Wednesday, 31 August 2016

That Apple tax bill raises all sorts of interesting topics...

1. Apple's $200 billion "offshore" cash pile is largely money which they have magicked offshore tax-free and dare not touch because it will trigger a US tax bill if they repatriate it to the USA, for example in order to pay dividends.

2. For clarity, Apple's accounts show that the cash pile has not been lent back to other companies, it is invested in "marketable securities".

3. The Faux Lib fuckwits from the TPA/City AM axis have a bizarre notion that it would be better to get rid of corporation tax entirely and replace it with a tax on distributions. This would be full of loopholes; administratively unworkable; overlooks the basic point that corporation tax does not really touch reinvested profits (reinvested profits are called expenses, FFS, so they come off profits before they are taxed, duh); as well defeating the whole object. This is what Apple already have - the result being they do not make distributions out of this spare $200 billion at all (and the tax advisers, lawyers and corrupt politicians make a handsome turn), so from the shareholders' point of view, that money might as well not exist in practical terms.

3. The accounts also show that Apple's net profit margin is a startling 25% of net sales (after VAT and so on). This is five times higher than a normal manufacturing business, as Apple are protected by patents. Also, although computer hardware is a competitive, low margin business, software is a natural monopoly even if not protected by patents and Apple sells hardware and software as a bundle. This was IBM's big mistake of course, they should have taken on Bill Gates and his little friends as employees, or at least insisting on an exclusive licence, rather than just using Microsoft software and allowing Microsoft to sell it to all and sundry. That way, IBM would still be world number 1 in computers (like they were twenty or thirty years ago).

4. Such a high profit margin is evidence of quasi-rental income. As we know, rental income can be taxed at very high rates to no ill effect. Seeing as Apple can pay the EU's back tax demand out of this spare cash, it won't actually make any difference to them.

5. Apple are wailing that the tax bill "will have a profound and harmful effect on investment and job creation in Europe." This is complete nonsense. Payroll taxes have a harmful effect on jobs; taxes on investment have a harmful effect on investment (and the UK actually only has one tax on investment, and that is the element of Business Rates that relates to the building). A tax on super-profits i.e. rents has no particular effect at all.

6. What is strange is that the EU says that Apple should repay Ireland €13 billion avoided tax. That 'tax' was never Ireland's in the first place. If Ireland hadn't come up with their stupid rules, Apple would not have channelled so much money through there in the first place. Assuming it hadn't channelled it through some other tax haven instead, Apple would have either paid higher taxes in the various European countries (where products are sold), in the USA (where products are designed) or in China (where products are manufactured).

7. So while €13 billion seems reasonable, compared to the $9 bn "fine" which the USA imposed on BNP Paribas for some trumped up charge or compared to the likely corporation tax on the European notional share of the $200 billion untaxed money, that €13 billion ought to be divvied by between each European country, the USA and China (i.e. where the tax would have been paid absent the Irish shenanigans) in some rough and ready ratio.

8. Finally, while I am a Brexiteer and je ne Bregrette rien, I have often said fair play to the EU (or any national government) for taking a firm line with large multi-nationals who take the piss on tax, despite what Newsthump says.There's no point even trying to draft clever tax laws, they will always circumvent them. So we might as well just ask them for regular large payments and have done with it, call it a 'market access fee' in EU-speak

Monday, 29 August 2016

Fun Online Polls: Team GB & applying for asylum in the UK while still in France

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

Team GB managed to come second in the Olympics medal table…

I was absolutely delighted - 10%
I was quietly pleased, despite myself - 40%
Not bothered either way - 28%
Bah humbug! - 8%
Oh, I didn't know that - 3%
What's "the Olympics"? - 8%
Other, please specify - 3%

I am relieved about that, as I was "quietly pleased" but was worried that I was in a tiny minority.
The French have come up with another cunning plan for getting their own back on us for voting Brexit.

From the BBC:

Migrants in Calais seeking asylum in the UK should be allowed to lodge their claim in France, the president of the region has told the BBC.

Xavier Bertrand said people living in the camp known as the Jungle should be able to apply at a "hotspot" in France rather than waiting to reach Britain…

The Home Office said "those in need of protection should seek asylum in the first safe country they enter". Mr Bertrand said under his plan anyone rejected by the UK would then be deported directly to their country of origin.

Sounds like a great idea to me; we can just reject all such applications out of hand and then it's the French's job to deport them. No doubt the 'refugees' will be able to work out this logic for themselves, so none will be daft enough to apply for asylum in the UK, thus preserving the status quo ante.

So that's this week Fun Online Poll, is this a good idea or a bad idea?

Vote here or use the widget in the sidebar.

Sunday, 28 August 2016

Proof that the Bank of England has absolutely no F*****g Clue...


What an utter twat.

Update: 13:25

Proof that he's a twat. (Well, one proof factor in a whole range of factors).


And this section is always worth a laugh for its endless contradictory news items.


synthetic fuels vs electric battery cars

If carbon neutral synthetic fuels can be produced cheaply enough, are the considerable costs of turning our transport system over to battery powered one worth it? And as batteries are powered by the grid,  this isn't going to be carbon neural  for the foreseeable future.

There are many methods for producing synthetic fuels, I think those using sea water look most interesting, so we'll use those as an example.

"The U.S. Navy estimates that 100 megawatts of electricity can produce 41,000 gallons of jet fuel per day and shipboard production from nuclear power would cost about $6 per gallon."

"In 2012, Willauer estimated that jet fuel could be synthesized from seawater in quantities up to 100,000 US gal (380,000 L) per day, at a cost of three to six U.S. dollars per gallon."

So, that basically means that the wholesale electricity cost of 41,000 US gallons (155201L) is 2400mw/h x £40(today's wholesale per mw/h) = 61p per Litre.

Internal combustion engine(ICE) cars are now edging towards achieving 100 mpg. There are new engine technologies hoping to improve this, such as

Hybridisation using batteries, flywheels or compressed gas can improve efficiency still further by regeneration energy lost under braking.

Point is, if we can get the cost of a 100 mile journey using ICEs to £2.77 (61x4.55) that is also carbon neutral, is it worth pursuing an expensive transition to battery only powered cars? Where a 100 mile journey, which is not CO2 neutral, costs around 30kw/h at 12p per kw(retail), adding up to £3.60

Of course I am not comparing like for like ie wholesale vs retail. But then a large manufacturer of synthetic fuels would probably have their own plant or negotiate low prices. Maybe it would be worth building a dedicated nuclear power plant for the job?

The UK currently uses 45 billion litres of petrol/diesel every year. If continuing efficiency can half this we'd need  around 45gw of extra electric generation to make the equivalent in synfuel. 

That's roughly the equivalent of 12 Hinkley Point C, to end our dependency on petrol and diesel imports, and reducing net CO2 emissions by 120 million tonnes per year.  

Hybrid cars may be a good idea. What may not be a good idea is to replace the internal combustion engine and all the infrastructure created for it, with a technology that is more expensive,  less convenient,  and will require an massive and expensive upgrade in infrastructure. 

Saturday, 27 August 2016

"Book your Xmas party today!"

Friday, 26 August 2016

Tory councillor channels Prince Philip

From The Daily Mail:

A veteran Tory councillor has been accused of making racist and sexist comments when he was introduced to a black fireman.

