Nobody move or the museums get hurt!

From the Evening Standard:

Fears that Britain’s flagship museums will be forced to scrap major exhibitions after Brexit can be revealed today.

Famous names including the V&A and the Natural History Museum believe they could be hammered with import taxes, the loss of key staff and huge cuts in vital research funding.

Some think they could be forced to temporarily close their doors in the case of a botched Brexit deal...

Etcetera etcetera.

As older readers will remember, there were no public museums or galleries in the UK prior to the mid-1970s...

"Jaguar Land Rover makes loss as sales slide 13%"

From the BBC:

Sales of Jaguar Land Rover cars have fallen sharply, taking the firm into a loss for the three months to the end of September.

The firm blamed lower sales in China for the decline, as well as uncertainty in Europe over diesel and Brexit. Jaguar made a pre-tax loss of £90m for the quarter, compared to a profit for the same period a year ago.

Car makers have high fixed costs and fairly low marginal costs, so they have to make up their minds which strategy to adopt:

a) Be a mass manufacturer. You make as many cars as possible to reduce fixed costs per car, enabling you to stay price competitive.

You even out good and not-so-good years by tweaking your finance deals and 'special offers' so that you can shift the same number of new cars for the same official list price each year.

In the really bad years, the shit hits the fan... but you might be big enough to be able to haggle for government bail outs. Or you make losses for years or even decades on end (like Vauxhall/Opel)

b) Be a niche/luxury car maker. Do like Morgan, and deliberately only make half as many cars as you could sell.

That enables you to either charge higher prices in good years; or charge lower prices and have the luxury of a waiting list, taking non-refundable deposits for a place on the waiting list to smooth cash flows.

If you're only making half as many cars as you could sell in good years and demand falls by half in bad years, so what? You can still sell every unit you actually make.

Dribbling them onto the market is also good for second-hand resale values, which in turn feeds demand for new cars in a virtuous circle.
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Summary: Jaguar-Land Rover has messed up, it can't decide whether to be a niche/luxury car maker or a mass manufacturer and has got the worst of both worlds.
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Update: Sobers makes the same point in the comments, but from the point of view of the consumer.

Fun with numbers

From The Guardian:

There are three options in tackling climate change. Only one will work

We’re now at a fork in the road: either we cut out fossil fuels completely, or we pass on a dying planet to our children

A "fork in the road" usually refers to a binary choice, i.e. go left or go right. To my mind, this jars uncomfortably with the notion of "three options".

And no amount of CO2 will ever lead to a "dying planet". It'd take something like a global nuclear war to get anywhere near that.

"Australia leads the world...

... in dangerous debt".

Australian home borrowers are so in debt they will be forced to sell their properties for a loss next year in a plummeting housing market, an American banking giant fears.

With Sydney and Melbourne house prices already in a downward spiral, Morgan Stanley predicted Australians would collectively lose $700billion if they were forced to offload their real estate.

It described Australia as the world's most 'exposed' nation to a deleveraging disaster, where borrowers with little to no savings have to sell for a big loss to pay off their mortgages.

Ominously, Morgan Stanley predicted there was an 'imminent risk' this would happen in 2019 as house prices fell and credit growth slowed.

Morgan Stanley predicted Australian house prices would plunge by 15 per cent, from their peak, which would spell the worst real estate plunge since the early 1980s.

It's all a bit exaggerated, but this sort of thing is just part and parcel of Home-Owner-Ism. This is what people want. No point wailing about it now.

Daily Mail on top form

From The Daily Mail:

A British woman faces death by hanging after being charged with murdering her allegedly abusive husband with a kitchen knife in their idyllic Malaysian retirement home.

Petite Samantha Jones, barefoot and wearing an orange prison suit with the words 'Police Lockup' emblazoned across it, appeared sombre and nervous as she was formally charged with murdering husband John, 63, in Langkawi on Tuesday.

Samantha was charged with murdering her husband between 1am and 3am on October 18 at their £200,000 home overlooking paddy fields in a quiet village on the island.

"Glaring tax divide between high street and online rivals"

The Daily Mirror does cognitive dissonance.

Compare and contrast their two tables:

£100 spent on the High Street
74p goes to Treasury in Corporation Tax
£13.20 on wages
92p on National Insurance
£2.06 on business rates

£100 spent online
20p goes to Treasury in Corporation Tax
£5.74 on wages
56p on National Insurance
26p on business rates

What are they missing/overlooking?

1. In both cases, up to £16.67 goes in VAT (the worst tax of all). That's as much as all the other taxes and wages paid by High Street retailers put together, and greatly reduces the relative difference between High Street and online.

2. I am well aware that large non-UK online sellers take the piss on corporation tax, but if High Street retailers are paying 74p corporation tax at an average rate of 19%, that means that their net profits after all costs are in the region of £4 per £100 sales, which looks OK to me.

