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August 2013

Does this sound like a threat to you?

Does to me:

I agree, but the hegemony of market based thinking seeks to deny that there are any such limits or that there is an issue to be faced.

That is one of the many reasons why one day we will need to hold those who have promoted such false thinking to account. For now, we need to make clear to the world that firstly such \’free\’ market thinking is actually an exercise in exploiting the planet and the generations to come, and secondly, that there are alternatives.

And of course Ritchie is his usual incompetent self in the claim that market based thinking tries to insist that there are no limits. For of course markets are about economic goods. Economic goods are defined by there being a scarcity of them. If there\’s no scarcity of something then they\’re not an economic good and there\’s no markets in them.

So, given that the entire market based thing is all about how we deal with scarcity, we cannot go around stating that markets ignore scarcity, can we?

Well, we can, but we\’d be idiots to do so.

Can\’t this Robin Hood Tax idiot fucking read?

Financial services continued to enjoy the largest awards, totalling £13.3bn in the year to March – the same as in 2012 but well beneath the 2007/2008 peak of £19bn. Bonuses per financial services employee fell £100 to £11,900.

Oil and gas workers received the next highest average bonus, of £6,700 – a £200 drop on last year. Total bonuses to non-financial firms rose 1pc to £23.6bn, closing in on the 2007/2008 peak of £24bn.

So, roughly speaking, finance sector bonuses are one third of all bonuses in the economy.

Simon Chouffot, a spokesman for the Robin Hood Tax campaign, said: “It’s outrageous that during one of the most scandal-ridden periods in the history of banking, City bonuses still far outstrip those in the rest of the economy.

Simon Chouffot is a cretin. One third is less than a majority, so they are not outstripping those in the rest of the economy, are they?

“But bonuses are only part of the story – City salaries are accelerating at break-neck speed to stay ahead of regulation and ensure the privileged few still receive their lottery-sized pay packets.”

Yes you pissant little moron. You change the rules in one part of the economy and peoples\’ behaviour changes as a result of that rule. Which is what will happen with your Robin Hood Tax as well, as I\’ve been shouting at you for the past 5 years. Behaviour will change, the economy will be smaller that it would have been, the incidence will be upon workers and consumers of financial services, not banks or bankers. Oh, and net revenue will be negative. All of which just goes to prove that Mr. Chouffot is both a cretin and a moron. For obviously, no one who actually understood these points would be working to foist this monstrosity onto the rest of us, would they?

No, really, I do not believe this

The report says: “Estimates suggest that three quarters of the population could be suffering from the effects of heart disease, diabetes and related illnesses within two decades, which is a significant jump.


I\’d
believe that 3/4 might suffer from these towards the end of their lives: after all, there\’s not much else other than cancer left now that we\’ve pretty much killed off communicable diseases*.

But 75% of the entire population?

Nah, they\’re \’avin\’ a larff

*Hyperbole alert.

No George, really, just no

Compare the treatment of shale gas to the alternatives. Another source of the same product (methane) is biogas, produced by household waste, sewage and farm manure. The great majority is untapped. Capturing it is easy, uncontroversial and probably a lot more profitable than shale gas.

This is the value of this capitalist market economy type thing. If something is more profitable then people tend to do it. That people are not doing it can therefore be taken as a signal (no, not proof, only as signal, for lack of information reasons) that it is not more profitable.

And biogas gets a number of subsidies, (feed in tariffs and renewables obligations) and yet even with them there\’s a problem with financing:

Securing financial support for an anaerobic digestion project can be challenging. Private finance is available but owing to the significant capital expenditure associated with bioenergy facilities and the risks involved, such funding can be difficult to obtain.

Another way of putting this is that with the current technology biogas is not more profitable.

And of course this is just flat out lying:

The prime minister fluently defends the fracking companies. Last week he maintained that \”fracking has real potential to drive energy bills down\”. Rubbish. The government\’s projection for gas prices sees them rising (with wobbles) from 61p per therm in 2012 to 72p in 2018, where, it predicts, they will stay until 2030. Even the major fracking company here, Cuadrilla, admits that the impact of shale gas on energy bills will be \”basically insignificant\”.

That \”basically insignificant\” comes from here:

Meanwhile, the research that Mr Linder said demonstrated shale\’s negligible impact on price, is presented quite differently in Cuadrilla\’s press release on its findings.

The report, by the Poyry consultancy, estimates that if shale gas production booms in the 2020s it will cut gas and electricity prices by between 2 and 4 per cent.

“According to Poyry, Lancashire shale gas production could also reduce the country\’s wholesale gas and electricity prices by as much as 4 per cent between 2014 and 2035, which corresponds to an average saving of £810m/year,” said the release by Cuadrilla, which is chaired by former BP chief executive Lord Browne.