Andrew Dransfield, vice-chairman of Buckinghamshire and Milton Keynes fire authority, made onlookers wince as he shook the firefighter’s hand and declared “You’re the first one I’ve seen.”

The crewman looked embarrassed and stayed silent following the remark from the councillor, who was on an official visit to Great Holm fire station in Milton Keynes. Undeterred, the councillor tried to clarify things by ploughing on with “You know....ethnic minority.”

The black firefighter, who hasn’t been named, did not respond but, according to witnesses, looked furious as Mr Dransfield added: "Now all we need is a woman. Are there any here?”

Just as truth is a defence to a defamation claim, why can't it be a defence to this sort of accusation? If, as a matter of fact that was the first black fireman the councillor had seen, why should he not be allowed to point it out? And, assuming no woman firefighter was present, who was there to take offence at the second comment?

Some people are way too sensitive! When I worked in Germany I was the first English tax advisor that most clients had ever met, and I got bored silly with clients mentioning it, but never did I feel offended, and even if I had done, I would have kept my mouth shut. Did nobody ever ask Thatcher what it was like being the first female English Prime Minister? As boring as it must have been for her, it's the sort of thing which she had to accept.

Plus, as a matter of fact, his comments were mildly amusing in a Prince Philip sort of fashion, you are laughing at him as much as with him. Doesn't that count in his defence as well? At least he didn't keep going and ask if they employed any disabled fire fighters, maybe a visually impaired driver or something...

Killer Arguments Against LVT, Not (404)

Returning to the KLN from #403...

Sam Bowman of the Adam Smith (is turning over in his grave) Institute had his KLN-fest of a year or two ago republished here this week, even though the commenters tore it to shreds on its original outing.

KLN #1: ... Land owners already have an incentive to do something with the land – opportunity cost. In other words, if I have an acre of land that I’m doing nothing with, but that I could profitably let a bunch of houses be built on, the cost to me of doing nothing is that house profit. An LVT would just add to this.

We covered the fact that whatever the notional/opportunity holding cost (lost interest or rent), this is more than cancelled out by anticipated capital gains, so there is an 'opportunity profit' (if such a term exists). If this were not so, then the land bankers would not be hoarding half a million plots with planning. As Kj pointed out in the comments, if land bankers own farm land with planning, then they are likely to be renting it out anyway; they are unlikely to be renting out smaller patches of urban land (except possibly for car parking?). So there is little or no lost rent on these sites until they are developed and SB's analogy fails anyway.

But in refuting this feeble argument, maybe I missed the more important one...

The flip side of the owner's opportunity cost is the external cost borne by 'everybody else'. If half a million houses could be built, then society as a whole is losing the benefit of half a million additional or more conveniently sited homes (and construction workers are going without the extra income etc). If indeed farm land is being held out of use, then society as a whole is losing out because less food is being grown (and farmers are going without the extra income etc).

The LVT is primarily there to compensate 'everybody else' for the external costs imposed on them. Mathematically it is equal to the opportunity cost borne by the owner (like all rent, it nets off to zero), so as a bonus, LVT turns an easy-to-ignore notional/opportunity cost into a real cash cost for those imposing it and provides compensation to the whole of society who have to do without the additional homes, additional food, car parking spaces, whatever.

That's either a crap translation or a tautology.

Question 6 in the BBC's Quiz: How well would you have done at GCSE? is as follows:

FRENCH: Read this extract from a letter to a local newspaper. What point is the writer making? Choose the correct phrase to complete the sentence.
"Pour réduire le nombre d’accidents dans le centre-ville, le conseil municipal propose d’agrandir la zone piétonne."
The writer tells us that the council wants to ...

A - Reduce pedestrian-only areas in the town centre.
B - Make the town centre safer for pedestrians.
C - Increase fines for motorists who cause accidents in the town centre.

You don't need to be a genius to guess that the council proposes to enlarge the pedestrianized area. But that option is not on there, so what do you do? We can rule out A and C (clearly incorrect), so that leaves you with B (which happens to be the correct answer) but that is not a literal translation and is stating the blindingly obvious anyway: "They are going to reduce the number of accidents by making it safer, duh". You could argue that increasing motoring fines or reducing the pedestrian-only areas also reduce the number of accidents (maybe it's cyclist vs pedestrian accidents).

The answer is as follows:

Literally, the sentence means: "To reduce the number of accidents in the town centre, the local council is proposing to expand the pedestrian area."

Well why didn't you fucking offer that as choice B?
Question 4 is a load of shit as well:

State the denary representation of the binary number 10111010

A - 157
B - 143
C - 186

It takes you a split second to realise that a binary number ending in -0 must be an even number and there's only one even number on the list. FFS.
The history question blows as well - Dido was a pop singer in the 1990s, not a queen in some ancient fable.

Thursday, 25 August 2016

Internet Bullshit* Of The Day, Probably.

Emailed in by James Higham from The Register:

If you worry the Internet of Things is bollocks and that the industry's just milking an old idea, think again: research outfit Arcluster has declared that the “Connected Cow and Farm” market will become a US$10.75 billion concern in 2021, a rather nice jump from today's $1.27 billion.

Byte-blowing bovines are going to drive most of the growth, says Arcluster's research director Arun Nirmal, who says “the intersection of highly sophisticated automation and M2M technologies combined with the application of Industrial Internet of Things in this space is set to disrupt the industry over the next decade."

How will cows be disrupted?

The Connected Cow market apparently comprises seven sub-markets, namely:
•Health Monitoring
•Mating Management
•Herd Management
•Automated Milking
•Comfort and Cleaning
•Automated Feeding

* In the context, more accurately "cowshit".

Killer Arguments Against LVT, Not (403)

Sam Bowman of the Adam Smith (is turning over in his grave) Institute had his KLN-fest of a year or two ago republished here this week, even though the commenters tore it to shreds on its original outing.

KLN #1: LVT supporters say that an LVT would encourage more productive use of land. But is this desirable? Land owners already have an incentive to do something with the land – opportunity cost. In other words, if I have an acre of land that I’m doing nothing with, but that I could profitably let a bunch of houses be built on, the cost to me of doing nothing is that house profit. An LVT would just add to this.

The first sentence is a misquote. In the first instance, LVT would promote the more efficient use of already developed land i.e. buildings, which by and large is the most valuable land i.e. urban land. In other words, Poor Widows In Mansions swap places with large families in small flats or groups of younger people sharing. I fail to see how that is A Bad Thing, so yes, it is desirable. PWIMs are like German tourists who get up early to put beach towels on sun-loungers and then go back to bed.

As to 'opportunity costs', I've heard this crap before from people who know a bit of economics jargon but don't understand the concept or how it applies in real life (this exchange from Twitter):

Mark Wadsworth: If land prices are increasing by 3% and interest rates are 1%, then there is no opportunity cost of owning idle land

Sam Bowman: The opportunity cost is the foregone profit from not using the land productively.

Mark Wadsworth: OK, so why are the land bankers aka developers leaving half a million plots with planning idle? Would LVT not change their behaviour?

He is of course jumbling two separate topics - the annual rental value and the capital gain; if interest rates are 1% and the potential profit on building a house is increasing by 3% a year, it is worth while deferring that as far into the future as possible, but let us fight him on his own turf.

