Monday, 31 August 2009

And you thought the Tories won't be as bad as the other lot ...

From Sky News, Sunday Live

CHRIS ROBERTS: Labour at the moment are promising, and there is a big announcement on this coming up I think this week, that every young person aged between 16 and 24 who has been out of work for at least ten months I think it is, will be guaranteed a job.

THERESA MAY: What they are going to do is guarantee them a place in training or in work of some sort for a short period of time. Now what we want to do …

CHRIS ROBERTS: So it’s a con are you saying?

THERESA MAY: Well no, what I’m saying is I hope it won’t be, I hope that what it will be is something that will help those young people then get in to sustainable work.

CHRIS ROBERTS: So what could you guarantee all those 16 to 24 year olds, how many of them, 17% of them out of a job isn’t it, something like that?

THERESA MAY: Yes, well one of the things we’d do for example is introduce a 100,000 new apprenticeships each year, that would be providing opportunities for those young people. We would set £100 million aside as a fund for the NEETs, the young people not in education, employment or training, specifically to be supporting them to get them into the work place.

How on earth is the government, of whatever party, supposed to "introduce apprenticeships"? They seem willing to chuck another £100 million of taxpayers' finest at it, but wouldn't it make a bit more sense to take a step back and look at what caused the problem first?

1. The whole welfare and tax systems are geared up to discourage this sort of employment, i.e. you lose Child Benefit (£13 a week for second and subsequent child) and Child Tax Credits (up to £43 a week) and the Education Maintenance Allowance (up to £30 a week) unless your child is in a certain narrowly defined type of training, which makes the whole exercise pointless for a proper NEET from a low income or workless family.

2. Maybe "apprenticeship" will be on the list of jobs which don't make you lose these benefits - in which case I see massive opportunities for fraud. Why not have apprenticeships in shelf-stacking or table-wiping? If the employer knows the market rate is £120 a week but if they fill in all the forms properly, they can get away with paying £34.

3. The whole PAYE system and Elfin Safety malarkey discourages employers from taking on low paid employees, of course, but for low paid apprenticeships, the actual tax wedge is probably not that big.

3. I suppose we ought to mention immigration at this stage - the wages that e.g. East Europeans are prepared to accept is often lower than what native Brits demand, firstly because they look at the value of those wages in terms of what they can save up for and buy once they return home; and the wages that native Brits demand are inflated by the fact that basic welfare is so generous and so harshly means tested, that as a rule of thumb, you have to earn at least £15,000 gross to be better off taking a job.

4. And right now, the immediate problem is that we are in a recession and unemployment is rising anyway, and until they are prepared to be honest about the root causes of the recession and deal with them accordingly, there's not much point tinkering with "apprenticeships".

Just sayin', is all.

Sunday, 30 August 2009

G-Force in 3D

We went to see this this afternoon, it was really nice feelgood family film.

I recommend it lukewarmly to all and sundry.

The money-go-round: QE in practice (2)

I've expounded on quantitative easing at length, but what it boils down to is commercial banks and government departments shuffling numbers on bits of paper (or on computer screens) around between themselves with little or no impact on the wider economy*.

An article in the FT, which is not easily available online sums it up:

In the UK, for example, nearly £140 billion has been injected into the economy through central bank purchases of government bonds and corporate assets, mainly from the commercial banks.

However, since the QE project was launched on March 5, a lot of this money, which in theory should be used by the commercial banks for lending to businesses and individuals has ended up at the Bank of England in reserves. Commercial bank deposits have risen from £31 bn in early March to £152 bn** at the end of July - the latest figure."

So all the commercial banks do is to swap one bit of paper saying "Government bond" for a bit of paper saying "Deposit with the Bank of England" (exactly the same as you paying cash into an account with a commercial bank); the Bank of England ends up with a new asset (a Government bond) and a new liability (the deposit from the commercial banks - don't forget that the depositor has an asset and the deposit taker has a liability) which net off to £nil; and the Debt Management Office no longer has to repay the commercial banks when the Government bonds mature, but another department in the Treasury (i.e. the Bank of England) instead. You can treat the two departments as one, for these purposes, actually, which makes it even easier to understand.

* Why do the commercial banks do it? Partly because the Bank of England is overpaying slightly (they must be - otherwise commercial banks who preferred cash to Government bonds would just sell them in the open market); and partly because commercial banks are prepared to forego the slightly higher interest rates on Government bonds compared to deposits with the Bank of England (the differential is about three per cent per annum, let's say) because they fear that the massive increases in Government borrowing that that have been promised (which is an entirely separate issue and nothing to do with quantitative easing as such) is going to depress the value of existing Government bonds by more than three per cent per annum.

This has little or no impact on the amount that commercial banks are prepared to businesses and individuals (net mortgage lending was a bare £1.6 billion last month), because the real-life commercial risks of doing so have not been reduced one iota.

** So £140 billion has been 'spent' and £121 billion has been deposited straight back with the Bank of England. Presumably the other £19 billion belonged to foreign investors who have shifted the money abroad.

Saturday, 29 August 2009

Victimhood Poker: The World Series gets off to a flying start!

Ross has a closer look at the Malaysian government's decision to prevent Muslims from attending a Black Eyed Peas concert.

Fun Online Poll Results & that Dutch lass who wants to go sailing


In last week's Fun Online Poll, a surprising 44% of respondents said they were angered and repulsed by the reception given to al-Megrahi on his return to Libya, with 56% saying they weren't (there wasn't a middle option or a "don't know/don't care" option). I personally don't see what there is to be particularly upset about, but hey, that's why I ran the poll.
Rantin' Rab got a decent debate going on the topic of whether it was right for the Dutch authorities to prevent Laura Dekker* from trying to sail round the world single handed at the age of 13 or 14. Those who commented (including me) seemed to agree that she should be allowed, on the basis of "What's the worst that can happen?"

So that's the topic of this week's Fun Online Poll, "Would you allow Laura Dekker to try and sail round the world single-handed?".

Vote here or use the widget in the sidebar.

* Whose father and mother are no doubt known as 'Desmond' and 'Blackand'.

Ask a silly question ...

Growler asked "... are there further outrageous policies that could be implemented [to reflate the house price bubble]?". I replied as follows:

"Yes of course. The Red and Blue Wings of the Home-owners' Party have between them cooked up various proposals, which are (he said, exaggerating ever so slightly, but nothing is impossible):

1. Exclude main residence from Inheritance Tax (discourages downsizing and holding cash or shares)
2. Freezing or even reducing Council Tax.
3. Subsidies for people on "fuel poverty"
4. Cut interest rates to nil.
5. Make it nigh impossible for borrowers to be repossessed via legal system.
6. Outright mortgage subsidies (on top of zero interest rates)
7. Increase Stamp Duty threshold to boost selling value of smaller homes.
8. Absolute stop to new developments (All Hail The Hallowed Greenbelt!) and restrict supply by keeping a third of finished units off the market (aka "affordable housing for key workers")
9. Unlimited mass immigration.
10. Freeze or reduce TV licence fee.
11. Housing associations and councils to buy up part-finished homes for above market value.
12. Soft loans to home-building companies to avoid "fire sales".
13. Paying out billions in rent subsidies to private tenants (Housing Benefit) to keep rents and hence house prices up.
14. Charge rental income to lower rates of tax (no National Insurance and 10% wear and tear allowance, for example)
15. Capital gains exemptions for second homes, even if an MP says it's his or her main home.
16. Increase income tax, national insurance and VAT to make housing, in relative terms, an even better investment.
17. Allow pension funds to invest in residential property (largely tax free).
18. Give even more tax breaks to Real Estate Investment Trusts to suck money into the commercial property market.
19. Allow EIS companies to invest in commercial and residential property (like it used to be when it was called BES)
20. Reintroduce MIRAS."

True UK public sector debt is more than four times our GDP

Brian Gilbert has totted up all the different bits and pieces here.

I'd argue that the bulk of the bank bad debt guarantee is not at risk; that the QE figure is double counting and that it's unfair to include future Basic State Pension payment (because you can match it with future tax receipts) but never mind - that would still only get us down to three times GDP, which is one heck of a figure.

Friday, 28 August 2009

Lost in translation?

The BBC says:

The son of Libyan leader Colonel Gaddafi has insisted no deals were linked to the compassionate release of the convicted Lockerbie bomber.

The Daily Telegraph says:

Col Gaddafi’s son, made it clear that in all business talks with Britain, the release of al-Megrahi was always ‘on the negotiating table.’


I've crept up from 48 to 26 in this illustrious list.

Pluck a number out of the air and then treble it

From the BBC:

Protecting societies against the impacts of climate change will be much more expensive than previously believed, according to a new analysis.

