Sunday, 24 May 2015

Killer Arguments Against LVT, Not (359)

Ian B, in the comments a few years ago here:

… and then Mr Georgist Tax Assessor comes along, slaps a massive tax bill on the nature reserve or the rose garden, and it has to close. For the Greater Good, you see.

That is why I’m a Libertarian. And more than that, a Propertarian Lbertarian. In so many crucial respects, liberty stems from property. Without property, liberty tends to be in rather short supply. For the Greater Good, of course.


All right, let's row back a bit.

In an ideal world, having a secular, democratic and free-trade capitalist society enables total freedom to be maximised - freedom from religious oppression, despotism, hunger and want; the freedom to choose what sort of job you want to do; an equal say in who gets the keys to Number 10 Downing Street; and indeed the state-protected right to occupy certain bits of land undisturbed by others. That last 'property liberty' is only one of many mutually-supporting freedoms, it is not the be-all and end-all.

The minute you start restricting some people's individual, subjective freedom in order to increase other people's individual, subjective freedom then the sum total of freedom has gone down, not up. If one ma's liberty comes at a cost to others, that is not true liberty.

(NB - these generalisations do not not apply to some one-sided restrictions of course - if they allow gay marriage, that increases the freedom of gay people without restricting the freedom of heterosexual people; if they legalise soft drugs, then that enhances the liberty of people who wish to trade in or consume them without in any way restricting the liberty of the majority who wouldn't touch the stuff.

Neither do they apply to trade-offs like speed limits in residential areas. A 5 mph hour speed limit is a huge benefit to residents but a huge burden on people who want to get from A to B. A 70 mph speed limit is the opposite, so there has to be a liberty maximising speed limit of 20 mph or 30 mph).

For example, let's look at the right to vote, which is given for free and as of right to (nearly) every adult over 18 in this country. We have decided that this maximises our total freedom. We could turn the clock back a century and only allow men to vote; this clearly reduces women's liberty a heck of a lot but only increases the liberty of men by a smaller amount. The sum-total of all liberty has gone down.

A more extreme case is slave-ownership. If you allow it, then those who own slaves are clearly more free than those who don;t; and those who don't are more free than the slaves. But the sum total of all freedom is increased when slave-ownership is abolished - slaves gain the most; they are now more productive (as they work for pay) so those who didn't own slaves end up better off (more output to go round more equally) and former slave-owners end up worse off. This is why the Union states beat the Confederate states - they had industrial might on their side.

So overall, there is an increase in total liberty when slaves are freed, given the vote and put on an equal footing with everybody else.
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OK, if you hadn't grasped the analogies yet:

- any form of taxation other than taxation of land and monopolies reduces total freedom, business and job opportunities and reduces total output i.e. wealth.

- 'Land ownership' and 'the nation state' are synonymous, you cannot have one without the other. Land only has value because the cost of defending title is minimal - society as a whole is conditioned to respect it and the state will (or should) enforce exclusive occupation the owner's behalf in case of trespass and burglary etc.

- The rental value of any plot of land is equal and opposite to the total burden placed on others who are excluded. That's extra 'liberty' for the owner but reduces the liberty of 'everybody else'. Unlike income tax, having to pay for the value of land you occupy is a break-even on the liberty front.

- There are currently four classes of citizen.

1. Those at the top are landlords or bankers who are basically extracting ransom from tenants and mortgage payers. The income tax they pay is roughly equal to the cash subsidies they receive. These are akin to slave owners.

2. There are welfare claimants and pensioners, whose income is funded out of the burden placed on the next two classes (income tax, NIC, VAT etc).

3. There are owner-occupiers, most of whom are working. By and large, the income tax they have to pay exceeds the rental value of the land they own/occupy. These are like non-slave owning citizens in a slave owning society.

4. There are working tenant households who suffer two huge impositions - income tax paid for the benefit of the first two classes and land rent paid for the benefit of first.

If extending the vote to women or abolishing slavery increases overall, total freedom or liberty (or indeed wealth), then so does taxing land values instead of earned income. The total tax payable by the last two classes will plummet and the wealth extracted by the first class will plummet by the same amount and the people in the second class would probably more or less break even.

- Two wrongs don't make a right.

1. The slave-owners said they should be compensated for giving up their slaves, but wouldn't slaves be entitled to compensation for having been kept slaves? The same applies with votes for women, men could have said they should be compensated for sharing the right to vote, but women could have counter-sued for all the years that they weren't allowed to. All you can do in these circumstances is call it quits and everybody gets on with their lives.

2. The sob story trotted out is somebody who "paid taxes all his life, bought his house out of taxed income and wants to be left in peace". Well sorry, that's the way the cookie crumbles. It is highly regrettable that people had to pay income tax in the past; that's no excuse for imposing the same injustice on all future generations.

- Being more prosaic about this, I am a working age owner-occupier and if we had full on LVT the selling price of our house might fall by hundreds of thousands of pounds but my wife and I would pay tens of thousands of pounds a year less in tax; after ten or fifteen years or so, our total 'wealth' will be the same, it's just that more of it will be spendable, encashable wealth (unless she spends it all on shoes and handbags) and less will be a paper capital gain.