We know that the land bankers release just enough land onto the market to maximise income without depressing prices or pulling up their own input costs, it is a fairly fixed ratio of one new home completed for every nine existing homes being bought and sold. The UK government in its stupidity (or venality) says that if they grant more planning that more homes will be built. Nonsense, real life tells us that construction levels are decided by other factors and any planning granted in excess of that just means that land bankers will hoard ever more land.

From the point of view of the land bankers, this is the optimal outcome. From the point of view of people who'd like prices to come down or construction workers who want more work/better wages, this is a bad outcome. The land bankers are just driving a wedge between the two and collecting the resulting rent.

So his original point was, a shift to LVT would make no difference to people's behaviour. Of course it would. Development triggers huge tax bills - CGT and SDLT when the landowner sells to a developer; 'planning fees', roof taxes like CIL and s106 agreements when construction starts, another layer of SDLT when the finished units are sold. Clearly, these discourage construction activity.

It is difficult to track down existing figures for these taxes for the whole of the UK, but let's call it £5 billion a year for sake of argument. Why not get rid of all that and just levy an average charge of £1,000 on each such plot (i.e. roughly the same as Council Tax)? That would push the land banker's decision towards developing rather than hoarding. It would discourage land banking, full stop, thus giving smaller builders who don't want to buy more land than they can expect to develop in the next year or two a look in.

I suppose the next KLN is "Yeah but, once the land banks are used up, where are you going to get the tax from?" Answer: from the homes that have been built, duh.

"Rise in drownings off Britain's coasts blamed on... Brexit and global warming"

From e.g. ITV. To be fair, they blamed it on "risk takers", but I can see a golden opportunity for a Project Fear double whammy here...

Stands to reason, doesn't it?

1. As a result of Brexit, GBP fell in value, making foreign holidays too expensive, so there are more people holidaying in Britain.

2. As a result of global warming, people are more likely to be on the beach and more likely to go into/onto the water.

3. UPDATE: VFTS points out that with rising sea levels, the water is deeper, thus increasing the risk of drowning.


Wednesday, 24 August 2016

Another classic bit of Home-Owner-Ist DoubleThink

From the Evening Standard:

Sadiq Khan has ordered Transport for London to sell off surplus land to property developers at below market value to ease the housing crisis. The Mayor instructed transport chiefs to dispose of an unused site at Kidbrooke in Greenwich at a “financially disadvantageous” price where 400 new homes will be built. The move means that more land owned by TfL — equivalent to the size of 16 Hyde Parks — could be sold off at a cut price to house-builders.

We know that Khan is a big friend of the developers and so on, but is he mad?

No of course not, in reality he is not selling anything at undervalue:

Tories urged Mr Khan to drop his campaign promise that 50 per cent of new homes built on public land should be affordable because it would drive down the value of the land.

Making some developers sell houses cheaply to long-term residents or selling them to housing associations to let for slightly below market rents is one of those politically appealing ideas (nonsense in practice, but there we are).

So clearly, if the 'developer' can only make a killing on half the finished units and a normal commercial profit (cost-plus) on the other half, the amount he will bid for the land is halved. TfL's loss is the next owner's or tenant's gain. But as this is an auction - and again assuming that the Mayor holds them to their promise rather than quietly shelving it after a couple of years - those developers are in fact paying full market value.

So really, the Tories are challenging Khan's pledge for 50% affordable. The only way to get the maximum price when selling is to chuck the affordable homes idea straight in the bin. AFAICS, Khan was elected on the basis of these pledges, and he is perfectly entitled to stick to them. The Tories hate the poor, especially tenants, and want prices and rents to be as high as possible*. So the Tories are weaselly enough to waffle on about value for the taxpayer with higher prices and rents as an unfortunate side-effect.

* So does Labour, of course. The irony being that the Tories' own Mayoral candidate promised something similar:

So, if I’m Mayor, I will set a simple rule that any homes built on mayoral land – as many as 30,000 – will only be sold to Londoners – people who have lived or worked in London for at least three years and don’t already own a home. My “Londoners First” rule will be in force for the entire first year that the houses are on sale. It can be delivered because on mayoral land the Mayor sets the rules.

This policy is not quite as bold as Khan's but if actually enforced (ha!) would also have led to developers paying less for ex-TfL land.

The Mothers' Pay Gap

At last!

From the BBC:

Women in the UK returning to work after having a baby fall even further behind men in earning power, a report by the Institute for Fiscal Studies has said. The gap between hourly earnings of the two sexes becomes steadily wider after women become mothers, the IFS says. Over the subsequent 12 years, women's hourly pay rate falls 33% behind men's.

The IFS says this is partly because women who return to work often do so in a part-time capacity and miss out on opportunities for promotion.

Robert Joyce, one of the IFS report's authors, said women who chose to cut their hours on returning to work were not penalised with an immediate cut in their hourly wages. However, he said: "Rather, women who work half-time lose out on subsequent wage progression, meaning that the hourly wages of men (and of women in full-time work) pull further and further ahead."

Which is what I have been saying for years - there is no real gender pay gap, it is a mothers vs everybody else pay gap. You do not need to be an economist, social scientist or statistician to suss this out, most people will have noticed this themselves first hand (my wife and I certainly have).

Ben Southwood of the ASI takes the more cheerfully libertarian view in City AM explaining why this is no biggie and the real reasons for the apparent residual ten per cent pay gap which cannot be explained by motherhood alone, worth a read in full.

Nonetheless, to the extent that we "should" do something about the gender pay gap*, this is the place to start. IMHO, a Citizen's Income and more generous Child Benefit** instead of the Child Tax Credit crap would more or less eliminate the pay gap in net terms.

* My view is 'big deal'; the total wage pot is what it is, if mothers were paid more, then everybody else would be paid less, so for most couples it evens out. Her Indoors earns barely a third as much as I do (she is underpaid and I am overpaid, by definition) but - like most women - she somehow gets to spend considerably more of our total net/discretionary income than I do.

** The IFS say that the pay gap increases steadily after a woman has had her first child. Other sources correlate this with the number of children - the more children, the bigger the gap (probably a bit of both). So a more generous Child Benefit per child, paid to the mother would fix this nicely, and scrapping means-tested Child Tax Credits increases the incentive to work, so that looks like a win-win to me.

"Crazy Cow Attacks Farmer"

Emailed in by Sackerson from Iceland Review:

"I thought my days were numbered,” stated María Jóhannsdóttir, cattle farmer at the farm Kúskerpi in Skagafjörður, North Iceland, after being attacked by a cow, which was about to calve, RÚV reports…

“I walked to her and then she started mooing loudly and threw me to the floor. She stepped on me and banged her head against me and held me there for about ten minutes while I tried to stand up,” María recounted.

Finally, María got to her feet, sore and in pain. “I was able to lean against a rail which is a meter up on a concrete wall, and I could hang on to it. She kept going and I was so overcome and exhausted that I thought my days were numbered, right there.” María held on to the rail for another ten minutes while the cow kept attacking and even bit her. She finally managed to get out of the stall.

“I was completely finished, and I had fainted there, where we feed the cows. I tried to stand up, but I couldn’t. Then my grandchild arrived… and asked if something was wrong. I told her to get help, to tell grandpa I was hurt.”