In 2007, the UN climate convention came up with a sum of $49 - $171bn per year. The new report says the UN sums omitted important factors and the true cost will be two to three times higher. Developing nations want [to blackmail] rich countries to provide major sums for adaptation as part of the new UN climate deal due to be agreed in Copenhagen in December.

PS, I love the caption to the picture:

"Some fear that a shortfall in the Asian monsoon is linked to climate change."

If there is a shortfall in the Asian monsoon, then that is climate change, surely, and not just linked to it? A more fitting caption might have been: "Some people believe we can influence the weather by turning back the economic clock two centuries. Others believe we can influence the weather by wearing garlands of flowers and sitting in rain butts."

The Henry North London Blog

Posted at the request of Henry North London:
"To all my usual readers, I wish to apologise that my blog is currently down for maintenance. There are other reasons too but I cannot discuss them currently. The blog will be back for business after Sept 26th at the latest.
In the mean time read my posts on National Death Service or the Libertarian South East Blog. I wish all my readers well and this is akin to why Nightjack was shut down so you will appreciate why I have had to take such drastic measures. Rest assured that all the posts still exist and that you will be able to read again in a month's time.
Henry North."

Signs that you spend too much time 'blogging...

When you read a story like this and you immediately think of him

Who says the Tories won't be as bad as the other lot?

For the benefit of everybody who has watched Benefit Busters and realised that it is a huge great scam to make it look as if something is being done about unemployment while achieving nothing whatsoever and lining the pockets of whomever it is who owns and runs the 'provider', A4E Limited, there's this from the BBC:

Ms May said the [government's] proposals were not radical enough and said the Tories were committed to reassessing all existing incapacity benefits claimants. The Tories want a bigger role for private firms and voluntary organisations to provide advice and support to the long-term unemployed.

As JuliaM said, "... just paying them the dole money would be cheaper. If you want to get people back into work, ensure the jobs are there and then cut down on the money. That'll do the trick."

Thursday, 27 August 2009

Benefit Busters (2)

Oh G-d that programme is depressing.

To take a step back, in my normal working life, I deal with HM Revenue & Customs. We know what we send in and we know what comes out again. If you take individual cases, there is very little logic and although we have little idea of the inner workings, on the basis of the thousands of tax returns and letters we send in, and thousands of responses we receive every year, we can somehow piece together what triggers what and are constantly trying to hone our tax returns and letters in such a way as to make life easy for our clients.

OK. Let's apply the same deductive reasoning to A4E. The two main 'stories' in this evening's episode, which plenty of you will also have watched, were Mark and Sherrelle, who seemed keen to work, and were indeed helped into work, but were both made redundant again within four weeks (it appears that Mark ended up out of pocket overall). We also know, as a matter of fact, that A4E have signed up to a £700 million contract with HM Government over the next four years to do whatever it is that they do and that A4E receive £100 for every week that one of their 'clients' attends their back-to-work classes, plus another £x00 for everytime they get somebody into a job.

So A4E have, on the face of it, every incentive to get people into short term jobs; often with the same employers (one of A4E employers boasted of having done so) just long enough to trigger A4E's £x00 bonus; for the employer then to make those people redundant again; and for the Job Centre to then send the very same people back to A4E for yet another round of lucrative (from the point of view of A4E) back-to-work classes.

Just for the heck of it, let's mention David Blunkett's consultancy role, that's always fun.

Just sayin', is all.

The Waste of Money Eventually Pays Off

JP here, seeing as people often think I'm Mark. Just revealed to me today I have the luck of visiting the (£470 million) Scottish Parliament to watch Question Time then meet my MSP. Her name is Cathy Peattie, from her voting record I'm guessing she's a Leftie and I get to meet her and ask her questions. Google her and you'll get some info.

Anybody got any ideas what I can ask? She's Labour by the way.

[Bonus/final round] Victimhood Poker: The World Series

In case of a tie-break (see earlier post), the bonus/final round will be based on a very finely balanced snippet, such as this.

The president of Mali has announced that he is not going to sign the country's new family law, instead returning it to parliament for review. Muslim groups have been protesting against the law, which gives greater rights to women, ever since parliament adopted it at the start of the month. President Amadou Toumani Toure said he was sending the law back for the sake of national unity.

Muslim leaders have called the law the work of the devil and against Islam. More than 90% of Mali's population is Muslim. Some of the provisions that have proved controversial give more rights to women. For example, under the new law women are no longer required to obey their husbands, instead husbands and wives owe each other loyalty and protection.

One side holds the cards for 'African traditional culture', 'Islam' and 'group rights'; the other holds the cards for 'Feminism/women's rights', 'Modernity/Rule of Law', 'International Human Rights' and 'Oppressed Minority'. I reckon even Joseph Harker would struggle here.

[Masterclass] Victimhood Poker: The World Series

In case you're struggling for inspiration, here's a masterclass from The Metro:

A UN expert says Australia breached Aborigines' rights during a crackdown on child abuse in Outback communities.

The UN special rapporteur on indigenous human rights, James Anaya, said the country breached international obligations on human and indigenous rights by imposing radical restrictions on Aborigines during the crackdown.

He said his 12-day fact-finding tour of Australia revealed that the Aboriginal minority still suffers from "entrenched racism." But he said he was particularly concerned by restrictions imposed on Aborigines in the Northern Territory in response to a 2006 government-commissioned report that found child sex abuse was rampant in remote indigenous communities. The government suspended its own anti-discrimination law so it could ban alcohol and hard-core pornography in Aboriginal communities and restrict how Aborigines spend their welfare checks. The restrictions do not apply to Australians of other races*.

"These measures overtly discriminate against aboriginal peoples, infringe their right of self-determination and stigmatize already stigmatised communities," Anaya told reporters in the national capital of Canberra.

The measures were too broad and had been imposed for too long, despite a lack of evidence that the ban on alcohol had reduced alcohol abuse, he said. Anaya described as "demeaning" the policy of forcing Aborigines to set aside a portion of their welfare checks for essentials such as food and rent. "They have to carry a card around that marks them as someone who can't manage their own funds," he said..

* The flipside of this is e.g. Malaysia, a predominantly Muslim (and increasingly Islamic) state, where the government allows non-Muslims to drink alcohol, but not Muslims. What does Mr J Anaya have to say about that? How is that any different? Clue: The Australians are "racists" and the Malaysians are "protecting their own religious and cultural identity".

[Place your bets now] Victimhood Poker: The World Series

OK, here are the rules:

1. Read the basic rules. NB, these are the US rules; you may have to adapt these rules slightly for UK consumption.

2. Write an article in the style of Joseph Harker (a regular at comment-is-free) analysing one or both of the snippets below (either in or out of context).

3. Post the article on your own 'blog (if you have one) and link to it in the comments; if you don't have a 'blog, just leave your submission as a comment.

4. Bonus points will be awarded for keeping a straight face and for explaining why group 'rights' trump individual 'rights'. Double bonus points if you can sneak in a reference to Mary Seacole or Caster Semanya.

5. The winner will be selected by Fun Online Poll.

Snippet A (beginners): Muslims have been banned from a Black Eyed Peas concert next month because the event is organised by Guinness, an official said Thursday. The prohibition comes amid a clampdown on alcohol consumption among Malaysia's Muslim majority. A Muslim woman who drank beer in public was sentenced to caning by an Islamic court last month, though authorities this week agreed to review the penalty.

Snippet B (advanced): Councillor Pat Richardson... claimed Mr Ramjanally was breaking the terms of the hire agreement at the hall and the leaflets also highlighted this. She added: "The main concern is that everybody else adheres to the terms of the hire agreement. There are issues with equality, yet the prayer group is men only. Christian groups use the hall but they are mixed. There are no exclusions."

Cannabis related deaths up by nearly two thousand per cent in five years: shock

From The Times, 20 January 2004

A WARNING about the toxic effects of cannabis was issued last night after a 36-year-old man became the first to die as a direct result of smoking the drug. Lee Maisey, 36, who smoked half a dozen "joints" a day, was found dead on the living room floor of his home in Summerhill, Pembrokeshire, after complaining of a headache. Michael Howells, the Pembrokeshire Coroner, recorded the cause of death as cannabis poisoning...

From The Metro 26 August 2009:

Heroin and morphine deaths rose from 829 to 897 from 2007 to last year*, while the figure for cannabis went up from 12 to 19.

* That's totally misleading as well. Last time I checked the figures, there were roughly equal numbers of deaths involving (illegal) heroin (about 300,000 users) and (legal) methadone (about 30,000 users). Figures from memory, so don't quote me on that.

UPDATE: I looked at the numbers a year ago; heroin-related deaths outnumber methadone-related deaths three-to-one, but the ratio of users is indeed ten-to-one.