Sigh. As I pointed out here, they\’re lying. There are two Poyry reports. One on the effect of European fracking on European gas prices. They halve. One on the effect of the extra reserves that Cuadrilla announced in Lancashire on European gas prices: 2-4%.

Greenpeace has been (deliberately?) confusing the two in order to give this most misleading impression that fracking will not have much impact upon gas prices.

Would anyone like to run a correlation for me?

As regular readers will know my ability to do anything technical is near zero. For example, I really do not know how to do anything at all in Excel. Or any other spreadsheet (I put it down to having being scarred by my experience with Lotus 123 V 1.0 at an impressionable age. Or maybe just to being dim).

However, there\’s something I would like to see the result of.

Here\’s a listing of countries by Gini. That\’s a measure of inequality. Use pre=tax (for we\’ve only post tax and benefit for the OECD countries).

Here\’s a listing of countries by GDP per capita.

I\’m assuming that there\’s some relationship between the two. And my initial prejudice is that inequality is higher in poorer countries. What I\’d like is someone to run the numbers (I think this means putting both sets into Excel and then hitting a button?) and produce a graph. Or scatter plot with a summat innit.

Essentially, are richer countries more unequal than poorer, or the other way around?

Whichever way it works then yes, I would write an article about it.

So which gap should we prefer?

A particularly unthinking line from Compass:

Without discounting either the gravity of the current slump or the chasm that divides rich and poor throughout much of the advanced capitalist world,

Are they really sufficiently ignorant (or stupid) that they don\’t know these two following facts?

1) As a general rule, the poorer the country the higher the inequality within it?

2) And that\’s as nothing compared to the inequality between those blessed with a capitalist society and economy and those without said blessing.

The new new Vodafone tax scandal

This is going to be a fun story.

Accounts filed in Dublin show that in 2009, HMRC settled a dispute with Vodafone over its Irish tax returns. The overall size of the settlement has not been revealed, but it involved Vodafone reclaiming €67m from the Irish government in tax that should have been paid in the UK.

So, Vodafone has paid more tax to the UK than it originally thought it ought to. This is going to be a scandal how?

Plus. they\’re still not getting the basic point about corporate taxation:

The UK-based mobile phone group used an Irish subsidiary, which employed no staff between 2002 and 2007, to collect hundreds of millions of pounds a year in royalty payments from operating companies and joint ventures around the world. By 2007, Vodafone Ireland Marketing Ltd, a company registered to an industrial estate in the Dublin suburb of Leopardstown, was reporting a turnover of €380m (£320m) a year.

During a four-year period, these royalty payments, collected from most countries except the UK and Italy, have helped Vodafone send more than €1bn worth of dividends to the low tax jurisdiction of Luxembourg from Dublin. The dividends, which include a final payment of €142m due to be delivered this year, came from profits made after taking advantage of Ireland\’s low corporation tax rates.

The law is different now but in that period none of this really made much difference. It allowed Vodafone to delay tax payments but not to miss them altogether. For if that money was brought into the UK in order to pay a dividend (the ultimate aim of any company of course) then it was taxable at full UK corporation tax rates, minus tax already paid elsewhere.

The company confirmed its Irish settlement had never been separately disclosed in its annual reports, and was not connected to a £1.25bn payment to HM Revenue and Customs in 2010 to settle a much publicised dispute over the use of a Luxembourg subsidiary.

That\’s what this payment was of course.

All these shenannigans, they can\’t (or in the past, could not) avoid tax for a UK domiciled company. All they could do was delay it. Because the moment the cash crosses the border in order to be paid to shareholders it\’s taxable.

The usual The English must all learn another language piece

Here.

But our European neighbours also learn English in large numbers, and soon the only monoglots left will be British. A monolingual society in Britain is no more likely to be successful than those that exist in the Amazon jungle and New Guinea. The upper classes will presumably continue to cultivate languages because elites know how to reproduce themselves (the present cabinet is the most polyglot in recent history). But schools are failing everybody else by not insisting that a far larger proportion of the rising generation acquire a good knowledge of at least one foreign tongue.

Sigh.

The one no one ever seems to have an answer to is, OK, but which foreign language?

And no, from bitter personal experience I will not accept the answer that having learnt some of one then learning some of another is easier. It ain\’t.

So, let\’s work from personal experience here. As a child I learnt a little bit of Italian. Only a bit mind. Then at school some French. Very much schoolboy French but it\’s enough that if I go and actually stay in France then after a couple of weeks I\’m just about able to tell a joke in a pub. This ain\’t fluency by any means.