María was transported by ambulance to Akureyri. She considers herself lucky not to be seriously injured. No bones are broken, but she’s bruised all over. The cow has been calm since it calved. María reports that in her 33 years as a cattle farmer, such a thing has never occurred to her, although cows are known to act aggressively when they are close to calving, especially if they’re outdoors.

“No, I’ve never encountered such incredible wickedness, but then, again, the stable is brand new, and maybe the stable disturbed her, or these new surroundings,” María suggested.

Tuesday, 23 August 2016

"Despite Brexit" weekly round up

As prompted by Graeme, here are the highlights from the last seven days.

Eurozone economic recovery picking up despite Brexit, PMIs show

Persimmon reports soaring profits and ‘robust’ demand despite Brexit

Brits Take to the Shops Despite Brexit

Hedge Funds Avoided Big Losses Despite ‘Brexit’ Shock

Car sales boom will continue despite Brexit, says one of Britain's biggest dealers

Demand for IT pros high, despite Brexit

Pound hovers at $1.30 as UK jobless claims unexpectedly fall despite Brexit shock

Mining sector outlook improves despite losses and Brexit

And my favourites, given the topic of this week's Fun Online Poll:

DFS shrugs off Brexit as it basks in Team GB glory

Team GB’s Olympic medal haul is a blissful break from Brexit blues

Fun Online Polls: Triggering Article 50 and Team GB

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

When do you think the UK government will trigger Article 50, if ever?

2016 - 1%
2017 - 42%
2018 - 5%
2019 - 5%
2020 - 5%
Later - 2%
Never - 39%

Let's hope that the (slim) majority for 2017 are correct. I'm not sure whether those who voted 'Never' were optimistic Bremainers or pessimistic Brexiteers.

A good turnout of 110 votes, thanks for taking part.
An lo, to this month's taxpayer funded propaganda fest aka the Olympics. Normally I pay no attention to these things, although the rest of my family likes it and watches a lot of it on the telly. After a few days, it the British team was doing rather well in the medals table and I kept tuning back in to see whether the inevitable had happened and we had collapsed down the table again. In the end I was hooked and amazingly, we did not snatch defeat from the jaws of victory, as is tradition with English/British national teams.

All of which prompted this article by the Daily Mash, "Man experiences strange patriotic feeling".

So that's this week's Fun Online Poll, what's your reaction. Vote here or use the widget in the sidebar.

Monday, 22 August 2016

BBC does "balanced" reporting

From the BBC:

German carmaker Opel plans to cut its workers' hours this year because it expects Brexit to hurt its UK sales. A spokesman for Opel said about 5,000 workers at its Ruesselsheim and Eisenach factories would be affected. Opel is owned by US car giant GM.

It has been mentioned that the Germans, for whom exporting is the national religion, are keen to maintain free-ish trade with the UK after Brexit and that their car manufacturers are putting pressure on the government in that respect. So this story is actually just about plausible - in the long run. In the short term, nothing has happened or will happen for a long time, which means that the excuse is a little thin - unless this is the German car manufacturers' subtle way of putting political pressure on the government, in which case fair play to them.

The pound has weakened against the dollar and euro since the UK's 23 June vote to leave the EU, adding costs for firms exporting to the UK.

That also seems plausible at first sight, although falling GBP does not add to exporting costs, it reduces them if anything and is more likely to put downward pressure on selling prices. Car manufacturers face a strange 'kinked demand curve', have huge sunk costs and are tied to a certain fixed level of average-cost minimising output, which means that they are probably better off maintaining GBP prices (and accepting lower EUR income) than cutting production. We will see.

So in true Mythbusters' fashion, let's call that one plausible.

Another German car giant - Volkswagen - has also introduced short-time working ("Kurzarbeit") at several factories, but not because of Brexit. It has been hit by slow deliveries from some component firms, the German broadcaster ARD says.

Why was it necessary to add "but not because of Brexit"? They might as well say "but not because of the weather" or "but not because of Germany's poor showing at the Olympics" or anything else totally irrelevant.

Sunday, 21 August 2016

Killer Arguments Against LVT, Not (402)

Emailed in by Ben Jamin', from The Guardian:

"Loatheallpoliticians: Your idea for LVT is shi*t. No one will go near it and it hasn't a hope due to the myriad of [sic] problems it would bring, most noticeably it's [sic] complete detachment from ability to pay.

Poor Widow Bogey yet again. Roll up and defer. Apart from that, most working households could afford to rent their own homes, by definition, and the LVT will always be less than the full market rent, especially if their other tax bills (income tax, NIC, VAT) were halved as a quid pro quo.

Ben countered with this: "The compensation (prices) we pay for other goods and services aren't set by ability to pay, incomes or profits."

If we are looking at an individual deciding what to spend his money on, this is quite clearly true, most suppliers don't give discounts for low income people, although where the price includes a large amount of rent/super profit and the goods or services supplied can't be re-sold, there is such a thing as price discrimination.

The moral being, why should LVT/rent be any different? The landlord/vendor rents/sells to the highest bidder and is indifferent where the tenant/purchaser gets his money from or whether he will have to live off baked beans to afford it. The same with LVT, you get what you pay for, even if you have to live off baked beans. The other point being that for once, higher earners, who will occupy the higher-LVT homes will be getting something specific in return for their tax payments, there will be no excuse for moaning about tax bills - just trade down if you don't like it.

LAP hits back with this nonsense:

"In reality they are, as without the ability to pay we don't purchase (or try to purchase). As the amount of people trying to purchase (demand) impacts upon the cost of a product and hence supply, how many people can afford a product is a major impact on price."

With freely traded goods and services, this is back to front. People will invent and produce new stuff if it is cheaper and/or better than what it supersedes (radio - black and white TV - colour TV - flat screens - HD TV etc). Production costs can be predicted in advance, it is up to the producer to work out whether the likely price (i.e. the price of similar but inferior products) is sufficient to cover production costs plus reasonable profit margin. If a reasonable profit margin is unlikely, those things don't get produced, this is a binary thing, yes/no.

So LAP has now gone round the clock and contradicted himself. The only thing where price is set solely by ability to pay is in fact rent, rent is set by the ability/willingness of the highest bidder to pay. There is no real 'cost', the landlord's price is the tenant's cost. Whether to build a new home is a binary decision, yes/no, but the land does not need to be produced and output is fixed.*

Most homes in most areas are fairly homogeneous and the average rent is set by average incomes in that area. Any surplus over the cost of bricks and mortar goes to rent. Average incomes are dictated by how well the economy is doing generally and landowners - in their capacity as landowners - contribute nothing to the economy.

So the LVT in any area is set entirely by ability to pay, it is not "completely detached" from ability to pay, it is 100% dictated by ability to pay. What it means is that lower income people will end up in smaller/cheaper homes and higher earners will end up in nicer homes - which is exactly what we have anyway, a few Poor Widows aside.

* This touches on another twattish KLN, "The supply of useable land is not fixed. We can get house prices/rents down by building more homes." Firstly, LVT is not just about the narrow issue of getting rents down, it is about untaxing production. Secondly, you can't. Thirdly, even if you could, the total amount going to land rent stays the same i.e. larger number of units each worth a smaller amount of rent.

Saturday, 20 August 2016

Beyond smug.