Cocaine safer than alcohol: shock

From The Metro:

The number of people being killed by cocaine has soared by a fifth in just one year, official statistics have shown. There were 235 deaths involving the class A drug in 2008, up from 196 the year before and up by half since 2004... As many as 1million people, half of them aged between and 16 and 24, are said to take cocaine. Prices have fallen to £40 a gramme from £77 a decade ago...

Drug deaths remain dwarfed by those from alcohol, put at nearly 9,000 in a year.

OK, what's safer, statistically speaking: something used by a million people that is "involved" in 235 deaths (which is slightly different to "killing", natch), or something used by half the population (30 million people) that is "involved" in 9,000 deaths?

Clue: 235 x 30 = 7,050

Life copies satire

Ed Balls, in a guest post over at Ross, yesterday:

The first group of young people to have been entirely educated under Labour pick up their GCSE results today. After they have found someone to read the results out to them they will find that more young people are succeeding than ever before.

The Daily Mirror, today:

A desperate mum will today read her son his GCSE results ...

Nannies in a tizz

From the BBC:

People are drinking more alcohol by "stealth" because of the stronger drinks on the market, an analysis of consumption in the UK suggests.

The amount of alcohol consumed per person has risen by 10% since 2000 - despite drink sales remaining steady. Researchers Mintel said wines and lagers were becoming stronger and people were unaware of the changes.

It comes as latest figures show a third of men and a fifth of women* drink more than the recommended daily limits. The NHS recommends a limit of three to four units of alcohol per day for men, and two to three units for women...

Yadda, yadda, blah, waffle, I'm sure you get the picture. My personal highlights from that crock of shit are these two claims:

"Consumers have limited information to help them make healthy choices about their alcohol consumption" Don Shenker, of Alcohol Concern

I was at a barbecue recently where a Japanese lass stared fascinatedly at my beer can and told me that in Japan, beer cans were not covered in little charts, tables and warnings telling you how much alcohol is in it and how much, when and where you should and shouldn't drink.

The report said the changes were likely to be down to the stronger drinks that were on sale. The alcohol content of wine is now normally around 13%, while in the past it would have been closer to 11%. Premium 5% lagers were also becoming more popular.

The clue as ever is in the name - "Premium" lager. Given that every can or bottle of drink is plastered with charts, tables and warnings (see above) anyway, I think all but the daftest punter knows that when he (or she) pays a few pence extra for "premium" lager that they're doing this (at least in part) because it is stronger. Or do Alcohol Concern genuinely believe that drinks manufacturers are doing this as part of some evil plot?

* I'm not sure where they get that from. Seven months ago they claimed "Over a third of adults in Britain drink over the recommended daily amount at least one day a week, figures show." A fifth is a lot less than a third, n'est-ce pas?

Wednesday, 26 August 2009

Victimhood Poker: we have a winner!

Far be it from me to fisk CiF articles (fish, barrel, yawn) but JuliaM has uncovered a corker (in the comments to my previous post).

In response to the whole "it's not fair for Microsoft to doctor a publicity shot that has been staged for one target market to cater for another target market" debacle, some cheeky chappy at CiF has come out with this:

There are those who say it's natural for a multinational company to gear its adverts towards the countries it's targeting. And, yes, if they were promoting themselves in African countries they might have an all-black cast...

Of course, this begs the obvious question: how would cheeky chappy respond if a Polish company had doctored an all-white picture originally intended for their domestic market to include a few non-white faces to cater for the UK or US markets?

PS, I trust you are all au fait with The Rules Of Victimhood Poker (scroll down to The Ace).

PPS, Giles Coren, Times restaurant critic and descendant of Jewish emigrés from Poland reckoned that the Poles are stupendously anti-Semitic, which, hilariously enough and in an actual not a parallel universe, earned him a kicking from, er, The Graun. How so? Well, just go back to The Rules Of Victimhood Poker (US rules) and you will see that 'Hispanic' (which translates roughly as 'Polish' in the European rules) counts as a Jack, but 'Non-christian' (which includes 'Jewish', either under US or European rules, thus ranking below 'Muslim' but above 'Christian') only counts as a Four. It's easy, once you know the rules!

PPS, a cursory reading of the relevant chapter in Martin Gilbert's A History of the Twentieth Century seems to confirm that murders of Jewish people continued even after 1945, so methinks Giles might have a very valid point here.

The internet never forgets ...

Re Pavlov's Cat's comment here.

I think this is the previous example to which he refers.

Fun Online Poll Results & do you agree with Gordon Brown?

In last week's Fun Online Poll, seventy-nine per cent thought that A-levels were easier than they used to be; ten per cent thought they weren't and ten per cent didn't know (I'm not sure where that missing one per cent went). The final result was: Congratulations! You all passed!
The Goblin King has finally muttered something about being "angered and repulsed" by the reception that al-Megrahi received in Libya. This week's Fun Online Poll is to see how many of you agree with him. Vote here or use the widget in the sidebar.

Outbreak of commonsense in Argentine

From the BBC:

The Argentine court ruled that: "Each adult is free to make lifestyle decisions without the intervention of the state."

Supreme Court President Ricardo Lorenzetti said private behaviour was legal, "as long as it doesn't constitute clear danger... The state cannot establish morality."

More PC publicity shot tomfoolery

It appears that even the mighty Microsoft is no match for the humble News Shopper.

UPDATE: the BBC have published both versions of the picture.

Reader's letter of the day (2)

From today's FT:

Sir, Those who criticise the release of Abdelbaset Ali Mohmed al-Megrahi should rack their brains to recall an incident that occurred some five months prior to the bombing of Pan Am Flight 103 (Lockerbie's fallout, Editorial August 25).

This was the downing of Iran Air Flight 655 by the USS Vincennes. The US Navy warship was in Iranian territorial waters when it launched its surface to air missiles. All 290 civilians on board the airliner died. The captain of the Vincennes, William C. Rogers III, was subsequently awarded the Legion of Merit by President George H.W. Bush.

Yugo Kovach, Winterborne Houghton, Dorset, UK.

Reader's letter of the day

From yesterday's Metro:

So the Americans aren't happy about the Scottish government's release of Al Megrahi on compassionate grounds. This is even though he may be innocent of the Pan Am Flight 103 Lockerbie bombing in 1988.

There is also reluctance in Britain to hand over an English man who suffers from Asperger's syndrome to be [extradited and] tried for hacking into the Pentagon's computers.

Well, perhaps US diplomats based in London should settle the £3.5 million they owe in congestion charges. On the other hand, the British ambassador's staff in New York could refuse to pay tolls to pass in and out of Manhattan Island. They could smash through the barriers like scenes out of the A-Team and Police Squad and claim diplomatic immunity after the event.

Sorry, Mr Obama and Mrs Clinton, but I don't think the special relationship is quite so special any more. The end.

Paul Haskell, Surrey.

Tuesday, 25 August 2009

Debt for equity swap of the week

From The FT:

Debt markets were given a significant confidence boost on Monday when Santander, Spain’s largest bank, launched a programme to buy back securitised bonds with a face value of ($23.6bn).

The deal, believed to be the biggest of its kind, is expected to help stabilise some debt markets by setting a floor for prices for securities that are often hard to value. The bank said in a regulatory filing that the offer covered 27 different issues of bonds backed by mortgages, consumer credits and business loans. The deal comes as Santander, in a separate deal, moves to replace more than 30 different debt securities with two new issues. In both cases, the aim is to profit from depressed pricing in the secondary markets...

Although offering as little as 61 per cent of par value on some bonds in the latest proposal, Santander is likely to have pitched a few points above current trading values, making the offer attractive to institutional investors under pressure to mark their assets to market. In June, Rabobank of the Netherlands bought back €986.5m worth of residential mortgage backed bonds at a discount.

The key to all this is that the bank are only paying 61% of 'par value' or 'face value' or 'nominal value'. In other words, as at today's date, the bank's balance sheet shows a 'debt' of €16.5 bn, but the bank only has to pay €10 bn to get rid of it once and for all. That gives a handsome book profit of €6.5bn, which, being profit, is added to their 'equity' (i.e. shareholders' funds) and so improves their capital adequacy ratio.

I doubt sorely whether the bank can afford to redeem these in cash, so of course it has to raise another €10 bn from somewhere. But as it is buying back/redeeming 'securitised' bonds (i.e. the holders thereof now realise that they are of dubious value) and replacing them with 'normal' bonds (which will be worth something approaching par value) it can still crystallise a profit.

Either way, they have converted €16.5 bn of debt into €10 bn of debt and €6.5bn of equity, which is all good stuff from the bank's point of view.

H/t Flintster1994

Monday, 24 August 2009

This one will run and run ...

We all had a fulsome chuckle back in June when the EHRC threatened the BNP with an injunction unless it changed its rules to allow non-white members. My view being, whatever the rights and wrongs of this are, how many non-whites would want to join the BNP anyway?

