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September 2012

Ritchie gets it wrong again!

The impact of the Washington Consensus on UK taxation is easy to identify. Over a period of thirty years top rates of income tax have fallen from 60% to
45%, corporation tax rates will have more than halved, the use of tax havens by UK based multinational corporations is now largely ignored by UK tax law, whilst VAT is at its highest ever rate.

The impact on UK society is also easy to identify. Inequality in the UK has risen. The share of national income paid to labour has fallen; the share to profits has risen.

No, the share to profits has not risen over the past 30 years.

This is simply wrong.

In my opinion, given that he\’s had this pointed out to him often enough, Ritchie is now lying, not being mistaken.

Can we have a new Justice Secretary already?

Life must be made harder for criminals, Justice Secretary Chris Grayling has said, as he pledges to crack down on prisoners watching television and enjoying themselves.

Ghastly tosspot.

The punishment of prison is the loss of liberty. Not the loss of the ability to find some enjoyment in life. As a certain Mr. Solzhenitseyn pointed out even those locked into the Gulag and being worked to death were able to find some enjoyments in the life they were soon to leave.

So \”stopping prisoners enjoying themselves\” is going to be something of a hard road.

But there\’s more to it than this. How do you keep order among a few hundred rapists, conmen, murderers, druggies and nonces that you\’ve decided to lock up for a few years? With a programme of rewards and punishments of course. You do your bird like a nice quiet little boy and we\’ll let you watch the footie. You start brawling and we\’ll take away your x-box.

The purpose of these \”treats\” is so that there is something to take away from those whose liberty you are already restricting.

And anyone who doesn\’t understand this is unfit to be \”Justice\” Minister.

Ghastly little tosspot.

How to prove that average wages have risen over the decades

1) Income tax used to only bite at about average wages.

2) Income tax now bites at part time working on minimum wage.

3) Income tax thresholds have risen in line with inflation.

Therefore wages must have risen faster than inflation.

The fly in this ointment is that at least once cunts like Brown didn\’t even upgrade personal allowances by inflation. But it is still true that the successful deployment of fiscal drag by successive chancellors does prove that wages have risen faster than inflation.

Perhaps @RichardJMurphy should have paid attention in economics class?

You can spend forever debating what capitalism is but most definitions would come down to something like “an economic system or model that emphasises the private ownership of the means of production motivated by the aim of making profit for the owners of that capital”.

I was knocking this about yesterday afternoon with a few enlightened people and we all had to laugh: if that’s the definition then let’s be candid about the fact that capitalism has already failed. As bankers and the top management of the world’s major corporations and the fund managers of the world’s major pension funds have already proved, the idea that making money for owners now has any significant link with the prevailing business model that we observe on a daily basis and which is reported in our media is a myth: the aim of management is to enrich management, not shareholders. And the role of pension funds is now very clearly to enrich fund managers or the returns they pay would not be as bad as they are.

The implicit split in the ownership of control of capital, with directors and others acting in a stewardship role as if they are trustees on behalf of those who entrusted their assets to their care is dead: it’s been killed by greed.

In that case the debate is about what comes next,

Perhaps just a little attention should have been paid to those economics classes at Southampton University all those years ago. The concept is after all to be found in Adam Smith. It\’s now known as the principal-agent problem.

As to what we do about it, well, some stuff is hard:

In political science and economics, the principal–agent problem or agency dilemma concerns the difficulties in motivating one party (the \”agent\”), to act on behalf of another (the \”principal\”). Common examples of this relationship include corporate management (agent) and shareholders (principal), or politicians (agent) and voters (principal)[1]. The two parties have different interests and asymmetric information (the agent having more information), such that the principal cannot directly ensure that the agents are always acting in its (the principals\’) best interests,[2] particularly when activities that are useful to the principal are costly to the agent, and where elements of what the agent does are costly for the principal to observe. Moral hazard and conflict of interest may arise. The deviation from the principal\’s interest by the agent is called \’agency costs.\'[2]

So that\’s the Courageous State screwed as an answer then, eh?