From the BBC:

Private landlords in the UK received twice as much in housing benefit last year - £9.3bn - as they did a decade ago, a report says. The National Housing Federation (NHF) study said the increase was due to a big rise in the number of private tenants claiming housing benefit. The NHF said this particular group of people had grown by 42% since 2008…

A government spokesman said it had been taking action to bring the housing benefit bill under control. He said: "Since 2012 the amount going to private sector landlords has actually been falling - something which the National Housing Federation fails to recognise."

That is probably true, the total bill has been hovering around £10 bn for quite a few years.

"We are also committed to building the homes this country needs and investing £8bn to build 400,000 more affordable homes."

That is a lie, or at best a dishonest use of the word "committed", he does not say over how many years. Make a note of the numbers though. They claim they will spend £8 bn (over an unspecified number of years) on building 400,000 homes = £200,000 per home, thus they are vastly overpaying for the land, this is less than what they firehose at landlords each year. Not only that, for every £1 they spend on building new council houses, they will save more than £1 in future because they will have more rental income and/or lower HB bills, so it is not really a cost, it is an investment in the truest sense of the word.

Here comes the stomach churning bit:

Chris Norris, head of policy at the National Landlords Association, said the private rented sector was responding to the increasing demand for homes from a growing proportion of tenants who are being failed by the social housing sector and housing associations.

"The NHF is clearly still reeling from the news that its members have been ordered by government to reduce spending over the next four years, so it comes as no surprise that they are looking to shift the emphasis and point the finger elsewhere.

"However, the private rented sector plays a pivotal role in providing much-needed homes for tenants so there seems no real purpose in the NHF taking a cheap shot at landlords for what is a failure on behalf of successive governments to adequately allocate its housing budget and to incentivise the building of new homes."

That misallocation is precisely what is benefitting his members, every penny spent on HB for private landlords is a penny wasted and a penny not invested in bricks and mortar.

Thursday, 18 August 2016

Anonymous Donations as Party Funding.

The perception that individuals and organisations donate to political parties in order to influence policy and/or receive honors makes the public, rightly or wrongly, view politics and politicians as self serving and corrupt.

In order to correct this, it has been suggested that parties should either be funded out of taxation or there should be a cap on the amount each donor can give.

I don’t think either of those two are satisfactory, and would like to suggest another alternative. Legislated anonymous donations.

Anyone wishing to donate above say £500, would have to send their cheque to the Electoral Commission nominating to whom it should go. Once a year, those donations would be passed on to the relevant party aggregated and without the names of the donors.

It should also be made an offense to let a party know, directly or indirectly you’ve made a donation, or colluded in this as a party official. The only possible reason you would want to make yourself known, would be to buy political influence.

Even if you did attempt to let yourself be known, there would be no proof you’d actually made that donation. It would be just your word. I therefore doubt any party officials would want to get involved, let alone pass on the message to politicians who actually influence policy and hand out the gongs.

Of course, there will always be those who seek to circumvent such rules. But that's isn't a legitimate argument, else we wouldn't have any rules or regulations. Making donations anonymous by law would draw a line, which people would then have to carefully weigh up the pros and cons before deciding stepping over.

Employment vs Self-employment

My post about the insane bribes for taxi drivers in Queensland turned into a jumbled slugfest about employment vs self-employment status.

In economic terms, there are people who are clearly employees at one end (where the employer needs the same people to come in and do a set job at pre-arranged times everyday - school teachers, bus drivers, shop assistants etc) via those who are self-employed at the other (plumbers, electricians etc who are called in when needed), all the way to (small) business owners. But there are massive grey areas where that can be reasonable room for debate whether somebody is actually an employee or self-employed in economic terms.

The distinction is important for at least three quite separate topics.

1. Vicarious and employer liability

An employer is more likely to be found vicariously liable for the acts of an employee and is also more likely to be liable for injuries etc suffered by an employee.

So if an employee in a restaurante deliberately ignores food safety measures and diners fall ill, the restaurateur is liable. And if the wiring in the kitchen is faulty and an employee is electrocuted, the employer is liable.

Conversely, if the restaurant orders ingredients which turn out to the poisonous and the same evening, diners fall ill, the restaurateur might (or might not) be able to escape liability and the self-employed supplier of the ingredients would be liable to the diners instead (he would be liable to the restaurateur anyway. And if the wiring in the kitchen is faulty and a self-employed electrician who is called to fix it manages to electrocute himself while doing so, then that is his tough luck.

2. Pay

An employee must turn up and be available for work whether there is anything to do or not; similarly, an employee expects to be paid whether he actually did anything or just sat around. If a role is redundant, then special rules apply, weighted in favour of the employee (fair enough up to a point - it is the employer's job to drum up business and he can be expected to plan ahead).

A self-employed person is only called and paid when needed and is usually paid by results (although a lot of rent-seeking businesses charge hourly rates whether they succeed or not). There are other rules to ensure that workers on zero-hours contracts are treated as employees, even though they would be self-employed under this test alone.

The government then messes things up by having the National Minimum Wage and Employer Pension contributions (a hidden tax and a massive subsidy to the pensions companies). The NMW simply does not apply to the self-employed, if you want to mow lawns or deliver parcels or drive a mini cab for £3 an hour as a self-employed person you are free to do so, and there is clearly no bar to the self-employed or small business owners making a loss, i.e. a negative effective hourly wage.

3. Taxation

Instead of taxing the least mobile and most highly visible source/flow of wealth (i.e. land and monopoly rights), most governments in their infinite wisdom tax the second least mobile factor of production - labour - at the highest rates. The effective rate on a basic rate employee, even ignoring VAT is about 40%, they just dress this up and split it into half income tax and the other half is split up into Employee's and Employer's National Insurance Contributions.

So there is every incentive for people to tweak things and present what is actually employment under the teal tests 1. and 2. as self-employment. HMRC has exactly the opposite incentive. Shiney gave the example of HMRC reclassifying partners in an LLP as employees. I could give the example of the extra 7.5% income tax on dividends to reduce the incentive for small business/limited company owners to pay themselves dividends instead of salary.

This is insane of course, to the extent that we have to tax incomes at all, it would be far better to tax all sources of income at the same rate to save arguments, rather than punishing employment status and then dreaming up endless anti-avoidance measures.

There, that is my non-partisan crash course in the topic. The problem is that most people start with the answer they want and then work backwards to the justification, for example saying that XYZ delivery company pays less than the NMW, thus automatically assuming that their delivery drivers are actually employed not self-employed.

Wednesday, 17 August 2016

Making sense of numbers (green c**p edition)...

The table below is the projected income statement from a 'community' hydro-electric project doing the rounds in Aberdeen.  Do have a glance at the whole prospectus here.

I checked the 7% claim by putting the payments schedule into an APR calculator and it checks out.  But the payments to investors are backloaded, the £500k share capital (the opportunity being promoted) is obviously being used to repay earlier backers.  They are in a hurry to get it commissioned before mid September when the FIT reduces by about two thirds or so.

Now I'm presuming the "£400,00" in column one is a misprint for "£400,000" and "£500,00" for "£500,000".  And I reckon the bank closing balance at the bottom of column one is supposed to say "£400,000" and not "£500,000" otherwise £100k just disappears.  So the typos, as careless as they are, aren't the issue.