It appears that the ECHR have no sense of logic or even irony and are determined to go ahead with this attempt to make utter idiots of themselves and guarantee the BNP loads more free publicity/sympathy.

PS, UKIPWebmaster alerts us to this fine article on Action 4 Employment Limited.

Nice bit of blackmail ...

From the BBC:

Representatives of 10 African countries are meeting in Ethiopia to try to agree a common position on climate change, months before a crucial UN meeting.

They are expected to renew demands for billions of dollars in compensation for Africa because of damage caused by global warming. And they are likely to ask rich nations to cut emissions by 40% by 2012. African nations are among the lightest polluters but analysts say they will suffer the most from climate change. BBC science reporter Matt McGrath says the move to agree a common negotiating platform for Africa recognises the continent's failure to make its voice heard on the debate...

Delegates from powerhouses South Africa, Nigeria* and Kenya are among those expected to attend. They will discuss a suggestion that developed countries should cut emissions by at least 40% by 2020, and that richer nations should provide $67bn (£40bn) a year to help the least well-off cope with rising temperatures.

* Ahem, maybe Nigeria could make a start by shutting down its oil wells?

Misleading juxtaposition of the day

From the BBC:

Smoking a shisha pipe is as bad for people as smoking tobacco, the Department of Health and the Centre for Tobacco Control Research has found.

People who smoke shisha, or herbal tobacco, can suffer from high carbon monoxide levels, its research revealed. It found one session of smoking shisha resulted in carbon monoxide levels at least four to five times higher than the amount produced by a cigarette. High levels of carbon monoxide can lead to brain damage and unconsciousness.

While it is indisputably true that high CO levels can be very harmful or fatal, if you read that second paragraph in one go, it might make you think that smoking can lead to sufficiently high CO levels to cause such damage, which is, frankly, complete bollocks.

Sunday, 23 August 2009

Citizen's Income & Housing Benefit

One common objection to replacing the entire Welfare State with a flat-rate Citizen's Income/Citizen's Pension system (i.e. every legally resident British citizen gets the sum of £x in cash every week, depending on age/disability, which would be non-contributory, non-taxable and non-means tested) is that the amount would have to be very high to be enough to cover housing costs, which would make it too expensive, a gripe shared, interestingly enough, by right-wingers and left-wingers, rather than my suggested starting figure of £70 per week for adults (£35 for kids, £140 for pensioners) which would cost a lot less than the current Welfare State.

That's missing the point. Housing and Council Tax benefit (total nominal outlay about £18 billion a year) can be neatly divided into two chunks;

Chunk 1) Two-thirds of that goes to social tenants, so it counts as an expense to the DWP, but counts as income for local authorities. So that's not really an expense at all. Rather than the over-complicated system whereby local councils have two departments to chase social tenants for rent and council tax and another two departments sort out Housing Benefit and Council Tax Benefit, which are savagely means-tested (withdrawn at a total of 85% of your post-tax income, which includes Tax Credits, natch), even in the absence of a CI-style scheme, it would be much better to scrap rent/council tax for social tenants and give them a PAYE code with a higher rate of tax. I calculate that a rate of about twenty per cent would be revenue-neutral.

We can then do a more honest appraisal of the true cost of social housing, as we can easily identify the extra PAYE collected by HMRC and councils/Housing Associations can identify their running costs. It appears that social housing runs at roughly break-even, or possibly a small surplus. With a reduction in means-testing from 85% to 20%, more social tenants are likely to work and hence the surplus would increase.

Chunk 2) One-third is paid to private landlords. This is anathema to me, of course, as it is a subsidy to private landlords. It would be far better for the state to scrap it forthwith and take that £6 billion a year, gear up a bit and use the money to build more housing for the 1.6 million families on council house waiting lists. Private rents would fall, of course so after a year or two, there'd be hardly anybody on the waiting lists and we'd have an extra million units of social housing. The average revenues would be more than enough to cover interest and running costs, so we've saved the taxpayer £6 billion a year, reduced rents for private tenants and kept a bit of a lid on house prices (which would go down if rents went down).

Quite what happens from here on in is a matter of conjecture of course - my view being that the private land market is so savagely rigged in favour of incumbents, for whom strict planning restrictions are a one-way bet (and an easy way for politicians to win votes), the state ought to just keep going. If the economy is growing at three per cent a year, why shouldn't the number of homes be increasing at three per cent a year (i.e. three quarters of a million homes)?

As long as private rents are significantly above twenty per cent of local incomes, there'll be demand for social housing, so we can just keep building it - a volume of 250,000 new units a year would be quite enough to give every young couple household the opportunity to move into a new home, for example*. And if more people are in state-owned housing, their average incomes would increase, so the tax rate could fall to maybe as low as ten per cent, which would in turn keep private rents and hence house prices down.

There, I've said it.

* Sure, the state is not particularly good at running housing - they're rubbish at evicting nuisance tenants, for example, but there's nothing to stop them sub-contracting that to private or mutual organisations with a profit motive; and sure, there will be more and less desirable housing, which can be allocated by charging a premium for the nicer homes, which again will help reduce the marginal tax rate and so on. That's all details, and different areas will try different things until we work out in practice what's best.

Saturday, 22 August 2009

Harry Potter and The Half-Blood Prince

We finally got round to seeing this film today. I normally take a great delight in going to see films that have had mediocre reviews just for the fun of being able to say that they were pretty good actually, but in this instance, the critics were right.

My main gripe being - bearing in mind I've read all the books a couple of times and seen all the films a few times and found that they were usually very faithfully and imaginatively translated to the big screen - that this time, they took a fairly long and complicated book, chose a dozen scenes at random (missing out some of the most important ones and including a few irrelevant ones, including two scenes that weren't even in the book*), filmed each scene in loving (but slightly inaccurate**) detail and sort of tacked them together into a half-way bland overall hodge-podge.

The best bit is fairly early on, when Luna Lovegood admits to Harry, "I sleepwalk. That's why I wear shoes to bed". I'm not sure that was in the book either, but at least it made me laugh.

* Neither the first scene, in which dementors (?) attack the Millennium Bridge, nor the scene halfway through in which Bellatrix Lestrange and Fenrir Greyback attack the Weasley residence in the middle of winter and then run off through a corn-field** where the corn is still standing eight foot high (or maybe it was a wheatfield, either way, that stuff would have been harvested months before then), were in the book nor do they advance the plot.

** In the book, Tonks rescues Harry from the Hogwarts Express; in the film Luna Lovegood rescues him. In the book, the baddies have to fight their way down from the astronomy tower; in the film they just sneak off. The Weasley residence appears in one or two of the earlier films and is in a copse or near a wood; in this film it's in the middle of a cornfield with nary a tree in sight. Why?

You can take drug legalisation too far ...

From the BBC:

NZ votes against child smack ban

Friday, 21 August 2009

[Dilemma] Whom do you trust less ...

... the UK Government/NHS or the World Health Organisation?


Pavlov's Cat draws our attention to the gloriously PC photo' accompanying a News Shopper article on local A-level results:

[Modest] Outbreak of commonsense in Mexico

From The Metro:

Mexico has relaxed its drug laws, allowing people to possess small amounts of cannabis, cocaine or heroin for personal use.

Free government treatment for drug addicts is also promised under new regulations that come into force today. The law sets out maximum "personal use" amounts for drugs, also including LSD and methamphetamine. People found with no more than the limits allow will no longer face criminal prosecution - but if caught for a third time will be forced into treatment.

Under previous law, possessing any amount of drugs was punishable by stiff jail sentences, but there was some leeway for addicts caught with smaller amounts.

But Bernardo Espino del Castillo, from the attorney general's office, said in practice no one was prosecuted and sentenced to jail for small-time possession. "We couldn't charge somebody who was in possession of a dose of a drug, there was no way, because the person would claim they were an addict," he added, "This person obviously couldn't be charged, not yesterday, not the day before, not a year ago, but the bad thing was that it was left up to the discretion of the detective, and it could open the door to corruption or extortion."

Officers sometimes hauled suspects to police stations and demanded bribes, threatening long jail sentences if people did not pay.

"This is not legalisation, this is regulating the issue and giving citizens greater legal certainty for a practice that was already in place," Espino del Castillo added.

The maximum amount of marijuana considered to be for "personal use" under the new law is 5g - the equivalent of about four joints. The limit is half a gram for cocaine, enough for about four lines, while the other restrictions are 50mg of heroin, 40mg of methamphetamine and 0.015mg of LSD.

Today I shall be mostly ...

Clicking this

Homelessness charities

Causes and symptoms thereof differentiated here.

