Friday, 19 January 2018

Killer Arguments Against LVT, not (433)

From the comments at The Guardian:

KLN 1. "What happens when all land owners sell sell their property to the lowest bidder, run for the hills and the economy become non-existent?"

KLN 2. "LVT will allow rich people to live in the best areas and push poorer people out as the town develops. The well to do will live within walking distance of the local amenities - including the best schools..."

Are those two not complete opposites? Both are wrong (KLN 1 being wronger than KLN 2), but they cancel each other out.

So what's it to be, you Homey twats? The rich will sell up and move abroad, or the rich will happily pay to be in nice areas? The poor will live in slums, or poor will snap up the nicer homes which the rich abandoned?

Every now and then, the Daily Mail manufactured outrage is perfectly justified

From The Daily Mail:

A Pakistani paedophile who claimed he didn't realise it was illegal to have sex with 14-year-olds intends to use his conviction for grooming to help him claim asylum in the UK...

He now claims his conviction means he cannot return to his homeland, as anger over a recent child rape case means it is now unsafe for him.

If he gets away with this..? FFS.
What is not quite clear, is how and why it is a crime to ask online vigilantes posing as 14-year olds for sex.

You ask a 14-year old you know to be 14 for sex, you're in trouble. You ask a 14-year old you genuinely believe to be 17 for sex (because she told you and she looks it), surely that's a defence or a plea in mitigation.

Let's assume having sex with a 17-year old you know is 17 is OK. What if you have sex with a 17-year old you genuinely believe to be 14 (because she told you and she looks it)? Would it make a difference if you knew she was lying?

They tried to explain inchoate offences on the criminal law unit, stuff like "attempt".
One of the questions was, is it a crime to (attempt to) do something you believe is a crime, but actually isn't?

Or would be impossible, like sinking a ferry by firing an airgun at the hull? IIRC, they can do you for criminal damage to the paintwork, but not for attempted murder.

IMHO, it would be impossible to have under-age sex with online vigilantes posing as a 14-year old, so attempting to do so can't be a crime either. Or perhaps it is. I never understood that bit.

But hey, in the instant case, deportation would seem like a reasonable punishment.

Thursday, 18 January 2018

Indian Bicycle Marketing: Big businesses v small businesses

Bayard left a throwaway comment on a thread about Carillion a couple of days ago:

"But the govt (and the EU) ignores small businesses because we don't so as we're told, can't lobby for bungs, oops contracts, and push back against their regulationism."

Not only do they ignore small businesses, they pretend that they don't exist. "Businesses" to the government, are only large ones run by the likes of Richard Branson or Philip Green. The left wing happily go along with this myth, as the image of silk-hatted millionaire boss profiting from his low-paid cloth-capped workers suits their rhetoric so much better than the owner-operator working long hours on slender margins and even thinner profits.

Then I noticed similar comments by people I follow on Twitter:


It's interesting that right leaning libertarians I follow are saying little about Carillion. I've noticed that most of them are much more interested in topics like multiculturalism and the EU than they are about corporatism.

Capitalism needs as level a playing field as possible. The Carillion mess shows so many ways in which markets are horrendously distorted. Market Libertarians have to call out this stuff as vigorously as lefty folks do.

In fact, pro market libertarians need to be more vigorous than lefties in exposing corporatism. This is because if lefties are the only ones doing it, then people will assume that the only alternative to corporatism is socialism.

@Land_Liberty, regarding an article in the fairly hard-left Jacobin mag, headed Small Businesses Are Overrated*:

Left and right on the same hymn sheet here. “Current state of small biz poor, ergo anti-monopoly movement bad.” Nope.
This is actually another fine example of nominally left and right, for example the UK Labour and Conservative parties, both subscribing to the same basic lie, each to serve their own nefarious ends.

The Conservatives promote the Protestant Work Ethic myth, if only you work hard enough, you too could be Richard Branson, a billionaire merchant banker or the next Duke of Westminster. Labour, under Corbyn in particular, seem to throw all employers in one pot; the little bosses are as guilty as the big ones - so let's regulate them all to death.

As ever, the key is to distinguish between:
a) rent-seeking, corporatism or outright corruption and
b) proper wealth-generating businesses.

The actual size of a business is irrelevant. There is some correlation - large businesses can hold out for bail-outs and subsidies; similarly businesses which collect rent find it easier to grow - but that is not correct way of looking at it, there are plenty of gigantic corporations who do a decent job, and plenty of small businesses who live off bungs.
* The article includes a chart showing that average wages are higher in larger businesses. Which is why "small businesses are overrated".