I'm trying to work out what the 'scam' is, because it's bound to be a scam.  As far as I can see, this hydro thing is basically being 'flipped' onto members of public in the form of untradeable illiquid securities that promise to start paying out profitably in a decades time, once another tier of debt investors have been paid back, and once the FIT and leecy prices have grown at a compounded 2%/2.5%.

Anyone else?

"Inheritance tax: why the new Duke of Westminster will not pay billions"

The Guardian kicks off in usual whiney fashion:

Had the Grosvenor estate bequeathed to the new Duke of Westminster been liable for 40% inheritance tax, the amount owed to the Treasury would have been not far off the government’s entire death duty take for the last financial year.

Hugh Grosvenor, however, avoids a significant cut to his £9bn inheritance because the estate is held in a trust. Britain’s generous trust law ensures that the country’s largest fortunes are largely kept intact. This is borne out by statistics which show that duties are a modest source of revenue for the Treasury. HMRC collected total tax of £534bn in 2015-16, of which inheritance tax receipts represented £4.7bn.

“The benefits of trusts are that they don’t form part of somebody’s estate,” says Ian Dyall, a manager at the financial adviser Towry. “In a discretionary trust, you have a whole pick list of potential beneficiaries which the trustees can choose to appoint benefits to. Because of that, you can’t point a finger to any potential beneficiary and say that’s your money. Money can stay in the trust and cascade down from generation to generation and nobody pays inheritance tax on it.”

But is fair-minded enough to explain the catch:

Instead of one-off taxation, trusts are subject to charges every 10 years from the anniversary of their creation. Known as the inheritance tax periodic charge, it can amount to 6% of the funds held. There are, however, plenty of loopholes. Agricultural and business property relief applies, and the Grosvenor assets will have been managed to take full advantage of that.

For sure there are loopholes, so why not do a 0.6% annual charge on the value of a home with exceeds the IHT nil rate band and simply add it to the Council Tax bill? They can do the same for the ATED charge aka Mansion Tax Lite, only instead of charging a high rate on a small number of dwellings which are currently caught, they could apply a much smaller annual charge to all dwellings in the value bands to end up with the same revenues. The same goes for SDLT, an awful tax, that can be turned from a large one-off charge every time a home is sold into a much lower annual charge. Then the next obvious step is to revalue all homes, make an adjustment for bricks and mortar value and smooth out the resulting tax bill relative to values to avoid cliff-edges and we end up with low-level LVT, job done.

As a result of all this we can simply scrap Inheritance Tax because the residual revenues on everything that is not land-related would be peanuts and probably shouldn't be taxed anyway.

Tuesday, 16 August 2016

"Virtuous Rent: a Rudder That Can Transform Our Economy"

A great article from Evonomics forwarded by SJS. Worth reading in full (quite lengthy) but here is the salient bit:

In Adam Smith’s view, landlords benefited from land’s unique ability to enrich its owners “independent of any plan or project of their own.” This ability arises from the fact that the supply of good land is limited, while the demand for it steadily rises. The effect of landowners’ collection of rent, he concluded, isn’t to increase society’s wealth but to take money away from labor and capital. In other words, land rent is an extractor of wealth rather than a contributor to it…

More recently, the concept of rent was expanded to include mono­poly pro­fits, the extra income a company reaps by quashing com­pe­tition and raising prices. Smith had written about this form of wealth extraction too, though he didn’t call it rent. “The interest of any particular branch of trade or manufac­tures is always to widen the market and to narrow the competition… To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can only serve to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens"

… In short, traditional rent is income received not because of anything a person or business produces, but because of rights or power a person or business possesses. It con­sists of takings from the larger whole rather than additions to it. It redis­tributes wealth within an econ­omy but doesn’t add any. As British economist John Kay put it in the Financial Times, “When the appropriation of the wealth of others is illegal, it’s called theft or fraud. When it’s legal, it’s called rent.”

Monday, 15 August 2016

Fun Online Polls: Improving standards in education & Brexit delays

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

What should we do to improve standards in secondary education and increase social mobility? (choose all that apply)

Have more selective state grammar schools - 50 votes
Have streaming and setting in state schools - 41 votes
Offer 'education vouchers' so that more can afford private education - 39 votes
Ban or restrict private education - 6 votes
Other, please specify - 4 votes

I would say that is conclusive enough, job done.

Interesting comment:

LJH: "Reactionary expectation that teachers keep orderly classrooms; that literacy and numeracy are more important than selfesteem; that there is a core cannon of facts* a person must learn before voyages of self discovery; sacking and forfeiture of pension rights for teachers in public employment who fail to conform to the above; close all education faculties at the polys- learn on the job."

* Agreed, like being taught the difference between "canon" and "cannon".
As usual, The Daily Mash says what people really think…

"EVERYONE has agreed to quietly sweep the referendum result under the carpet, it has been confirmed. Britain has confirmed plans to keep its head down and start talking about football or the Olympics whenever anyone mentions Article 50.

A government spokesman said: “The ‘Leave’ thing has become like a workmate’s barbecue where many people agree enthusiastically to attend, then bail on the day after realising they’d rather go to Homebase. Let’s just ignore it and move on – Boris is cool with that, he never gave a shit really and Farage was only doing it to get himself a TV agent and crack the jungle reality show circuit.”

A few days later, The Times repeated this without the satire…

Theresa May has been expected to enact article 50 in January, setting in train the formal two years of negotiations before Brexit. Despite great political pressure to stick to that timetable, she may be forced to delay because her new Brexit and international trade departments will not be ready, City sources said.

So that's this week's Fun Online Poll:

"When do you think the UK government will trigger Article 50, if ever?"

Vote here or use the widget in the sidebar.

Friday, 12 August 2016

"Shallows and Amazons"

from Wiki and Wiki:

The film opens with a young boy kicking a soccer ball along the shore of a beach. He finds a GoPro camera attached to a helmet washed up on the surf which he picks up. The video on the GoPro is of a man struggling to get out of the water and onto a reef only to be dragged under. The film then relates the outdoor adventures and play of two families of children. These involve sailing, camping, fishing, exploration, piracy and being killed by an enormous shark.

The Walker children (John, Susan, Titty and Roger) are staying at a farm near a lake in the Lake District of England, during the school holidays. While waiting for a wave, Nancy notices a large humpback whale carcass floating about twenty yards away. They sail a borrowed dinghy named Swallow and meet the Blackett children, Peggy who sails a dinghy named Amazon and Nancy, who prefers surfing. While riding a wave back to the beach, a large great white shark bumps her surf board, causing her to fall and hit her head on a submerged rock formation.

The shark, normally an ally of his nieces, has withdrawn from their company in order to write his memoirs, and has become decidedly unfriendly. As Nancy surfaces to her board, the shark bites her leg, pulling her under. Nancy swims to an isolated reef, where she places a tourniquet on her leg to stop the bleeding. When the children meet, they agree to join forces against their common enemy - the Great White Shark whom they call "Captain Flint" (after the character in Treasure Island) The children depart, unaware of Nancy's situation, leaving Nancy to spend the night on the reef.

In order to determine who should be the overall leader in their campaign against Captain Flint, Peggy Blackett and the Walkers have a contest to see who can capture the others' boat. Several hours later, the Walkers return. They get into the water before Nancy can warn them away, and two of them are killed by the shark. As part of their strategy the surviving Walker children make a dangerous crossing of the lake by night, and John is later cautioned by his mother for this reckless act.