Thursday, 20 August 2009

Benefit Busters

I'm off to watch this programme now, just to see what we taxpayers are getting in return for the £123 million we pay to Action 4 Employment Ltd every year.

Fun with numbers

Number of people who die from 'flu in the UK each year: 6,000 on average

Number of people who have died of swine 'flu in the UK so far: 59

Number of people who have died of something else after being misdiagnosed with swine 'flu in the UK so far: 5

One rule for UKIP, one rule for them ...

From the BBC:

The Liberal Democrats broke electoral rules when accepting donations from a south London MP's son, it has emerged.

Jonathan Kramer, son of Susan Kramer, MP for Richmond Park, donated more than £1,300 to the Liberal Democrats between December 2008 and March 2009. But the party was forced to repay the money when the Electoral Commission discovered Mr Kramer was not registered to vote in the UK. Parties can only accept donations from those on the electoral role [sic]...

Parties have 30 days to check whether donations are permissible or return them - something the Lib Dems failed to do. Legal action against the party was not necessary because the money was repaid as soon as the error was pointed out, the Electoral Commission confirmed.

Fun Online Poll Results: NHS and A-Levels

Seven per cent thought that NHS spending, in cash terms, had gone up by half, with the remainder evenly split between 'doubled', 'trebled' and 'quadrupled'.

This handy website confirms that cash spending has in fact trebled since 1997. In 'real' terms (adjusted for inflation) it has doubled and in 'real real' terms (adjusted for GDP growth) it has gone up by two-thirds (from 5% to 8.4% of GDP).

So now you know. But is the service two-thirds better than twelve years ago? Does anybody know?

I see that our traditional annual A-level result debate has broken out again, so that's the topic of this week's Fun Online Poll. Cast your vote using the widget in sidebar.

Be afraid, be very afraid ...


FakeCharity Fun

RR emailed me to ask whether Reprieve are a fakecharity.

Their website is absolutely textbook fakecharity template, with the tabs for "Home", "About us", "Our work" and "Get involved". It doesn't have the tabs for "Careers" or "Our partners" but hey. Interestingly, it doesn't show their registered charity number (so presumably they were using a beta version or something).

We can ignore the annual report on their website as it does not go into enough detail. Their full accounts are available on the Charities Commission website.

'Donations' (Note 2 on page 21), total £328,480, include an 'anoymous' donation of £200,000. Hmm. As the tax reclaim amounts to about 22% of the total income, that means the charity must be reasonably certain that said donor is an individual with a personal UK income tax liability of at least £56,410. Hmm. So either they play fast and loose with procedures, or he's not 'anonymous' at all.

'Incoming resources from charitable activities' (Note 4, page 22), total £633,388, include £30,000 from the Foreign Office (ker-ching!). However, the largest single source of income was £194,481 from the 'JEHT Foundation'. "Who are they?" you may ask, well, I've no idea, so let's a do a quick Google and find out...

Right. That source of income will have dried up, then.

Wednesday, 19 August 2009

Innumerates & economic illiterates of the day

I accept this is fish/barrel stuff, but hey. From The Daily Express:


NEARLY two-thirds of council housing tenants get all their rent paid by the taxpayer, it was revealed last night.
Make up your minds, is it 60% or 66.66%?
The massive benefits handout – largely to households where no one has a job – is costing hard-working middle-income families a total of £10billion a year. That is the equivalent of £476 every year for every privately-owned home in Britain...
The £10 billion headline cost to the DWP is meaningless of course, as this money gets paid straight to local councils as rent who then have it deducted from their Whitehall grants, thus reducing the amount that the council receives from the taxpayer ... so it's just different branches of the government shuffling money around between themselves. The true cash costs are the actual running costs of those units, repairs, insurance, interest etc, not the headline figure, which is covered by the rent that the other 40% pay (who don't claim Housing Benefit). Let's not debate the notional costs, that's too complicated for now.
Figures reveal there are now three million households living in publicly-owned homes whose rent is funded through housing benefit.

Matthew Elliott, chief executive of the Tax- Payers’ Alliance, said: “This is a shocking figure and a massive financial burden on taxpayers. Ordinary families are struggling to put food on the table and keep a roof over their own heads without the ever-growing benefits culture. More must be done to cut the number of people living at taxpayers’ expense, and wherever possible a fair rate should be charged for social housing.”
So he didn't spot the logical flaw either, which is typical of the TPA.

And if 'ordinary families' are so envious of those living in council housing for free, they can always pack in their jobs and put themselves on a waiting list, can't they? It's not the sort of lifestyle I'd choose, but hey, each to his own.
Average incomes of council tenants have plummeted since the early 1980s when the majority of people living in local authority accommodation were in low-income jobs and paid their own rent. Between 1981 and 2006, the proportion of social housing tenants in full-time employment fell from 67 per cent to 34 per cent.
Well duh, if two-thirds of social tenants were in work in 1981 and half of social housing has been sold off since then (not just under the Tories!) to the better-off poor who could afford a mortgage on the heavily discounted price, it stands to reason that the fraction goes up, simply because the same number of unemployed is being compared with a smaller number of social homes. I accept that they probably sold off less than half, but the point still stands (all the Afghanistanis and Somalis probably make up the balance, of course).
Critics claim that Labour’s benefits policy has destroyed incentives to work for many families living in deprived areas, leaving them dependent on handouts and public housing.
Again, duh, the only people who take welfare reform seriously are proponents of a Citizen's Income-style system. The welfare state as it stands has developed piecemeal over the decades and was largely unaffected by changes in government, i.e. the system now is not radically different from what it was in 1997. Worse, yes; more expensive, yes; radically different, no.

We then get the bleating from the Housing Associations that we covered a couple of days ago, and finally:
A spokesman for the Department for Communities and Local Government recognised some housing associations were concerned about a possible cut in their rental income. He said: “We are consulting on proposals which will protect housing associations from a drop in rental income of more than two per cent.”
Protect = give them more taxpayers' money, of course.

Foot, shot.

Oh dear, they can't help helping themselves, can they? Or at least trying.

More Citizen's Income queries:

Matthew in the comments here said:

The problems I foresee are two. First is that people's needs just aren't very similar, and some people will just need more and as Sobers says that immediately brings back form filling, inspectors, admin, etc (1). Also regional differences will present problems with no housing benefit - of course people can move away from London (2), and aggregate housing costs will decline a bit, and it will encourage them to get jobs etc, but these things will either be slow or limited in their effect. I'd probably keep a type of housing benefit (3).

The major problem though is political acceptability. The headlines about people getting something for nothing, families with 10 children (4) spending it all on fags, blah, blah. And of course anyone who earns more than about £17,500 will get (net) nothing after taxes, and it that will be extremely transparent, won't help "Assault on middle classes". (5)

Of course this will mostly be nonsense, but that doesn't stop anything. Which means the only real chance it ever has of being implemented is the first term of a landslide government. Nothing in 1997, I fear 2010 is the last chance then until about 2023. (6)

(1) Then get a job, just like anybody else. The CI payments continue whether you are working or not and there is no means-testing, so there is no disincentive to take on a job, however low-paid or short-term.

(2) I don't believe in London weightings, it just adds fuel to the fire and ultimately makes life more expensive for people who live in London, so requiring an even higher London weighting ...

(3) Most Housing Benefit claimants are in social housing, so that can be dealt with by scrapping rents/Council Tax for social tenants and giving them a PAYE code with a [twenty per cent] higher rate of tax; the extra PAYE then gets reallocated to the local councils in which social tenants live.

And to hell with Housing Benefit for the minority of claimants who live in private rented accommodation, which is not only a subsidy to property ownership but a massive incentive for fraud and distortions - it's far cheaper to build more social housing (which is a break-even at worst) than to pay Housing Benefit to private landlords.

(4) I'd restrict Child Benefit to the first three children per mother.

(5) As Ed says: "Would the transparency of this system not be an advantage in selling the idea to the middle classes? Plus the fact that they will benefit most if the current income tax+NI is replaced by a flat rate 30% income tax."

(6) Let's pencil in 2023, then, shall we?

Bayard asked: "CI is just an extension of Child Benefit. How much Child Benefit fraud is there?"

Answer: next to nothing. The amount paid out is ever so slightly less than you would expect by multiplying the number of children by the legal entitlement. And the administration costs are barely measurable as it is nearly all paid directly into bank accounts.

[New Zealand] Cow attack

It appears that cow attacks are 'going global'. From New Zealand we have this:

A jogger feared for his life during an attack by a cow in a popular Auckland park that left him with a broken arm and extensive bruising. A morning run through the farm at Cornwall Park, on One Tree Hill, has been part of Ted Walker's routine for almost 15 years.

But the Greenlane resident never expected to be attacked by a full-grown cow protecting her calves. While running through a paddock on July 26, he passed a cow who had recently given birth to two calves. She knocked him to the ground, kicking and head-butting him.