Well duh.

It's clear that entry-level, bottom rung wages must be pretty much the same in small and large businesses. So you earn much the same in the local corner shop as at the checkout in Tesco. A car mechanic in the local garage earns the same as somebody on the production line at Ford.

Small, local businesses only have one or two levels in the heirarchy, there are the workers and the boss, the boss earns a bit more than the workers, but not much more. The larger the business, the more levels there are, and people in each level earn a bit more than in the level below, so in massive corporations, the top dogs earn (or pay themselves) a hundred or a thousand times as much as the bottom level.

Therefore, average wages in large corporations are higher than in small businesses. That's neither a good thing nor a bad thing in itself, it is just is the way it is.

Large corporations can only exist to exploit economies of scale, and those economies go into higher wages at higher levels of the hierarchy. The higher paid workers are exploiting the business' owners, rather than the other way round.

Wednesday, 17 January 2018

Schrödinger's missing beats

I haven't spotted any wonky timing in ages, but there is something wonderfully weird in a song from Keith Richard's last solo album.

Listen to the chorus at about 25 seconds in, the first "Trouble..." is on the last two beats of the bar (third and fourth), but the next "Trouble..." appears to be slightly too soon, on the first two beats (until the next bit makes it clear that they weren't, they were on the last two beats).

What actually happens is that the next bar (after the first "Trouble...") containing the line "... is your middle name" is actually six beats long, so the "Trouble..." still comes on the last two beats (in 6/4 time) but appears to come on the first two beats, if you have been tricked into splitting it into 4/4 and assume that the left over 2/4 bit is the first two beats of the next 4/4).

So are there two extra beats, or two missing beats? I'll leave greater minds than mine to debate that one.

"... because they didn't teach us about it at school." is the short answer to that.

From The Daily Telegraph, April 2015:

Why has everyone forgotten about male suffrage?

... Before 1918, the vote was restricted not simply by sex but also by property qualifications. Roughly 60pc of adult men were then entitled to vote. At the 1910 general election, 7,709,981 men were registered to vote. By the time of the 1918 general election there were 12,913,166 registered male electors in the United Kingdom.

The 1918 Act is, rightly, most famous for having brought more than eight million women into the electorate; but, for the first time, it also enfranchised more than five million men over the age of 21 without regard to property or class.

I knew that the number of men allowed to vote crept up gradually over the centuries, as the "property owning" condition became less and less onerous, but I didn't realise that universal (male) suffrage was as recent as that.

Which makes the outcomes of the 1906 election and the second 1910 election, when the Liberal Party won on a platform of Land Value Tax, all the more surprising.

Economic Myths: Local taxes

Let's refer back to the handy cut-out-and-keep guide on what makes a good tax:

I've been prompted to think about this a bit more from the various KLNs that were advanced in response to a tweet by @tomcopley.

There is this brainwashing that taxes on land and buildings are only appropriate for paying for "local" services (this is actually embedded in the German constitution, at the suggestion of the Americans).

The Homeys always start flailing about and saying that LVT is the worst way to pay for "local" services, and either a Poll Tax or Local Income Tax is better (despite those two being diametric bloody opposites, with LVT being the Goldilocks middle. Sales taxes go round the clock and start behaving more like a Poll Tax, "on closer inspection, everything becomes something else", as Steve S and I like to say).

That's actually a minor issue.

I compiled that handy cut-out-and-keep-guide on the assumption that we are looking at national taxes. National taxes which serve to reduce regional discrepancies, so the wealthier regions subsidise the poorer ones (in return for leeching off them in the first place), are surely inherently better than "local" taxes?

Think about it, Council Tax operates like both LVT and Poll Tax at a hyper-local level. Me, the wife and two kids live in a detached house in Band G, so we pay about twice as much as a two-person household in a one-bed flat across the road in Band B. So we could express this as a modest LVT (our house is worth about twice as much as a one-bed flat across the road) or a Poll Tax of £700 per person.

Whichever way I look at it, that seems fine to me if I am just comparing what we pay with what the people across the road pay.

What is not OK, is when an arbitrarily defined amount of arbitrarily defined "local" spending is to be funded out of a "local" tax.

They could replace Council Tax (which pays for a tiny fraction of "local" spending) with a "local" income tax. To get £700 per person where I live, the appropriate income tax rate would be something like 3% of local incomes (assuming no personal allowance), no biggie and I'd be happy to pay it instead of Council Tax, it's a few hundred quid either way.

To raise £700 per person from the most depressed areas of the UK, the income tax rate would have to be more like 15%.