More importantly, my children will grow up in a society with more and better paid jobs and will have a fighting chance of being able to afford to buy a house within five or ten miles of where they grew up. Increasing my personal subjective 'liberty' to be able to retire a few years earlier is naught compared to all the extra years it will take for my children to pay off their mortgages etc.

Saturday, 23 May 2015

I bought a new 'phone today

Friday, 22 May 2015

Mad Max: Fury Road Trip

From imdb.com and imdb.com:

An apocalyptic story set in the furthest reaches of our planet, in a stark desert landscape where humanity is broken, a group of raucous, college buds living the Frat life decide to have a blowout with a Road Trip of insane proportions.

Almost everyone is crazed fighting for the necessities of life: Dad's car, hard partying, nubile and Nubian Princesses and a boa constrictor.

Within this world exist two rebels on the run who just might be able to make a videotape and mail it to Tiffany. There's Max, a man of action and a man of few words, who seeks peace of mind after the wrong tape gets sent in the aftermath of the chaos.

And Beth, a sexy blonde going to college with Josh who believes her path to survival may be achieved if she can make a great trip down comedy lane back to her childhood homeland.

Burger King's rather puzzling pricing policies.

Yesterday I bought a "Bacon double cheese XL burger" meal*, which is £6.99, plus 60p to 'supersize' it, in other words get a few extra chips and a drinks cup the size of a bucket.

It wasn't really enough, so today I just got two of their £3.79 "Big King" meals, as a result I got a lot more food (four burgers and even more chips) for one penny less. The lass behind the counter happily swapped the two normal sized cups for a bucket-sized one.

Strange. You'd expect the reverse to apply.

* Off limits for Hindus, Jews and Muslims!

Thursday, 21 May 2015

Interest-ing.

What puzzles me is that banks are adopting two diametrically opposed strategies regarding how much interest they pay on deposit balances.

See e.g. This Is Money.

In the red corner

- Nationwide pays 5% on first £2,500; no further interest on larger balances.

- Tesco Bank pays 3% on the first £3,000; no further interest on larger balances.

in the middle

- Lloyd's pays 1% on the first £2,000; 2% on balances between £2,000 and £4,000 and 4% on balances between £4,000 and £5,000, no further interest on higher balances.

In the blue corner

- Santander pays zero % on the first £1,000; 1% on balances between £1,000 and £2,000; 2% on balances between £2,000 and £3,000 and 3% on balances between £3,000 and £20,000.

Clearly, having lots of small balances gives you a more stable overall figure but is more actual work/hassle; having a few large balances is a riskier business model but is less actual work/hassle.

But why do the different banks place such different values on these things? It's like one supermarket offering "3 for the price of 2" and another one offering "2 for the price of 3".

PR China clearly not too fussed about 'dangeous sea level rises'.

From The Guardian, November 2012:

Sea-level rise is occurring much faster than scientists expected – exposing millions more Americans to the destructive floods produced by future Sandy-like storms, new research suggests...

The faster sea-level rise means the authorities will have to take even more ambitious measures to protect low-lying population centres – such as New York City, Los Angeles or Jacksonville, Florida – or risk exposing millions more people to a destructive combination of storm surges on top of sea-level rise, scientists said.

Scientists earlier this year found sea-level rise had already doubled the annual risk of historic flooding across a widespread area of the United States. The latest research, published on Wednesday in Environmental Research Letters, found global sea-levels rising at a rate of 3.2mm a year, compared to the best estimates by the IPCC of 2mm a year, or 60% faster...


Yada yada blah.

From The Daily Mail, May 2015:

Beijing is rapidly building several artificial islands in disputed waters...

It's difficult to tell from the aerial photographs, but those artificial islands are only a metre or two above sea level, so if the warmenists are right, they'll be unusable in a couple of decades and the problem sorts itself out.
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The artificial islands also neatly illustrate the point that 'land ownership' and 'the nation state' are synonymous.

Basically, whichever country is prepared to fight hardest gets to control the land and the surrounding sea; the country which controls the land gets to decide who 'owns' it. Let's say PR China built an island just for the heck of it of no military use and decided to sell ownership to private entities; the US government could, in its private capacity, acquire the freehold title, but the land is still part of PR China and would not become part of the USA

Economic Myths: The government needs to run a deficit to enable private saving.

Caveat: I whole heartedly agree with the basic tenant of Modern Monetary Theory i.e. that there is no real direct link between government spending, taxation, borrowing and debt repayments; in the very long run they sort of match up in accounting terms is all.

But then they go off on a complete tangent e.g. here:

It may not be apparent from perusing mainstream newspapers or watching the evening news, but the private sector’s capacity to save and pay off debt is inextricably linked to the government’s use of fiscal policy.

Attempts to slash budget deficits will actually work against private-sector efforts to get debt under control. By directly subtracting from demand, fiscal contraction will have a negative impact on output, employment, income and therefore private saving, frustrating private-sector attempts to pay off debt.