"I was absolutely terrified and scared witless," he says, "I thought it was all over. I quite literally thought she was going to kill me."

Sienna's air miles

Having been in Ibiza last week, she was today snapped in New York.

Tuesday, 18 August 2009

Stupendously, breathtakingly outrageous Tory lies of the week

From ConservativeHome:

A new report (1) by the think-tank [Policy Exchange] puts the actual number of Britons out of work and living on benefits at 5.96 million - somewhat different from the official tally of 2.44 million, according to the latest figures. Policy Exchange calculates the figure based on the number of those of working age living off the following benefits:

1.58 million on Jobseeker's Allowance
2.6 million on incapacity benefit and the new Employment and Support Allowance
736,000 on lone parents' benefits
400,000 on carers' benefits
363,000 on disability benefits
182,000 on other income-related benefits
95,000 on bereavement benefits

It also reminds us that the cost of the benefits system has risen from £93 billion in 1997 to £193 billion today (2), all of which will present a considerable challenge for an incoming Conservative Government if elected next year...

Shadow Work and Pensions Secretary, Theresa May, said the report demonstrated the urgent need for radical welfare reform:

"These figures plainly show ­Labour's complete failure to get to grips with our welfare system. Too many people have been abandoned on out-of-work benefits and now sadly the recession has made their situation even more desperate. The Government should adopt Conservative proposals for bold, radical welfare reform (3) to help these people and their families before it's too late."

Mrs May gave a speech identifying the principles underpinning the Conservative approach to welfare reform ... (4)

(1) "New report"? Jesus wept! These statistics have been freely available from the DWP for years!

(2) This tricks you into thinking that the six million people they speak of cost £193 billion, which would equate to about £32,000 each, which is patent bollocks. The £193 billion figure includes old age pensions (twelve million recipients) and Child Benefit/Child Tax Credits (ten million recipients) and various other bits and pieces, of course.

(3) Hey, here's a truly bold, radical idea:

Lets scrap all the tax breaks that are supposed to 'alleviate poverty' like the personal allowance and tax breaks for pensions savings, which 'cost' well in excess of £100 billion, chuck it in the pot with the £193 billion and replace the entire welfare/pensions system with a Citizen's Income scheme (kids £35 per week; adults £70 and pensioners £140, for example) which would 'cost' £233 billion or so.

This would completely end absolute poverty; the poverty trap; the couple penalty; opportunities for fraud; the massive bureaucracy (in both public and private sectors) and so on, and we could then use the handsome 'saving' of £60 billion a year to scrap higher rate tax and Employer's NIC so we end up with a flat tax income tax of 30%-ish, for example, heck knows what the corresponding boost to the economy and employment would be...

(4) Feel free to follow the link to her speech, it's badly thought out paternalist/authoritarian drivel at best ...

Michael Moore - Prick

I do enjoy his films, but only to laugh at him. He is an obese, rich, white American, whom on many occasions has SLATED capitalism, in particular middle class white Americans. What a hippie-crite. Many of you may remember his almost autobiographical Stupid White Men.

Capitalism: A Love Story.
Now a new film about... CAPITALISM! I wonder how much he'll make from it?

Outbreak of commonsense at HM Treasury!

CityUnslicker linked to this article, Northern Rock Defers Payment of Subordinated Debt Coupons (which does what it says on the tin).

I did a bit of digging and uncovered this even better article of two weeks ago, UK government plans a great escape from Northern Rock, the upshot of which is that, as I have been saying since NR first went *pop*, the government can sort out the banks out at nil or negligible cost to the taxpayer by applying the logic of "debt for equity swaps". What these boil down to is that losses are first offset against shareholders' funds, and once these are used up, the next wave of losses is borne by bond-holders.

Happily, there is a pre-ordained, contractually agreed heirarchy as between bondholders, so there's not much to wrangle about. The losses are therefore shared out between 'reckless borrowers' (via higher interest rates, repossessions) and the 'reckless lenders', i.e. those who were willing to accept the highest risks in return for the highest possible rewards (being shareholders and 'junior' bondholders).

Another cow attack ...

Continuing my occasional series, from the BBC:

A farmer who was trampled by his herd of cows after they stampeded when a fire engine siren apparently startled them has died in hospital...


From Wikipedia:

In 2001, Uttlesford was voted as the best place to live in England, in a survey by the Sunday Times newspaper. A range of factors, including housing costs, quality of schools, and low crime contributed to the overall result. Uttlesford has recently been found to be The Healthiest Place to Live in the UK, due to the relatively low level of obesity problems in the area...

In May 2006, a report commissioned by British Gas showed that housing in Uttlesford produced the highest average carbon emissions in the country at 8,092 kg of carbon dioxide per dwelling. In response the council stated "We try and lead by example but there is nothing else we can do to get people to save energy".

Causation, correlation or coincidence?

Emailed to me by MA.

Yeah, like that's going to happen ...

From The Metro:

Millions of housing association tenants are being asked to forego an expected rent reduction to help avoid a shortfall of new properties.

The National Housing Federation (NHF) has warned that even a small drop in rental income could see thousands fewer new homes being built as services get squeezed. Rent rises for tenants are linked to inflation measured by September's retail price index (RPI). It is expected to fall to minus 1.7% for July and remain around that level for some time to come.

Ruth Davison, NHF campaign director, said the impact of a 2% reduction would cut the number of homes that could be built next year by 4,000 at a time when nearly five million people were waiting for council homes. "This is bad economics and bad politics," she told The Times...

Monday, 17 August 2009

More pots, kettles

As I pointed out a while back, London taxi drivers are keen to restrict supply of taxi services because it enhances their own earnings, which is why cab licences trade at a premium in the grey market.

Along come the Elfin Safety brigade, who want to restrict supply by limiting taxi drivers' working hours, and all of a sudden the taxi drivers are up in arms.

Funny, that.

Drug driving

They showed the ad on Channel 4 just now, see e.g. here. According to the voiceover, the police can see whether a driver has been taking drugs, because taking opiates constricts your pupils and smoking cannabis dilates your pupils.

To cut a long story, a good way to avoid detection might be to take equal measures of opiates and cannabis.

What can possibly go wrong?

Pots, kettles

From the BBC:

"One hundred public figures have joined a pressure group's campaign for a High Pay Commission to curb "excessive" pay, amid concern over high City salaries.

Politicians, as well as unions and academics, are backing the centre-left Compass group's campaign for steps such as maximum wage ratios and bonus taxes. Chancellor Alistair Darling said he was ready to curb bonuses if necessary.

Media reports suggested Barclays was seeking to hire five JP Morgan bankers with bonus deals totalling £30m. Seperately, the Times on Monday said Barclays paid million of pounds to its head of Barclaycard, Anthony Jenkins, for a role that never came to fruition. Barclays declined to comment on both reports.

Barclays has not benefitted unduly from the taxpayer-funded bail-outs, so I'd suggest that their pay structures are none of the government's business. As to the bonuses paid by government-backed banks, I'd suggest that the problem is the government backing, not the bonuses.

The group urging for control over pay issued a joint statement, which said the "unjust rewards" of a few hundred "masters of the universe" exacerbated the risks to which the British economy was exposed. The campaign's backers include Liberal Democrat Treasury spokesman Vince Cable and Labour MP Jon Cruddas, who argue that high levels of pay and bonuses led to the financial crisis.

The campaign compared the wage levels of the highly-remunerated to those of employees who worked a 40-hour week earning the minimum wage. It argued someone earning the minimum wage would have to work for about 226 years to receive the same annual pay as a FTSE 100 boss.

Tee hee! And how many years does that person have to work to earn as much as MPs can claim each year as Second Home Allowance? About two?

If we are to focus on those people who earn high salaries at the taxpayer's expense, shouldn't we be looking at MPs, all the heads of quangos, Town Hall fat cats and organisations like the BBC?

Adding insult to injury ...

"We are pleased that both Ms Blake and her daughter are well and healthy." said a spokesman for Leicester Royal Infirmary, who refused to send an ambluance when Ms Blake went into labour, as a result of which she gave birth on the pavement in front of the hospital, having had to walk there.

Sunday, 16 August 2009

A few more people who appear to have understood the NHS debate

I am generally pretty despondent about the standard of the debate between politicians, and in most of the MSM and even large parts of the 'blogosphere, as most people appear to think that there is a stark choice between a "free at point of use" State-monopoly NHS and a US-style system (that by all accounts appears to be just as awful, except for different reasons), while completely overlooking the vastly superior models in other European countries (and many other places in the world), the key to these being a complete separation of the 'funding' and 'provision' sides.