Then I worked in Russia for a time. Learnt enough Russian to have business meetings in the language but not the social language. I can\’t discuss Dostoyevsky in Russian for example. But then I can\’t do that in English either. Living in Portugal has given me supermarket Portuguese. I can get my meat cut the right way, order bottles of gas etc. But I actually live and work in English so no more than that. And now I\’m in Czech and German. I actually find the former easier (although I\’m told that I speak my few words of it with a terrible Russian accent that doesn\’t go down well) and the latter, well, sorry, I just don\’t get it at all. I can, for example, count in Czech but not in German.

So, to those who insist that I should have learnt a language other than English properly. Which one? Over the past 50 years, which one should I have put the couple of thousand hours of study into? That couple of thousand hours which is necessary (ie, that\’s a full working year) to gain some reasonable level of fluency? I would assume that no one at all thinks I should have tried to learn all six.

Or, more pithily, if the English must learn another language, which fucking one?

This is an odd comment

\”David\’s detention was unlawful and inexcusable. He was detained under a law that violates any principle of fairness and his detention shows how the law can be abused for petty vindictive reasons.

How can being detained under a law be unlawful?

I could understand unfair, or that the law itself violates human rights, all that sort of stuff. But if a law expressly says that they can do this something (which it does) how can that be unlawful?

Competition time in honour of Marianna Mazzucato!

As we all know her basic thesis is that since the government occasionally invents stuff which other people then make money from all that money really belongs to the government.

You know the sort of thing. Government invented the internet therefore Google really belongs to the State. And Jeff Bezos. And pharma discoveries often come from uni labs therefore…..

So, we\’re looking for the best phrase we can to describe this idea. Along the lines of:

Newton invented gravity so NASA owes Cambridge University.

The Arabs invented the distillation of alcohol so the Scotch industry belongs to the Mullahs.

Egyptians invented beer so all beer tax should be paid to Egypt.

The Celts invented the heavy plough therefore all farmers should pay Wales.

You get the idea: what we\’re looking for is the perfect encapsulation of this very stupid idea of Mazzucato\’s.

If we find one that\’s really good it might become a t-shirt.

From The Annals Of Ritchie

Richard Murphy ?@RichardJMurphy 30m

@worstall Cost benefit analysis allows faux economists to make up numbers for externalities and then claim the results are science
View conversation

Oh aye?

Tim Worstall ?@worstall 10m

@RichardJMurphy That\’s rich coming from someone whose entire corpus of work is estimation from incomplete information.
View conversation

A question for the audience: is a faux economist one who did an accounting and economics degree and then proudly states that they paid no attention to the economics lectures because they were obviously wrong?

Please note that Tim Worstall is not an economist and has never claimed to be one. For while he did an accounting and economics degree and did pay attention that\’s still not enough to make the claim.

Lucky we\’ve got all those food banks then

Food bank inquiries soar as further working class families slide into poverty

Millions find it harder to put food on the table as low wages, welfare cuts and high cost of living take their toll

Imagine what it would be like if we didn\’t have them?

Slightly more seriously, it\’s an error to use evidence that a problem is being solved as an argument that there\’s a problem requiring solving. We\’ve a society with sufficient solidarity that people are voluntarily providing both food and a food distribution system for those that require it. This is not an argument that \”something must be done\”. This is evidence that something is being done.

The charity said the worst affected area was the West Midlands, where there had been a 142% increase in inquiries – 779 in total – since February……In our Solihull office, staff say they are giving out food parcels on average once every two days.

800 people in 6 months? One incident every two days? Isn\’t this the sort of level of activity that is best dealt with by voluntary cooperation? Rather than the State and its hobnail boots?

Gillian Guy, chief executive of the charity said: \”Food banks have no place in modern Britain.

Why? If there are people who, for whatever reason, do not have enough food why is it wrong that, purely through the charity of their hearts, people organise a method of getting food to those who do not have enough? What the hell is wrong with the citizenry solving the citizenry\’s problems? And aren\’t we all told we should be being less individualistic and more communal anyway?

Something sensible at last


In a letter to the chief executives of six online retailers, seen by The Sunday Telegraph, David Gauke, the Exchequer Secretary to the Treasury, said the Government favoured “an approach which aims to ensure common principles apply to all businesses whether operating online, from physical premises or with a combination”.

The letter is a response to the bosses of Ocado, N Brown, Shop Direct, Boden, Appliances Online and notonthehighstreet.com, who wrote to the Treasury last month warning that an online sales tax would damage a flourishing sector in the UK and hamper job creation.