What\’s Ritchie blathering about now?

Large extractive companies dealing with oil, gas and minerals would be obliged to disclose full information on their payments to national governments, on a country-by-country and project-by-project basis, according to a negotiation mandate approved on Tuesday by the Committee on Legal Affairs.

Hmm, OK. That\’s the Extractive Industries Transparency Initiative.

Ritchie says:

It’s nine years and 11 months since I first came up with the idea of country-by-country reporting.

And it\’s 10 years exactly since Tony Blair announced the EITI at the World Development Summit.

You don\’t think that Ritchie\’s idea could be, umm, derivative, do you?

Especially since the idea had been around for some time before the announcement?

Insane Portuguese political manouevering

I spotted a brief news item at the newspaper stand. And I think that the Portuguese Government has gone entirely insane.

At least, if I\’m understanding what they\’re doing properly.

They are increasing worker social security payments (our employees\’ national insurance) from 11% to 18% of wages.

No, that\’s not the insane bit.

They\’re reducing the employers\’ part of social security payments from 23% to 18% or so.

That\’s not insane either.

But to do both at the same time is insane.

For both are part of the labour share of income (the labour share of income being wages and salaries plus employer paid taxes on employment). They\’re both coming out of the same pot. OK, the changes in rates aren\’t quite symmetrical.

But the perception is that employees pay one and employers pay the other. So how politically insane do you have to be to increase the amount that the workers think they are paying, decrease the amount the workers think the employers are paying, while actually making no damn difference at all to the fact that the workers have been paying it all all along?

Worstall\’s addendum to Kip\’s Law

But report after report – the kind governments and big organisations choose to override – tells us that the best way to ensure that everyone is well fed, sustainably and securely, is through farms that are mixed, complex and low-input (quasi-organic). These must be labour-intensive (or there can be no complexity), so there is no advantage in them being large scale.

Those who advocate the return of peasantry never, but never, view themselves as being the peasants.

Why must there be manufacturing?

The fact is that any country, if it wants to remain strong, must have a manufacturing base.

Why?

Yes, I know it\’s an oft stated point. I also get the point about defense. But other than that I can\’t think of any reason why this statement is true.

Anyone?

On the subject of the last Lada Zhiguli

The last one rolls off the line:

The AvtoVAZ manufacturer announced that the last VAZ-2104 from the Classic series – usually known as the Riva abroad – rolled out of its factory in Izhevsk in the Urals on Monday.

The series had been produced since the early 1980s but varied little from a 1970 predecessor, which was conceived as an affordable workhorse as a result of collaboration between Italian automobile giant Fiat and the Soviet government.

In the West, the Riva became a figure of fun for its boxy looks and atrocious build quality,

Build quality was indeed the thing. For if you had one that was actually built right (a rarity, you wanted one built in the middle of the week in the middle of the month such was the effect of state planning. At the beginning of the month there were no parts to build one from, at the end they were being slammed together to make quota as the parts had arrived. Mid-week for the obvious reason that sobriety was most likely among the workforce at that time) they were very solid little beasts.

But oh dear God, the build quality. We never did have one over there, but we had to vans made in Moscow. Based on the old Renault 4 design. Bought them new out of the factory. First thing the drivers did was take them apart. Right down to disassembling the gearboxes. To check that all parts were there, that screws were screwed in, not hammered, etc, etc.

This is one of the things that so grossly over-estimated Soviet productivity and wealth. Sure, they made cars, trucks, steel, cement, in vast quantities. But most of what they made was just crap. Not worth the value that the national accounts put on them at all.

Let\’s just legalise drugs shall we?

Three consecutive stories spotted on the Telegraph\’s world news pages.

17 bodies found dumped along road in Mexico
Nine men found hanging from bridge in Mexico
Mexico parades captured Gulf drug cartel boss

It really is about time that we gave up on this war on drugs thing.