I'm happy to say that I stumbled across a few more people who have grasped this basic point, and hence addressed each issue separately today.
Nigel Sedgwick kicked off his comment on a fairly indifferent post on the Adam Smith Blog with this:

On the issue of the NHS, there are at least two very important and entirely separate questions.

Firstly, there is the issue of whether we should have a universal welfare system for healthcare (beyond just accident and emergency). With such a welfare system, payment is made as currently in the UK, through taxation according to income, with equal benefit accruing to every resident citizen (and to many other residents beside), irrespective of income and of tax paid.

Secondly, there is the question of whether that healthcare should be provided through hospitals run entirely by central (or other) government, or whether there should be an insurance based system (as with current private healthcare) with hospitals run privately or by charities (and perhaps also by government), with patients freely choosing which hospital to use...

And follows this up with his own very sensible suggestions and illustrations of how it could work, and how similar systems work in other countries.
Charlotte Gore had this to say:

The real debate comes into the nitty gritty of who runs the hospitals and employs all the doctors and nurses. It’s here we’ve got room for manoeuvre to make the NHS better. For example, why does the state need to run all the hospitals? The answer is that it doesn’t. The chapter on health care in the Orange book made a very compelling case for an insurance model, where each individual treatment is paid for by medical insurance and the money goes to whomever the patient chooses to carry out the treatment for them - rewarding good efficient hospitals and seeing to it that the people running bad hospitals get fired.

You can have multiple insurance providers competing with each other - in fact that’s almost certainly essential. You can have private hospitals, too. All of them can be private, in fact. The difference is the state would only get involved to subsidise people’s insurance premiums when they can’t afford to pay them.

In other words, you can radically change the way medical treatment is provided without removing the basic ‘universal, free at the point of use’ element. The rewards from such changes are obvious - the cost of medical care should come down and the quality of care should go up. If we look at the Singapore model and the Dutch Model we can see how these sorts of systems do deliver better outcomes...

I'd mark her down for the idea that the state would only subsidise insurance payments for lower income people; that smacks of means-testing to me, a particularly spiteful form of taxation on anybody who does their bit to stay out of poverty - such payments should be universal or not at all, but apart from that, good stuff.
Finally, Subrosa Blonde went into some detail on how the German system works (and why it's better):

There are those who say '[The NHS is] an entity admired the world over', what nonsense. Which other country has adopted the British system of healthcare? None. If it was so admired surely there would be at least one or two.. Let's get one fact straight; it is not free, but free at the point of delivery. It is paid for by NHI contributions from those who work and further subsidised by the treasury (taxpayers)...

I doubt if many who 'love the NHS' have ever had the (mis)fortune to use the healthcare system of any other European country because if they had, they would realise the NHS is failing in many ways and it is by no means perfect. We have some of the worst results for the treatment of cancer and heart disease in Europe and we (parts of Scotland in particular), have the worst results for longevity. Other countries have similar social problems yet they provide better healthcare.

In Germany for example, blood test results are usually available within 24 hours. My GP here tells me to telephone in a week. There is no extensive waiting time for specialist appointments in Germany where 90% of the population contribute towards around 1,000 semi-private, fiscally independent, sickness funds (only 10% use private commercial insurance). The premiums are calculated on an 'ability to pay' basis and joining a fund is compulsory...

The NHS is Britain is now nearly 10% of GDP, a similar figure to Germany. So often we hear that the present problems within the NHS are caused by the increasing elderly in our population: 15.5% of Germany's population are over 65 with the UK's just slightly higher.

I have used the example of Germany because I have experience of their healthcare system and its quality. It still surpasses the best Britain can offer by way of results and it is not as expensive as the figures bandied around by politicians. It is not my intention to suggest we adopt the same system as Germany or any other European country, but we need a debate about healthcare...

Billions of pounds have been poured into a healthcare system in past years and we see little improvement by way of results. Of course we have some shiny new hospitals but it is the treatment which matters. If we want the treatments that produce the best results, we have to look and listen to those who work in our system, medics and nursing staff - they know what is needed, not politicians. It is the job of politicians to decide the best way to fund a system without interfering in the running of it.

I'd mark her down for suggesting that National Insurance contributions (about £80 billion a year) pays for the NHS (cost > £100 billion a year), because aren't National Insurance contributions also supposed to pay for old-age pensions (about £70 billion a year)?, and for the fact she doesn't seem to emphasise that all health providers in Germany are competing (on quality rather than on price, of course).

Sure, apart from GPs and small practices which are owned privately, German clinics and hospitals are usually owned by insurance companies (particularly health insurers), by local councils, universities, trade unions, churches or charities, but they are still competing for the same patients, and that is the main thing.

Fun with numbers

An article in The Times last week contained the following statement:

... five-year survival rates for prostate cancer in America are more than 90 per cent, compared with just over 50 per cent in Britain — at least according to the 2008 Concord study.

Here's a reader's letter rebutting it:

Sir, Chris Ayres (Commentary, Aug 13) cites prostate cancer survival rates to demonstrate the superiority of the US healthcare system over the NHS. A better comparator is death rates from prostate cancer, which are 322 per 100,000 in the US and 254 per 100,000 in the UK (OECD Health Data, 2004).

The higher survival rate from prostate cancer in the US is a function of the more extensive use of PSA screening there than in the UK. The value of PSA screening is debatable but it results in the detection of many cases of prostate cancer that would not in any event lead to death, and so shows higher survival rates...

Ian J Hartill, Chandler’s Ford, Hants.

I suppose the best way to envisage this is to imagine that [exactly the same number] out of 100,000 men in each country get the disease, half the time it would be fatal (without treatment) and half of the time it wouldn't be fatal.

The Yanks love going to the doctor for check-ups, so all their cases are diagnosed, including the non-fatal cases, which increases the average life-expectancy of all men who are known to have the disease, but not that of those with the fatal type disease.

We Brits on the other hand don't like going to the doctor, especially if it involves having something shoved up our bums. So the disease only gets diagnosed if it's more serious, which by definition is more likely to kill you.

So the 'survival rate' (from the first excerpt) is indeed lower in the USA (as it includes considerably more non-fatal cases) and the number of deaths attributed to the disease is lower in the UK (because it excludes those men who just grin and bare it and then die without ever being diagnosed).

Saturday, 15 August 2009

Killer arguments against LVT, not (21)

Anonymous asked "So who puts a value on the land and what size of official army is required to deal with rises and falls on the market value and appeals?"

To which I replied (numbered footnotes added as afterthoughts):

"So who puts a value on the land?"

HM Land Registry's computer can do it, as they know plot sizes, recent selling prices and ownership (1). All they then have to do is average it out over small geographic areas (postcode sector, council ward, whatever), knock off an arbitrary amount [per square yard] to make it more like land value tax and less like property value tax and Bob's your uncle.

"what size of official army is required to deal with rises and falls on the market value and appeals?"(2)

A couple of dozen to run the spreadsheets at HMLR (which updates automatically for changes in values, as based on recent actual sales) plus six hundred to hear appeals (let's say five for each postcode area, of which there are 124 in the UK). Seeing as I envisage a fairly mechanical/automated valuation system, there's not really much to appeal about except for obvious arithmetical errors. (3)

Seeing as my ideal LVT would replace Council Tax/Council Tax Benefit, Business Rates, Stamp Duty, Inheritance Tax, Capital Gains Tax, TV licence fee, Insurance Premium Tax, Section 106 agreements, roof tax, shared ownership crapola etc etc, I am quite confident that we'd see a significant overall reduction in the number of civil servants.
(1) They can merge their database with the existing databases of all properties liable to Council Tax or to Business Rates to iron out any missing bits. There's another register for agricultural land (i.e. for those land-owners who receive Single Farm Subsidies), which would be exempt from LVT - let's scrap the subsidies first - that's the main thing, and the owners of the other bits and pieces have the choice of finally registering ownership (and paying the tax) or forfeiting it.

(2) Appeals? What appeals? See (3) below - for the sake of saving £100-odd every year, most people didn't bother appealing against Council Tax bandings and wouldn't bother appealing against LVT valuations (especially as they would change every year!). And every subsequent purchaser would sign a separate form confirming that he or she agreed that the plot-size was X sq yds and that he or she agrees that the plot will be valued on the basis of average values in that [postcode sector/council ward/whatever]. In any event, whose fault is it if there are endless appeals?

Sure, there will be marginal situations that may superficially appear unfair, but so what?

The law is the law, and there will always be winners and losers: let's imagine Labour would like to delay the next General Election until the last possible date, 3 June 2010. Let's imagine that the EU manage to bully or bribe the Irish into approving the Lisbon Treaty on 2 October 2009 and BluNuLabour decide to bring the next General Election forward by six months. That simple act will deprive a few hundred thousand British Citizens, born before 2 June 1992 but after 2 December 1991 of the right to vote at a General Election. Will any of these young people, several thousand of whom will die before the next General Election, and thus be deprived of ever being able to exercise their [second] most important democratic right, launch an appeal? Will they begrudge those people who are still alive and can vote on 3 November 2009 (but who die in the next six months) their last opportunity to do so?

