Willy, Willy….

One of his five great ideas of the year:

Cambridge University\’s Brendan Simms is an extraordinary historian and his reinterpretation of British history in the 18th century is one of those sleeper ideas that, along with others, is gradually challenging know-nothing Euroscepticism. His argument in the engrossing Three Victories and a Defeat is that Britain won the military space to build an empire and industrial hegemony through consistent and deep involvement in European politics, ensuring that no one European power could ever challenge us.

It was when we followed the Eurosceptic injunction to forget Europe that we suffered ignominy and disaster, losing the war in America as united Europeans undermined our war effort and then watched Napoleon dominate Europe.

We never were, and never will be, capable of prospering without engaging in Europe. It may be wishful thinking on my part, but visceral Euroscepticism increasingly seems batty – and the planks with which it is built rotting.

He seems not to notice that this is, in fact, the Eurosceptic case: that we indeed don\’t want one dominant European power which constrains us. In the way in which the assembled European powers now make 80% of our laws, just as an example. The historic engagement with Europe was in fact to make damn certain that such a situation never arose.

Somewhere….

Our Basil is laughing quietly to himself:

Roman Catholics have overtaken Anglicans as the country\’s dominant religious group. More people attend Mass every Sunday than worship with the Church of England, figures seen by The Sunday Telegraph show.

This means that the established Church has lost its place as the nation\’s most popular Christian denomination after more than four centuries of unrivalled influence following the Reformation.

The conversion of England, just what he used to pray for.

Pricing Carbon

This makes sense:

Coal-fired power stations, airport expansions and new road schemes could all be put on hold following a decision by Gordon Brown that ministers must in future take account of the true economic cost of climate change damage.

Ministers have been instructed to factor into their calculations a notional "carbon price" when making all policy and investment decisions covering transport, construction, housing, planning and energy.

Unfortunately, this doesn\’t:

The "shadow price for carbon", representing the cost to society of the environmental damage, has already been agreed for every year up to 2050 by government economists. It will be set at £25.50 a carbon tonne for 2007, rising annually to £59.60 a tonne by 2050.

That\’s actually higher than the number the Stern Review came up with and that in itself was an outlier. Others (William Nordhaus) have put the appropriate cost at one tenth of that figure. Adding externalities into the costs used to make decisions is great, using the wrong cost isn\’t: it leads to resource misallocation and thus makes us poorer.

But then that\’s the problem with any form of political action about climate change. It depends upon the politicians being well informed, not subject to lobbying and so on. And as ethanol, biofuels, fleet emissions standards, the CFP, the insane insistence upon recycling everything show us, this simply isn\’t true.

Tax Incidence, Tax Incidence

Gaaaah! Richard Murphy again on a US proposal to reduce the corporate income tax:

Yet again, the corporate world seeks to lower its tax bill by shifting it onto ordinary people with a smaller capacity to pay.

It\’s not even controversial, it\’s a well known fact, that corporations do not in fact bear the burden of the corporate income tax. The actual burden is carried by some combination of the workers, in lower wages, the customers in higher prices and investors in lower returns.

The Congressional budget office saya that, in the US, more than 50% is bourne by the workers. Another more recent international paper says that in the long term, a $ 1 raised in corporate income tax reduces the workers\’ wages by more than $ 1.

Lowering the corporate income tax therefore benefits the incomes of the workers.

Does Murphy simply not know this basic point?

Colours In Fashion

Hmmm.

It\’s nearly tautological that colors come and go with fashion. But it\’s empirically interesting to ask which colors and why? For starters, is Pantone actually the leader it\’s posing to be, or does the designation of blue iris reflect the net leanings of fashion\’s myriad of tastes and designs?

From memory (as ever, rather fallible) there\’s something of a get together between the yarn, weaving and fashion industries which details which colours are going to be available for the mass market 18 months hence. Certainly, I\’ve been told this is true for knitwear.

Thus the way that colours flow through fashion might simply be a result of a cartel.

Tecchie Question

So, we\’ve got a problem with an XP laptop.

Using it last night the cat walked across the keyboard. Since then, the mouse (yes, I know, but don\’t laugh) will not move. It is stuck. We\’ve rebooted, taken the battery out and rebooted, nothing seems to get the mouse working again. It just sits there in the middle of the screen.

It\’s an Acer, if that makes any difference.

Is there perhaps a key combination that he hit which turns off the mousepad?

Economists Know More Than You Think

I was telling my colleague Danny Finkelstein about my new theory that the free market doesn\’t work properly when the real customers are those who commission a product rather than those who use it. It is, for example, businesses, not the householder, that choose the courier service that makes you stay in all day in case it calls; it is insurance companies, not patients, that are are private medicine\’s real customers. “Ah,” said Danny, “this conundrum is well known to economists. They call it the Principal-Agent Problem. There are whole chapters in textbooks about it.”

I felt as proud as Molière\’s Bourgeois Gentleman, enchanted to discover from an expert that quite spontaneously he had been speaking something called “prose” all his life.

Not all that unusual. You see someone struggling to a conclusion, working from first principles, and they then come up with the answer. And it\’s already there in the textbooks, they just didn\’t know that it was.