Does that outcome not seem like madness? That higher earners in high income areas pay 23% basic rate income tax and people in depressed areas pay 35% basic rate income tax?

Try this again with Poll Tax, local LVT or local Sales Tax and you get the same answer. They are all inherently regressive.

Which is why, if you really want LVT to come into its own, it has to be a national tax.

Here endeth.

Tuesday, 16 January 2018

Some people are a bit confused

From The Daily Mail:

Last April, federal prosecutors filed charges against two men suspected of spying on the opposition People's Mujahedin of Iran (MEK) on behalf of Iranian intelligence, Deutsche Welle reported.

The Paris-based MEK is an Islamist-Marxist-feminist militant group seeking to overthrow Iran's theocratic government. Iran has blamed the group for stirring up protests earlier this month in Iran.

I know what each of those four adjectives means, and I am sure there are plenty of groups which tick two of those boxes; if you drop "Islamist" then a group which ticks the other three is plausible; going for all four is a comedy sketch.

Killer Arguments Against LVT, Not (432)

From Farmers' Weekly:

The Scottish Land Commission has been instructed by the government to investigate the tax as part of a wider piece of research on land reform issues.

The taxation would raise public revenue through an annual charge based on the rental value of land, typically levied against the unimproved value of that land, not taking into account any buildings, services or infrastructure.

So far so good, here's the classic one-liner:

Shadow rural economy secretary Peter Chapman said the prospect of such a level could be “catastrophic” for farm incomes.

Woah! His argument is totally devoid of facts - without knowing the proposed tax rate (anything between 1% and 100%) it is impossible to say what the impact will be. It could be anything between "very modest claw back of agricultural subsidies" (which average out at £40 per acre per year in Scotland, as far as I can make out) all the way up to "quite a lot".

Then we get into logic free arguments:

Andrew Wood, partner with property consultant Bidwells, said this plan would increase food production costs and put Scotland at a further disadvantage for doing business and securing investment.

Whether it increases total food production costs or not depends on whether the Scottish government reduces other devolved taxes (income tax, business rates, LBTT and Council Tax). Because of the tendency of LVT to stimulate output per unit of land, per-unit production costs will probably fall, or worst case, stay the same.

LVT has little impact on "doing business", in fact it probably helps people wanting to "do business" because it strengthens their hand against land owners who want to hold them to ransom charge them rent, and after all, it's "business" which invests, land is just there to be used.

Money for nothing...

From the BBC:

Rudi Klein, head of Specialist Engineering Contractor, an umbrella group representing suppliers to the construction industry, said Carillion outsourced virtually all its work.

He said the government knew of Carillion's reliance on sub-contractors, but continued to award the company lucrative work despite growing concerns about its finances.

"It's that supply chain who is going to bear the massive loss," he said. "There could be a large number of firms that will experience substantial financial distress."

... and presumably their chicks for free, although that is not expressly stated.

Monday, 15 January 2018

Carillion: Winners and Losers

City AM have listed the winners to save me the bother:

... Amid the chaos, however, lurk some cunning opportunists – most of whom can be found in Mayfair.

In many ways, Carillion has been the story of the short sellers. The most bet-against stock in Europe will see hedge funds share profits of around £300m between them. Marshall Wace took the biggest piece of this as shares plunged in the autumn. After it exited stage left, the fund was quickly replaced by rivals, steadfast in the belief worse was to come. Blackrock, the world’s biggest asset manager, has stuck around and still holds a chunky bet against the contractor.

Then there is a raft of advisers picking up hefty fees. The jewel in the crown would be the administrator mandate. EY is reportedly in the box seat, but pension scheme adviser PwC may cry foul, arguing its rival has a conflict given EY’s six-month role helping the company right-size operations.

But never mind the winners, back to the many losers from Carillion's decline – including, of course, the government. A decade on from the financial crisis it is incredible the state yet again finds itself under pressure to consider a taxpayer bailout of a private company, this time during a period of economic growth. Such situations imperil public faith in business and the very principles of a market-led economy, and remind us that regulators – in the financial sector and beyond – have some way to go before we can be confident that the spectre of bailouts has been consigned to the past.

As to paying hundreds of millions for "administration", sod that. All the government needs to do is send somebody round to each site where Carillion operates and tell everybody "You're working for us now, here's your new employment contract". Those people will then get onto their own suppliers and tell them to send future invoices to the Department of [whatever] and everything continues as was. It'll save the government taxpayer a fortune.

This is also another argument for deposit funded corporations - like building societies, co-operatives or partnerships, they don't have a share price, so speculators will have to find something better to do.