Business rates are a tax upon the use of land. If you\’re not using land why should you be paying business rates? And why should you have to pay another tax just because you\’re not using land?

Will @RichardJMurphy please learn some goddam fucking economics!

No, seriously, this man, Richard Murphy, writes reports and gives advice on how the economy should be run. He\’s spent several years setting himself up as an all purpose guru for hard of thinking lefties.

And as we all know I disagree with him on many things. But this really does take the cake. He\’s showing himself to be entirely, totally and completely, ignorant of the very subject he\’s attempting to pontificate upon. It\’s such an egregious error that he should be laughed out of the room whenever he opens his mouth on anything at all to do with economics. And this isn\’t just neoliberal abuse from me: this is a plain statement of obvious fact. The man\’s gargantuanly ignorant.

Richard Murphy ?@RichardJMurphy 2h

RT @tomharrismp: \”I want to adopt a rational, science-based approach to fracking.\” > That\’s the neoliberal way to environmental destruction
Details

Yer what? Science is neoliberal these days? Rationality is? What in buggery is the man talking about?

@tomharrismp Objective, rational and scientific are the key words of Cartesian, reductionist thinking. Invariably misses externalities

Eh? I think he\’s getting a little confused here between markets, which do indeed miss externalities, and rationality and science, which don\’t. Easy words to get confused with each other I\’m sure.

Richard Murphy ?@RichardJMurphy 1h

@rf_mccarthy @TomHarrisMP Cost / benefit analysis is typical exercise in dismissing externalities – hence environmental destruction

Ah, yes, that is where he\’s ignorant then. Completely, totally and alarmingly ignorant.

In the hope of being able to put him right (after all, he does have influence among the mad and we\’d prefer him to be informed rather than not) let us walk through the basics of this.

We do indeed have something called externalities. This is a technical word and it means things and effects that are not (in this limited sense of that technical meaning) included in market prices and thus do not influence the incentives that market participants face.

There are both positive externalities (one form of which is public goods) and also negative externalities. The classic case of the latter is pollution. If the polluter doesn\’t have to pay for the pollution being made then there will be too much pollution made. For he\’s not having to bear the costs of it: other people are, but they\’re not party to the market transaction leading to the pollution.

This is bad: it\’s acceptable to intervene in the system to make sure that externalities are properly accounted for. Long time readers will note that I support a carbon tax to account for the externalities of CO2 emissions for example. You know, like Nick Stern?

We also have something called a cost benefit analysis. This is where we add up all of the costs of something and compare it to all of the benefits of that thing. And the crucial feature of a cost benefit analysis is that we do not simply look at the market prices and incentives. For we know very well that there can be all sorts of externalities. That\’s why we\’re doing the cost benefit analysis of course: because we know that a simple look at markets won\’t tell us all about those externalities.

Indeed, a cost benefit analysis is one of the things that we\’ve got to do before we can work out whether and how to intervene in order to get those externalities accounted for.

I give you one example, the cost benefit analysis of the Severn Barrage. This looked at, of course, the cost of building the various forms of the barrage. It also looked at the costs of not building (or perhaps benefits of not) gas turbines to produce the same power. And at the fines the country wouldn\’t have to pay by not emitting CO2 from those gas turbines. And the costs of gas and….and, crucially, the externalities of the two different forms of energy generation. One externality (ie, one not included in market prices) would be the loss of wetlands in the estuary for birds to wade eat and nest in. This isn\’t a monetary cost but it is a cost of the barrage. It\’s, in fact, an externality of the barrage.

Similarly on the gas calculations they included the cost of CO2 emissions. This is an externality, this is not included in market calculations. But it is included in our cost benefit analysis because that\’s why we\’re doing a C&B: to look at all of the costs and benefits, not just those acknowledged monetarily through the market.

Or we might think of the Stern Review. It\’s really just a big C&B looking at the externalities of the use of fossil fuels. You know, those bits that aren\’t included in current market prices. Which is where we get the recommendation from that we should include them in market prices by adding a carbon tax. And the calculation of $80 a tonne comes from the consideration of all of the externalities.

Murphy is simply totally wrong here. He\’s got himself 180 degrees opposed to the truth. A cost benefit analysis is how we include externalities, not how we reject them. For because externalities are not included in market prices, us calling them externalities because they are not, then we cannot simply look at market prices to tell us what to do. We need to do a full cost benefit analysis, including those things that are not included in market prices: the externalities.

As a matter of minor interest Richard Murphy has proudly told us all that he ignored his economics lectures after the first term. They were so obviously wrong as to be of no merit. It might be worth his revisiting a basic textbook before he tries to tell us all how the world should be run, don\’t you think?