The following accounting identity shows an aggregate relationship that must hold by definition for a closed economy, such as the global economy as a whole:

(G – T) = (S – I)

In this identity, G is government expenditure, T is tax revenue, S is private saving and I is gross private investment.


Somehow or other, government deficits are spun as being a good thing as they enable private saving or enable the private sector to pay off debts.

This is all robbing Peter to pay Paul; if you allocate government debt back to the individual taxpayers who have to pay the interest and principal, it all cancels out. Admittedly, government debt is usually never paid off, it is just rolled forward indefinitely, that's the key to all this but a separate topic.

More importantly, if the government is running a balanced budget, then G-T = 0 and we are left with...

S-I = 0
Hence S=I
In other words, private (i.e. household) saving = Private (i.e. business) investment.

(The distinction between 'saving' and 'investment' should not be under-estimated, see my earlier post).

Overall, the optimum savings ratio for each individual and hence the population as a whole is zero but the overall optimum amount of business investment is positive.

So that means that S-I could be a negative number; if we want the equation to balance, then the government has to run a surplus i.e. G-T<0, i.e. T>G.

This strikes me as complete nonsense, ergo the original equation must also be nonsense; common sense tells us that lower taxation would, all things being equal, lead to more business investment (as long as it doesn't spill over into higher land prices - let's assume a sane tax system which taxes production less and land more).

Newsthump nails the gay cake story

From Newsthump:

Judge Johnson declared that not only were the bakers a pack of twats for denying the commission based on a person’s sexual orientation, but also that the bakery should “check out its own shop-front sometime”.

“Seriously, I’ve walked past it, and it looks camper than Dale Winton admiring a row of tents” said Johnson. “So where exactly they get the nerve to tell someone else that their gayness is inappropriate for something covered in pretty icing is absolutely beyond me.”



Investments

Left-wingers love to talk about "investment" but rarely talk about what investments they want. I wrote on this before, but here's 2 ideas for government investments that have been knocking around in my head:-


  1. Dual-carriageway across Wales. Actually, a bit more than Wales. Link up from Gloucester to say, Aberyswyth including Hereford. About 100 miles, total cost, around £700m. Reduces the journey time from around 2.5 hours to 1.5 hours. Opens up new avenues for tourism and for business to trade better with the rest of the UK. Much better idea than shaving a tiny amount off Birmingham to Manchester by rail. Might also want one from say, Stoke to the same point, but I've not worked it out.
  2. A container railway, linking the ports with major cities. Fully enclosed, automated high-speed trains, Containers are loaded at ports and do most of the work getting them to cities where they can be unloaded and locally distributed. No idea of cost and benefit, but seems like a better idea than having lots of small lorries being driven around.

Wednesday, 20 May 2015

Michael Meacher's excellent summary of Indian Bicycle Marketing.

I would disagree with his conclusions as to what the UK government 'should' be doing, but apart from that, his reader's letter is an excellent summary of the Indian Bicycle Marketing practised by Tories and Labour in the run up to the General Election.

The clever bit is that under the Home-Owner-Ist consensus, Labour aren't allowed to state the bleedin' obvious, that the 'financial crisis' was caused by unbridled land price speculation and rent seeking (the modest deficits the previous Labour government had been running were very regrettable but not in in themselves fatal), so they engaged in an entirely phoney and fictitious war over who would keep deficits down.

From The Guardian letters:

Labour didn’t lose because it failed to support a New Labour business agenda. It lost because it never nailed the Tory lie that Labour left behind a dreadful economic mess – as though the banks and the international recession had nothing to do with it.

And it never challenged the Tory canard that Labour was profligate, when in fact the Thatcher-Major governments in 10 out of their 18 years ratcheted up deficits bigger than Labour’s in any of its 1997-2008 pre-crash years. That left millions of undecided voters at the end who were sympathetic to Ed Miliband’s positive reform programme, but who, faced with the relentless barrage of negative Tory propaganda about Labour’s economic record, felt they couldn’t risk a vote for Labour.

Miliband was right that the banks, the corporate elite and the media had too much power and had abused it by inflating their own incomes and wealth at the expense of everyone else and by seeking to suppress all those forces, notably the unions, that stood up for the vulnerable and dispossessed. He was right that a deregulated predatory capitalism needed reform.

By contrast the New Labour approach was that big cuts needed to be made to pay off the deficit, but slightly more gently, by cutting less far and less fast. However, that was the worst of all worlds. It implied that Labour accepted the Tory framing of the election that Labour caused the financial crash, that the deficit was the central issue and that deep cuts in pay, benefits and public services were the right way to deal it.

All these claims are fundamentally wrong, The right response, which Labour sadly never argued for, was to use public investment to expand the economy, not shrink it. And by increasing jobs and wages, raise tax receipts so the deficit could be paid off faster. It is tragic that this far better alternative was never argued for.

Michael Meacher MP, Labour, Oldham West and Royton.