Nancy retrieves one of their GoPro camera helmets, and after another close attack from the shark, records a message for her father and sister, and then throws the helmet toward the shore. The Walkers finally  win the contest - thanks to Titty who seizes the Amazon when Peggy Blackett comes to Wild Cat Island.

A preposition is something you should never end a sentence with.

A classic from yesterday's Evening Standard:

As historian David Kynaston put it, “social mobility has become one of those motherhood-and-apple-pie causes to which it is almost rude not to sign up”.

Let's gloss over the ghastly Americanism-and-apple-pie and rejoice in the fact that he was trying to be clever and remembered to put the "to" before the "which" but then messed it up right royally at the end. Having dodged the first trap, why not go with "pay lip service" or "pledge support"?

Thursday, 11 August 2016

Insane subsidy of the day

From The Daily Mail:

* Uber and other ride-sharing services will be allowed to operate legally [in Queensland]
* Taxis will be allowed to charge surge pricing and will receive $20,000
* QLD Premier announced a $100 million industry assistance package
* Queensland is the fourth Australian state to legalise ride-sharing apps
* The move is expected to anger anti ride-sharing app campaigners

The only reason why taxi licences had value was because they restricted supply, raised artificial barriers to entry, thus pushing up prices for passengers and destroying jobs etc. If the government realises its mistake and changes the rules, why on earth would they compensate the people who have unfairly benefitted in the past? The mind boggles.
For the benefit of Striebs, this is anathema to left-libertarians; such compensation is the opposite thereof, i.e. rent seeking and wasting taxpayer's money all rolled into one.

I can sort of see the "left wing" argument for subsidising particular activities if at least it increases output and employment or ensures security of supply (although on closer inspection, other factors usually outweigh the apparent gains), but such a subsidy achieves nothing, it does not increase the number of taxis or passenger journeys one iota and costs the taxpayer money so fails from a left-wing perspective as well as from a "libertarian" perspective.

Similarly, I support the "libertarian" case for removing barriers to entry and increasing competition, although this is usually not a left-wing cause (thus putting the lefties in a dilemma - do they want to restrict supply/boost incumbents' wages with permits; or increase supply with subsidies?)

Taxi driver bleating also reminds me of a terrible KLN: "But I paid for my house out of taxed income!" No you didn't, you paid for it out of the money you were saving on rent; by and large, taxi licence holders have collected more in extra income than they ever originally paid for their licences (bearing in mind they were originally issued for low or zero cost).

Wednesday, 10 August 2016

Just for us...

The first two or sometimes three or more across clues in the DT quick crossword are always a pun.  And this puzzle uses synonyms only; it's not cryptic.  Today's are:

1. Correct (6)
4. Nipple (3)
9. Cut. (3)

And the answer is....?

"Despite Brexit fears" is the new "underlying warming trend"

I googled the phrase for fun and the first two pages gave me the following hits in the last week (ignoring duplicates):

UK consumers carry on spending despite Brexit fears

Food prices continue to fall despite Brexit fears

Dutch bankruptcy rate continues to decline, despite Brexit fears (WTF?)

Wells Fargo shrugs off Brexit fears

City house prices grow by over 10% in a year despite Brexit fears

Despite Brexit fears, the Chinese have confirmed a £1.7 billion investment to regenerate Royal Albert Docks in London

So remember kids, if the weather gets warmer, it's global warming but if it gets colder, that's merely masking the "underlying warming trend". If there's negative economic news, it's "because" of Brexit fears; if there's positive economic news, that's "despite" etc etc.

Ex-policemen don't need to have a number plate on the front of their car, allegedly.

Yesterday, a beautifully restored 1960s E-Type passed me and stopped in front of the office next door to pick somebody up. An excuse for some gratuitous car porn, methinks:

I noticed that there was no number plate on the front, even though it was clearly an English car (right hand drive and with an English number plate at the back), so I scampered after it and asked the driver how he got away with it.

Simple, he replied, I'm an ex-copper, and tutted to indicate that the conversation was thereby ended.

It sounds a bit implausible to me, I have no idea whether he was bullshitting (either about being an ex-copper or that alleviated him from the need to have a front number plate - what happens, for example, if his wife drives the car..?). But the fact is, there was no front number plate.

Can this possibly be true or is it an Urban Myth in the making?


All is doom and gloom...

We're going to be £70Bn worse off...

Yeah. Right.

From the article...

"...Official figures from the Office for National Statistics on Tuesday showed the UK exported £12 billion worth of goods and services to the EU in June, an increase of £500 million compared with May...."

Tuesday, 9 August 2016

"No sorry, the speed skating is not on for another two years..."

... says the German beach volleyball player politely, while making the international symbol for c**t behind her back.

Pic from BBC

UK Rents Higher Than in Europe? Why the High Net Migration?

The IEA recently published a piece of work arguing that although the UK has high rents, rent controls will only make things worse. Illustrating the point regarding high rents, they link to a piece in the Telegraph showing a table comparing average rents across Europe. As the IEA points out “To be precise, British tenants are paying the highest rents in Europe, both in absolute terms and as a proportion of their incomes. Average rents in the UK are between 40-50% higher than average rents in the Netherlands, Belgium, Germany and France. They also exceed those of Luxembourg and Switzerland, two countries that are vastly richer than Britain. In most of Europe, rent payments account for between a fifth and a third of tenants’ incomes; in the UK, they account for around 40%.”

Only there are a few problems with this analysis.
Firstly rents are affected not only by wages, but by taxes and other major spending, like healthcare provision. So any measurement needs to be as a ratio of discretionary income.

Secondly, average rents will be affected by social housing and rent controls on one hand, and housing benefits on the other.

Thirdly, if unemployment is high, average wages might be high, but average rents will be lower.

Fourthly, London is by some margin the largest city in Europe accounting for 22% of UK GDP. It therefore pulls in demand for housing from around the globe. Over half of people in the capital rent, many of them in high pay jobs, or just very wealthy. This will completely distort the UK “average” rent compared to other countries.

Fifthly, if all things are equal and UK rents are higher than those in Europe, it is axiomatic that discretionary incomes must be lower. If this was the case, we would have expected to see an exodus of  people leaving the UK to work in France, Germany and indeed Poland. But the opposite is true isn’t? So, all things cannot be equal.

Rents are set by disposable incomes at the margin. While they may well be expensive in London, distorting UK averages, this will have little to do with the supply of housing. We can build loads of homes in the UK, but as we discussed recently, this will just move the margin of production, as more people will continue to migrate towards London/SE. Good perhaps for London landowners (as they will capture the rise in London GDP), not so good for everyone else.

It might therefore be better if the IEA were to tell us where they think David Ricardo went wrong with his Law of Rent. Then we can all move on.

Muddled argument for contributory benefits

Ryan Bourne writes a largely sensible article about immigration in City AM, marred by this diagonal comparison:

Indeed, the cost of immigration quotas can be seen with a simple example. Suppose an entrepreneur wanted to come to the UK and had the potential to build a business worth billions. Ludicrously, if he was number 100,001 that year, he’d be kept out.

