84,000 less than 10 years ago...

This will mean, for example, that someone in the West Midlands who had been a tenant for eight years on an household income of £20,000 could buy their £90,000 flat with a discount of £50,000 compared to £26,000 previously - effectively doubling their discount. In London, a tenant for five years buying a flat worth £160,000 would also receive a discount of £50,000 - more than three times the previous cap of £16,000.


So, to recap...

- 160,000 tenants sub-letting their council houses and making a handsome profit (because council house rents are lower than market rents) is A National Scandal, but

- allowing (say) 84,000 tenants a year to lock in an extra £50,000 profit by allowing them to buy their council houses at undervalue, as well as 'up to £1,000 a week' rental income by subsequently renting them out is... what, exactly?

Or to turn that into a question, if subletting council houses at a profit of 'up to £1,000 a week' is being done 'at taxpayers' expense', is selling off council houses for a discount of 'up to £50,000' not also something being done 'at taxpayers' expense'?

Sunday, 1 January 2012

Licence To Kill

There's a scene early on in the James Bond film which was on telly today, one of the two with the best James Bond actor ever, where James Bond and an FBI agent drop a corrupt US cop into a shark tank, and for dramatic effect, James Bond throws a suitcase with $2 million cash after him (we assume that the bills are destroyed).

The $2 million had been given to the cop as a bribe by a criminal, and the cop had in turn tried to bribe James Bond and the FBI agent with it. They were on US soil at the time (I think) and so the cash was proceeds of crime and the correct procedure would have been for the FBI agent to seize the money and hand it back to the US Treasury or the IRS or something.

The FBI agent shakes his head and says words to the effect of "It's a shame about the money though."

James Bond doesn't have a snappy answer to this, but if he knew anything about fiat currencies, his snappy answer would have been something like this:

"Yes, strictly speaking, we should have handed that money back to the US Treasury, but by destroying it in this way, we have achieved exactly the same thing.

Don't forget that dollar bills are merely IOUs issued by the Treasury - while they are in physical existence, they constitute a financial asset in the hands of the bearer and a financial liability on the Treasury. So by physically destroying them, we have released the Treasury of $2 millions' worth of liabilities.

As any bookkeeper will tell you, being released from a $2 million in liabilities is exactly the same as being given $2 million in assets. So apart from imposing on the Treasury the modest cost of printing up new bills with a face value of $2 million, we have in fact done the right thing.

Think about it!"

"We're fighting for cows who died"

Spotted by JuliaM in the Daily Mail, but the original version in the Peoria Journal Star is better:

In October, a grisly accident occurred outside the west-central Illinois town of Cambridge. A truck veered off Interstate 74 and flipped onto its side in the median. Four passengers died inside the vehicle, while two others wandered into the roadway, only to be fatally struck by a pair of cars. Police never revealed the final resting place for the victims. My guess is, a slaughterhouse or backyard barbecue.

See, the slain "passengers" were cows. No humans were seriously hurt. And if you think I'm making a big deal of nothing here, then you don't see eye to eye with People for the Ethical Treatment of Animals. Leaning on a little-known law [aka Tina's Law], PETA wants the state to erect a memorial in honor of the six cows. Ditto for 16 cattle slain in a wreck in May outside Chicago.

"We're fighting for cows who died," says PETA's Tracy Patton...

Tina's Law says "only a qualified relative of a deceased victim" can request a sign. It doesn't exactly explain what "qualified" means, but IDOT spokesman Josh Kauffman says the law implies people - as in relatives. So PETA is asking the state to waive that requirement.

"There's no surviving relatives in the meat trade, which sends millions of cows kicking and screaming to the slaughterhouse," says PETA's Patton.

I didn't know cows scream. Still, I can't imagine there's a statutory loophole big enough to allow cow monuments, regardless of PETA's stunts.