Sure, perhaps the entire population shooting up on heroin wouldn\’t be a very good idea. Not that that would happen, just about everyone who wants to take drugs can currently get them. But with Mexico suffering a casualty rate akin to a major war perhaps this is a war that is too expensive to be fighting?

I wondered when this argument would be made

The success of the Paralympics should trigger a rethink of Britain’s abortion laws to make it illegal to terminate a pregnancy because a child will be born disabled, a coalition of campaigners and charities argues today.

For there is a problem with the law as it stands:

An alliance of pro-life campaigners and religious groups is launching a new push to restrict the 1967 Abortion Act, to prevent doctors terminating pregnancies on the grounds of physical abnormality.

In a letter to The Daily Telegraph, they describe the practice of aborting foetuses on physical grounds as a form of “eugenics”.

The letter, signed by leading figures from groups such as Life and the Pro-Life Alliance, as well as the Catholic Bishops Conference of Scotland and a number of evangelical Christian groups, argues that the current law enshrines a form of disability discrimination.

Also among the nine signatories is Peter Elliott, a businessman who founded the Down Syndrome Research Foundation UK, after the birth of his son, David, in 1985.

The signatories say that while pregnancies can be terminated even up to 40 weeks on physical grounds in certain circumstances, the moment the child is born a “moral volte-face” is performed and the official approach is “full of compassion”.

We have a law that says that no one can or should discriminate against the disabled. We\’ve just had that extravaganza celebrating the achievements of the disabled. And yet in another part of the law we have a specific discrimination against the disabled.

A fetus/baby at 36 weeks is recognizably more a human being than it is anything else. But one with a club foot can be killed and one without cannot. That is discrimination.

Noe, I know it\’s all very rare, know that there are indeed times when what is there is definitely not a human (say, lacking a brain at all).

But there is, if you don\’t want to call it a problem, at least an illogicality here.

Quite firebreathing

Here’s an opportunity for redemption. The First Vice President of the Iranian government has announced that Iran will “track and pursue” the maker of the film that is the pretext for the spate of riots breaking out in the ME.

The appropriate response: touch a hair on his head, and we’ll obliterate every Iranian government facility. Then we’ll make the rubble bounce for grins. He exercised his rights as an American. Problem with that? Talk to the B-2.

As Palmerston said about Don Pacifico. Civis romanus sum.

How very German

Deutscher Hausfrauenbund, the German housewife association that she works for, offers courses in how to run a household, from practical skills to teaching young people how to budget. It also offers a \”master housewife\” qualification for the more ambitious.

That you might know how to do something is not enough. You must have a certificate to prove it.

Peter Wilby\’s solution of Oxbridge exclusivity

Suppose Oxford and Cambridge were to ask every state school to identify, at 15, its brightest pupils academically (one, two or three, depending on size). Suppose those pupils were given every possible support and guidance in A-level subject choice and teaching. Suppose they were invited annually to week-long summer schools where they could form their own peer networks of solidarity and support.

We have a word to describe such a practice.

Streaming.

Oft considered a no no in our famously egalitarian education system.

Hell, why not go the whole hog. Take the 10% who might possibly get there and stick them in a different school?

We could call them grammars.

Guardianista misses the point

The Sun, too, sees no hypocrisy in supporting the duke and duchess\’s bid to sue the photographer responsible for snapping Kate\’s chest in a Sun Says editorial – just a couple of pages after printing a picture of Kelly, 22, from Daventry with her own breasts exposed. Online the newspaper has a host of scantily clad women for readers to pore over, such as Georgia Salpa in a bikini, Maria Fowler \”flashing her cleavage\”, and Kelly Brook posing for a new calender.

Facepalm.

One group of women has said \”Why, yes, sure, you can put a picture of my nekkid titties in your newspaper\”.

Another woman has not given such assent.

The message it seems, is clear – it\’s fine to print pictures of half naked women, as long as they are not heading for the throne.

Idiot.