That is the crassest diagonal comparison I have heard for ages and has no place in a sensible discussion. You could counter it with some nonsense like this:

Indeed, the benefit of immigration quotas can be seen with a simple example. Suppose an violent extremist wanted to come to the UK and had the potential to blow up a building worth billions. Conveniently, if he was number 100,001 that year, he’d be kept out.

There is a killer argument against Citizen's Income that says welfare payments should be contributory, i.e. you can only claim unemployment benefit if you have been working and paying tax for a minimum period and then are made redundant. This is economic nonsense but has a lot of political appeal. Worse still, it is cancelled out by the equal and opposite notion that welfare payments should be means tested, which is also economic nonsense with a lot of political appeal. (I suppose means-testing in turn is largely cancelled out by tax breaks for 'savings' which are also economic nonsense with a lot of political appeal...).

Anyway, returning to the article...

Ideally, this would mean lowering barriers to migration as broadly as possible but making the UK’s welfare system more contributory to avoid any welfare draw factors.

Complete bollocks.

Outside the EU, we can merrily restrict welfare payments to UK-resident British Citizens only (including or excluding immigrants who have been naturalised) or to those who have lived (or indeed worked) here legally for a set number of years, or make up any other conditions that keep the electorate happy. This test can be applied to non-contributory/universal benefits like a Citizen's Income, the right to vote or to use the NHS 'for free' etc.  just as much as it can be to contributory benefits.

If pedantry were an Olympic event...

It riles me that they all abbreviate "Rio de Janeiro" to "Rio". That's like abbreviating "New York" to "New" or "Sao Paolo" to "Sao". "Rio" is the least important part of the name!

As we all well know, "Rio" is the Portuguese/Spanish word for "River" (see also Rio Grande, Rio Tinto etc). Behindthename further informs us:

Its full name is Rio de Janeiro, which means "river of January", so named because the first explorers came to the harbour in January and mistakenly thought it was a river mouth.

Look on a map - Rio de Janeiro does not have a prominent river running through it (like London or Rome), so that makes abbreviating the name to Rio even more annoying.
I couldn't avoid catching a few seconds of live coverage of something or other recently, the commentator solemnly announced that the competitor's time was "... seconds faster than the world record"

Bollocks. His or her time was precisely 0.0 seconds faster than the world record because be definition it is the world record.

"Retail sales rose in July despite Brexit slump fears, report finds"

The BBC on top Bremainer form.

FFS, on any day, there will be a mixture of positive and negative economic news, most of it inconsequential anyway, but on Planet Bremain, all good news is "despite" and all bad news is "because of".

Daily Mail on top form...... until it commits a terrorist offence under S.58A of the Terrorism Act 2000

The Mail recently ran a story about Chief Constable Stephen Kavanagh under the banner that he "claimed £32,000 above £200,000-plus salary". This was retweeted by Matthew Scott of Barristerblogger

The problem is that the Mail couldn't stop itself at ranting about the pay of a failing Chief Constable, oh no, as is customary it quickly worked up an epic cramp in its forearm looking at his home. 

His expenses also include a £6,900 taxpayer-funded ‘housing allowance’ towards his sprawling five-bedroom home in Essex, which is worth nearly £1million and has a kitchen crafted by top designer Nicholas Anthony.”

This was followed by an aerial picture of what was presumably the random brick pile. 

Unfortunately for the Mail and the 232 people who retweeted the outrage and as was pointed out by twitter user @polybore, "Publishing Pic of this officer’s house an offence Terror act 2008?"

Matthew Scott initially dismissed the idea but after a big of worried review of the scatter gun of shit that is the UK's draconian anti terror laws (and brace yourselves because more of this shit is coming in the form of the banks, paypal et all being about to receive a home office fisting in a truly mental plan to prevent kiddies seeing breasts on the interwebs), he concludes that an both the Mail and himself have committed an offense (with no mental element either so guilty until proven innocent). As he points out; 

In the rather confusing fashion of many modern statutes, S.76 of the Counter-Terrorism Act 2008 adds a S.58A to the Terrorism Act 2000, which reads as follows:58A Eliciting, publishing or communicating information about members of armed forces etc(1) A person commits an offence who—(a) elicits or attempts to elicit information about an individual who is or has been—(i) a member of Her Majesty’s forces,(ii) a member of any of the intelligence services, or(iii) a constable,which is of a kind likely to be useful to a person committing or preparing an act of terrorism, or(b) publishes or communicates any such information. 
...I went through the elements of the offence systematically. Subsection (1) (a) might the Daily Mail: Mr Kavanagh is a “constable,” a Chief Constable. Presumably the Daily Mail had “elicited the information” from somewhere (unless it just dropped, unbidden, into their lap). Even more pertinently, subsection (1) (b) applies because they had “published” it – certainly in the online edition (and probably, although I haven’t checked) in the paper edition too. It is easy to see how a picture of Mr Kavanagh’s house could be of use to a person “preparing an act of terrorism.” Moreover, the section contains no mental element – in other words the offence is complete even without any intent to assist a terrorist. 
And with dawning horror I realised that it was not just the Mail that had apparently committed this terrorism offence. By tweeting the story I had published the same picture, as had at least 232 other people... On the face of it, all of us have committed an offence under the Terrorism Act. It carries a maximum sentence of 10 years imprisonment and, although I haven’t dared check, probably a whole host of other nasties as well to make sure that we don’t step out of line once we are released.
The Mail seems to have realised this too and hastily deleted the picture. It is somewhat worrying that you don’t need to be a terrorist to get sent to HMP Barlinnie and that "anyone from the head of a huge news organisation to a single tweeter needs to beware the huge reach of the criminal law".

Monday, 8 August 2016

Safe as (securitised) houses...

FT Alphaville's Kadhim Shubber, has been questioning the sanity of investors in property crowdfunding schemes:

"The flat’s market value in January 2015 was £525,000; Property Partner grabbed it at a discount for £435,000; and in July another independent valuation put the price at £611,000. But in the past three months investors on the website have given the property an implied valuation as low at £520,000 and as high as £4m."

It's less common for financial hacks to question the market valuations of property companies in general.  Take institutional landlord Grainger plc for instance.  At close of play today the company was valued at £906 billion, whereas on 31/09/2015 (when they were valued at more like a cool billion) their accounts showed net assets of £565 billion.

There's perhaps a big difference between buying a company at more than the value of its assets in the hope management grow the business and buying a share in one flat.  But nevertheless, whereas the big commercial property companies trade at thereabouts or even discounts to book value, those plc's holding residential property (landlords and householders) are changing frequently hands at double their intrinsic value.  The market likes UK residential property so much, it's prepared to pay double the going rate for the convenience of owning it in the form of ready-leveraged, hassle-free shares.

And the nations financial regulators appear to be quite happy for residential property to effectively be securitised and flogged as illiquid penny shares on the basis "Bricks and mortar make a solid investment" and "No one ever said ‘safe as the stock market" and even "Earn a current estimated return of 10%* per year, after fees."  

Alongside this sales spiel, Property Partners boast that over 8,000 punters have invested over £35 million in 234 properties so far.  Small fry in housing or stock market terms, but one to watch and something that just might take off during the next phase of the land price cycle.  How long it will be before the leveraged products are released?  And will they be allowed to advertise in the same manner?