One example I like currently is all those greens, telling us that markets don\’t take account of externalities, that we have to make the cost equal the "real cost". Indeed, and economists did indeed note this a long time ago. Vast amounts of modern economic research is in trying to work out "how" to do this: it\’s already accepted that "whether" to do this is either useful or necessary (dependent upon circumstances).

Idiots

Drivers face steep price rises for luxury cars under measures to force manufacturers to meet strict CO2 targets. Those who go green by buying a car with low emissions will be rewarded with savings on fuel over the lifetime of the vehicle, according to plans unveiled yesterday.

With several commissioners dissenting, the European Commission set a four-year phase-in period from 2012 for fines on manufacturers whose fleets exceed an average of 120 g/km of the main greenhouse gas blamed for global warming.

Far simpler to add to the petrol tax than this sort of stupidity. As far as I can see (and do correct me if I\’m wrong) they\’ve also made same mistake the US did with the CAFE standards. This applies to passenger cars but not to trucks (whether light or not). And it\’s that distinction within CAFE which lead to the introduction of SUVs in the first place.

Morons.

Your Tax Money At Work

A quite splendid use of the money extorted from you at gunpoint, don\’t you think?

The Ugandan president, Yoweri Museveni, is to buy a new Gulfstream presidential jet for £24m after convincing MPs that his £16m plane bought seven years ago is out of date.

The UK is of course pumping £700 million into Uganda over the next decade to reduce poverty. No, of course, none of that will pay for this plane, none at all: except of course that money is fungible.

And Musuveni is actually one of the better of the African leaders for this sort of thing.

The Youthful Vibrancy of the Lib Dems

In particular, and despite being 59 himself, Mr Eno has been instructed to advise the Liberal Democrats on how to appeal to young people.

My favourite story (which I might have mis-remembered but that\’s how these things go) about Eno was the reason for leaving Roxy Music. He said that with both him and Brian Ferry in the band one had to go: there\’s only room for one non-musician in a band.

Still, nice to see that one political party is up there, with it, appealing to the hep cats and the musical combos topping the hit parade.

Sure, We Know That…

Or at least we should all know that:

The report – which scrutinised the labels of 54 ready meals from Asda, Morrisons, Sainsbury\’s and Tesco – says that while the difference between premium lines and standard lines are noticeable, the difference between budget and standard ranges are less obvious, with the ingredients often appearing remarkably similar. Often the only difference is extravagant wording on the packaging.

Tesco, for instance, says that its standard bolognese is "produced in the UK using beef from a welfare-assured source". In fact, its value bolognese contains exactly the same meat, but refrains from boasting about it on the packaging.

Segmentation I think it\’s called. Or is it price discrimination? You as a producer know that there are some people who are happy to pay a higher price for your products than others are. What you want to do is keep the low priced business (which is after all profitable) but find a way to shake those extra pennies out of those willing to pay more. So you charge more for silly things and see what happens. It might be the above, telling people about some feature. It might be Starbucks offering, for a fee, to shake and stir the sugar into your iced tea. It might be, in the metals trade, labelling your alloy "aerospace grade" and "commercial grade", even though they\’re the same. But of course the aerospace grade is higher priced because you "guarantee" that it meets certain chemical standards, while commercial grade simply meets them (true story btw).

Now you can look at this two ways: one is that suppliers are trying to rip off customers. The other is to look a little more deeply. It\’s a standard assumption that in a perfectly competetive market there should be no profits over the cost of capital: any that did exist would be competed away. This sort of segmentation is the response to being (or thinking that you as a supplier are) in such a competetive market. Yes, perhaps it is true that this is "ripping off the consumer" but what it tells you is that the suppliers think they\’re in a competetive market.

It\’s a slightly cock eyed manner of looking at it, I agree, but interesting as well: the very fact that people are doing these things to avoid being in a perfectly competetive market shows their underlying assumption, that they are in one.

Hmmm, What\’s that word?

Gold  digger is it?

A woman who has been awarded an estimated £18 million in three divorces is at the centre of a test case for pre-nuptial agreements after seeking share of her fourth husband\’s £45 million fortune.

Well, no, not so far, but the list of previous husbands:

Mrs Crossley, who was previously married to Robert Sangster, the late Vernons pools heir and racing magnate, is trying to block Mr Crossley from using the agreement in the courts.The former model, whose first two husbands were the Kwik Save heir Kevin Nicholson and the Lilley and Skinner shoe chain heir Peter Lilley,

Rather Mrs. Merton, isn\’t it? So Mrs. Crossley, what was it that first attracted you to the multi-millionaires Sangster, Nicholson, Lilley and Crossley? And this current marriage seems to have lasted a long time too:

The couple drew up a pre-nup shortly before their marriage in January 2006, following a whirlwind romance.

However, after Mrs Crossley filed for divorce in August,

18 months, eh?

Anyway, the whole thing is going to become a test case: pre nuptial agreements don\’t really work in England because of the nature of the marriage contract: it over rides previous contracts. Things like wills for example. ("I thee with my worldly wealth endow" is a bit of a clue.)

When this has been discussed before it\’s been pointed out that Scottish law is very different: what you had before marriage remains yours, doesn\’t it? Perhaps that\’ll be the way English goes as well.