(3) Don't forget that it took them about six months to band all properties in Great Britain for Council Tax back in 1990-91. This was pretty rough and ready - the gap in values between the upper and lower limits of each bands is about twenty percent, so you might be paying just as much Council Tax as a property worth nineteen per cent more; or you may be paying a lot more Council Tax than a property that is worth just one per cent less, but as the difference is between bands is only £100 - £200 there wasn't a wave of appeals, people just paid up.

And don't forget that all residential properties in Northern Ireland were revalued as at 1 January 2005, when they finally replaced Domestic Rates and replaced them with a property value tax of about 0.78% per annum. Of course there was grumbling and rumbling, but there were more winners than losers and very few of the losers ended up more than £100 worse off every year, so that was that.

Fun Online Poll Results: Madeleine McCann & NHS spending

Thirty-four per cent of those who took part in last week's poll have seen a woman who was possibly involved in the disappearance of Madeleine McCann, allegedly. I trust you have informed the police accordingly ...

This week's Fun Online Poll is mildly topical: "By how much has NHS spending increased in cash terms [i.e. not adjusted for inflation or GDP growth] since 1997?"

Vote here or use the widget in the sidebar.

George Osborne misses the point

From the BBC:

A Conservative government would seek to stop the payment of large bonuses across the banking system, shadow chancellor George Osborne has said. He told the Guardian that handing out big awards backed by state guarantees was "unacceptable", even for banks that were not part-owned by the taxpayer...

My knee-jerk responses to this issue are OT1H that taxpayers shouldn't be indirectly paying these bonuses but OTOH that banks, even state-owned ones, should be allowed to run their affairs as they like. Hmm. But that is missing the point as well.

The point is that the government should never bail out, take over or otherwise prop up private businesses. Neither windfarms nor nuclear companies; neither LDV nor Jaguar; neither Vestas nor Airbus; and certainly not the banks - who ought to be sorted out via debt-for-equity swaps - in which case the knee-jerk dilemma just does not arise.

Funnily enough, George nearly gets it at the end of the article, saying "You cannot privatise the gains and socialise the loss in the way that has happened", which is a cornerstone of the MW economic manifesto.

Friday, 14 August 2009

Sienna Miller's non-essential flights

Continuing my occasional series, Global Cool ambassador Sienna Miller did her bit to "spread awareness about global warming" this week by popping over to Ibiza for a holiday with her new boyf.

Posh Spice

And the OECD says ...

... in the summary to their research on Tax & Economic Growth

Corporate taxes are found to be most harmful for growth, followed by personal income taxes, and then consumption taxes (1). Recurrent taxes on immovable property appear to have the least impact (2).

A revenue neutral growth-oriented tax reform would, therefore, be to shift part of the revenue base from income taxes to less distortive taxes such as recurrent taxes on immovable property or consumption. The paper breaks new ground by using data on industrial sectors and individual firms to show how re-designing taxation within each of the broad tax categories could in some cases ensure sizeable efficiency gains. For example, reduced rates of corporate tax for small firms do not seem to enhance growth, and high top marginal rates of personal income tax can reduce productivity growth by reducing entrepreneurial activity.

(1) Unfortunately they make the mistake of lumping in VAT with 'taxes on consumption'. if you go to pages 18 and 19, you'll find this, which certainly applies to VAT:

38. Because they lower the purchasing power of real after-tax wages, consumption taxes may curb labour supply in much the same way as a proportional income tax. Consumption taxes can also reduce labour demand in the short-term if they add to wages and labour cost... Most empirical studies that assess the effect of taxation on employment exclude consumption taxes from the relevant wedge. However, some recent studies that include the consumption tax in the overall labour tax wedge find that a rise in this wedge reduces market work ...

Exactly, the clue is in the name: it's called "Value Added Tax", and what is "value added" if not the same thing as "profits"? So why is it be any better than any other "corporate taxes" (i.e. on profits)?

... and this, which applies to proper consumption taxes:

40. Specific consumption taxes that penalise the production and consumption of “bads” can improve environmental outcomes while generating revenues that can be used to offset other taxes on, for example, labour. Examples are excise duties on petrol and diesel. A similar argument can be made for “bads” that affect consumers’ health, with potential social externalities (e.g. tobacco or alcohol), though the extent of such externalities is controversial...

I'd agree with that as well. The killer point being that demand for these things is price-inelastic, so taxes thereon do not affect behaviour very much, and people just pay more for the same amount of petrol, fags, booze. This makes a mockery of the argument that such taxes discourage driving, smoking or drinking, but hey. As long as the taxes at least cover the external costs, that's the main thing.
(2) I'd also like to highlight these paragraphs, a bit lengthy, but a good summary nonetheless:

Recurrent taxes on land and buildings have [only] a small adverse effect on economic performance...

47. Recurrent taxes on land and buildings (especially residential buildings) are generally argued to be more efficient than other types of taxes in that their impact on the allocation of resources in the economy is less adverse. This is because these taxes do not affect the decisions of economic agents to supply labour, to invest in human capital, to produce, invest and innovate to the same extent as some other taxes. This conjecture is supported by the new empirical work undertaken in this project (see Section 4).

Another advantage of property taxes is that the tax base is more stable and the tax revenue generated from this tax is therefore more predictable than for revenues obtained from labour and corporate taxes, partly due to less cyclical fluctuation in property values.

Also, as real estate and land are highly visible and immobile these taxes are more difficult to evade, and the immovable nature of the tax base may be particularly appealing at a time when the bases of other taxes become increasingly internationally mobile.

Property taxes also encourage greater accountability on the part of government, particularly where they are used to finance local government. Property taxes, with regular updating of valuation (which, with modern technology, is now feasible), can also increase the progressivity of the tax system (for example, by the exemption of low value properties), provided that special arrangements are made to reduce the liquidity constraints that the tax may imply for the relatively small number of people with low incomes and illiquid assets.

…and they could contribute to the usage of underdeveloped land…

48. The design of property taxes on land and buildings can also be used as an instrument to affect land development and land use patterns. For example, low taxes on vacant property and undeveloped land can encourage the under-utilisation of land which may lead to a reduced supply of land for housing particularly in urban areas. Linking the assessment value to market value may increase incentives for developing land as market prices also reflect the development potential of land.

But, in many OECD countries the assessment values of land lag substantially behind the actual development in land prices generating gaps between taxable land values and current land prices, which are politically difficult to close (e.g. Finland, the United Kingdom).

…while preferential housing tax treatment may distort capital flows...

49. As described in Section 2, owner-occupied housing has a favourable tax treatment relative to other forms of investment in many OECD countries through reduced tax rates or exemption for imputed rental income, mortgage interest payment deductibility and exemptions from capital gains tax. While the favourable treatment of owner occupation is often justified by the specific nature of housing and the positive externalities for society associated with its consumption, they may distort the flow of capital out of other sectors and into housing. They can also reduce labour mobility and thus the efficient allocation of labour.

In these circumstances, raising taxes on immovable property could improve economic efficiency and growth. The distortion between housing and other investments should be removed by taxing them in the same way: taxing the imputed rent and allowing interest deductibility. However, most OECD countries do not tax imputed rent at all, while those that do often under-estimate the rental value. In such circumstances, the denial of mortgage interest relief and the use of property taxes can provide a ‘second best’ approach, though local government control over property taxes makes it difficult in many cases to implement this approach in a co-ordinated fashion.

By contrast, taxes on financial and capital transactions are highly distortionary...

50. It is always less distortionary to tax the income and services provided by assets than the transaction involved in acquiring or disposing of them. This follows from the Diamond and Mirrlees (1971) result that taxes on intermediate transactions are inefficient, in the sense that the same revenue and distributional effect can be obtained at a lower distortionary cost by taxing income (including capital income) or consumption (consumption of housing services).

The lower distortionary effect arises because both transaction taxes and taxes on income/consumption discourage the ownership of the assets, but the transaction taxes have the added distortionary cost of discouraging transactions that would allocate these assets more efficiently. For example, they discourage people from buying and selling houses and so discourage them from moving to areas where their labour is in greater demand.

In fact, the distributional effects of transaction costs are probably also less desirable, as the tax falls more heavily on people who trade more frequently, such as people who need to move frequently for their jobs. Nevertheless, governments have found these taxes attractive for two reasons: they are relatively easy to collect and they compensate for the difficulties of applying VAT to the financial sector.

Capital gains taxes, which are paid only upon realisation, suffer from some of the same shortcomings as taxes on intermediate transactions.