3. It ignores the amount paid in rent, which is two or three times as much as the business rates. If included, this would increase the relative difference between High Street and online.

4. They ignore tax incidence.

a) The National Insurance (second worst tax of all) is borne by workers in terms of lower wages.

b) Business Rates are borne by the landlord, so do not increase overall costs either. For owner-occupier businesses, the business rates are largely just rent on that part of the land and buildings they never paid for in the first place - the price they originally paid was depressed by one-quarter or one-third because of the likely future business rates payable.

c) Our man of the moment, Mike Ashley, is perfectly aware of this, that's why he's going into battle with Debenhams' greedy landlords and demanding they drop the rents. Having achieved that, the business rates bills will fall of their own accord, being set at a percentage of rental values.

5. It is quite probably true that large 'online' retailers pay relatively little in business rates per £1 of sales, that's because they largely trade from out of town warehouses, where the location value is low. If High Street retailers think that they can sell as much stuff for the same price by relocating to the middle of nowhere, then good luck to them. Common sense says they can sell 2% more, or charge 2% higher prices, by simply being on the High Street, so big deal.

Daily Mail on top form

Arthur Collins's father, 55, ADMITS allowing his £1million home to be used as a cannabis factory after he was caught by police during raid to find his acid attacker son

"Fancy having your piss boiled?"

... asks Thomas Hall, who emailed in this:

IEA announces winner of the Richard Koch Breakthrough Prize

The prize, supported by entrepreneur Richard Koch, sought to find the best and boldest entry outlining a ‘free market breakthrough’ policy to solve the UK housing crisis...

The winning entry proposes the ‘Land Purchase Act’ – a market-based policy that centres on how swathes of public land can be made available for people to build homes according to their own choice and preference.

The essay argues that the shortage of affordable housing in the UK has been caused by strict and outdated planning laws. Government interventions to address the issues – such as Help to Buy – have, on the whole, exacerbated the problem.

The submission makes the case for releasing surplus or underused public land to help people onto the housing ladder. Such a move could deliver as many as two million new homes, the majority of which would be built in areas where there is high demand for housing.

How the Land Purchase Act would work

• The government would enter into a contract with the occupier, who will take out a mortgage to cover the cost of building the property on the land.

• The occupier would decide on the style of house to be built. Furthermore, they would be given choice over the timescale and structure in which they gradually acquire private ownership of the land. This would include options such as paying rent for the land, purchasing the land at set intervals over time, or buying the land at a discounted rate after living on it for a set period of time.

• The Land Purchase Act would also reduce the number of planning restrictions on houses built on land made available under the policy...

Benefits of the policy

• It offers people a ‘hand-up’ rather than a ‘hand-out’ and puts them on a path to homeownership, rather than government dependency

I am thouroughly fed up with all this rent seeking crap and Brexit shenanigans, so let's cheer ourselves up...

Evening over Suffolk

They [want to] own land! Give them money!

Everything that's wrong with the Home-Owner-Ist/supply sider overlap in four short paragraphs:

We should be honest: our housing crisis is one caused by the state, by draconian planning restrictions and convoluted finance policies.

Clearly, it's not a "crisis", it's a long term thing. Even if it were, it's not actually a "housing crisis", it's a "transfer of wealth crisis". Planning restrictions have little to do with it, it's all about the lack of good locations. Simply building more homes in good locations (while being a good idea) does not increase the number of good locations, if anything, it reduces it. And how is the tortured ASI suggestion of a massive extension of Help To Buy for a limited group of people (for that is what it is) not a "convoluted finance policy"?

More state intervention in the form of rent controls, as has been suggested in some quarters, would merely help the privileged few already here at the expense of the next generation and leave us all the poorer for it.

Nope. We had rent controls/tenant protection in one form or another from WW1 until 1988. That was a key element of Georgism Lite which helped keep selling prices down, so benefitted everybody who bought prior to the 1990s price surge. Rent controls are a second best policy, but better than nothing.

A massive expansion in council-owned housing while ending the right to buy will not be a long-term solution either. Sure, you’re no longer trapped paying rent to a private landlord. But you’ve merely swapped to paying rent forever to the state. What a choice.

The "massive expansion in council housing" up to the 1970s was another key part of Georgism Lite. It is and always was hugely popular - people would prefer a secure council tenancy for £80 a week to an insecure private sector one for £200. And the government's got to get money from somewhere, charging people rent is infinitely better than collecting taxes on output and earnings from 'everybody else'.

Our housing crisis will only be fixed by freeing up the market and building more – and we will continue to call on the government to do exactly this, and build more homes where they are most needed. But we need to make better use of our existing homes too. And that starts with giving people choice.

We've done this one, see above, it's bollocks.