No Johann, not really

To fight furiously to keep the gigantic Bush tax cuts for the elite richest two percent of Americans, even though this alone will add two trillion dollars to the deficit over the next decade.

That is, I think, an estimate of the entirety of the Bush tax cuts if they were extended.

Letting President Bush’s tax cuts for families making over $250,000 expire as scheduled at the end of 2010, while temporarily redirecting this money to more efficient ways of boosting the economy while it is weak, would help the nation address two key challenges: short-term economic weakness (with nearly one in ten Americans out of work) and unsustainable long-term deficits.

Over the next year or two, policymakers could channel the savings from letting the tax cuts expire — about $40 billion in 2011

Still a big number, yes, but not a cumulative $2 trillion over a decade.

Not again Johann

He does have a way with history, doesn\’t he?

Let’s start with the most hopeless and wildly idealistic cause – and see how it won. The first ever attempt to hold a Gay Pride rally in Trafalgar Square was in 1965. Two dozen people turned up – and they were mostly beaten by the police and arrested. Gay people were imprisoned for having sex, and even the most compassionate defense of gay people offered in public life was that they should be pitied for being mentally ill.

Imagine if you had stood in Trafalgar Square that day and told those two dozen brave men and women: “Forty-five years from now, they will stop the traffic in Central London for a Gay Pride parade on this very spot, and it will be attended by hundreds of thousands of people. There will be married gay couples, and representatives of every political party, and openly gay soldiers and government ministers and huge numbers of straight supporters – and it will be the homophobes who are regarded as freaks.” It would have seemed like a preposterous statement of science fiction. But it happened. It happened in one lifetime. Why? Not because the people in power spontaneously realized that millennia of persecuting gay people had been wrong, but because determined ordinary citizens banded together and demanded justice.

Nothing at all to do with Leo Abse, the Wolfenden Report, no, it was all people power, eh?

In the 1960s, one MP, Leo Abse and a peer Lord Arran put forward proposals to humanise the way in which criminal law treated homosexual men by means of the Sexual Offences Bill. This attempt at liberalisation in the laws relating to male homosexuality can be placed in the context of rising prosecutions against homosexual men. The potential for these prosecutions to bring existing sexual offences legislation into disrepute was seen as acute and is evidenced by an article published by The Sunday Times entitled \”Law and Hypocrisy\” on 28 March 1954.

In his 1965 Sexual Offences Bill, Arran drew heavily upon the findings of the Wolfenden Report (1957) which recommended the decriminalisation of certain homosexual offences.

The Wolfenden committee was set up to investigate homosexuality and prostitution in the mid 1950s, and included on its panel a Judge, psychiatrist, an academic and various theologians. They came to the conclusion (with one dissenter) that criminal law could not credibly intervene in the private sexual affairs of consenting adults in the privacy of their homes. The position was summarised by the committee as follows: “unless a deliberate attempt be made by society through the agency of the law to equate the sphere of crime with that of sin, there must remain a realm of private that is in brief, not the law\’s business” (Wolfenden Report, 1957).

And yes, of course Johann gets his tax stuff messed up.

The company – which has doubled its profits during this recession – engaged in all kinds of accounting twists and turns, but it was eventually ruled this refusal breached anti-tax avoidance rules. They looked set to pay a sum Private Eye calculates to be more than £6bn.

Then, suddenly, the exchequer – run by George Osborne – cancelled almost all of the outstanding tax bill, in a move a senior figure in Revenues and Customs says is “an unbelievable cave-in.” A few days after the decision, Osborne was promoting Vodafone on a tax-payer funded trip to India. He then appointed Andy Halford, the finance director of Vodafone, to the government’s Advisory Board on Business Tax Rates, apparently because he thinks this is a model of how the Tories think it should be done.

By contrast, the Indian government chose to pursue Vodafone through the courts for the billions in tax they have failed to pay there. Yes, the British state is less functional than the Indian state when it comes to collecting revenues from the wealthy. This is not an isolated incident. Richard Murphy, of Tax Research UK, calculates that UK corporations fail to pay a further £12bn a year in taxes they legally owe, while the rich avoid or evade up to £120bn.

Look who his source is?

Erm, Johann?

When Obama set us all up for environmental disaster by refusing to put the brakes on his country’s unprecedented and unmatched emissions of climate-destabilizing gases, we switched over to watch will.i.am’s YouTube rejig of the President’s “yes, we can” speech. And when a week from now he is beaten at the mid-term elections –

Umm, Obama isn\’t running. You see, he\’s President, and \”mid-term elections\” means the election held in the middle of the President\’s term. You know, that even numbered year when there is no Presidential election?

And they rake in a fortune from the reality that 44 percent of the entire federal budget is spent on a largely unnecessary war machine

Rilly?

\"\"

Gosh:

His huge government bailout of the auto industry kept millions of people in work, was hugely popular – and is already making a profit for the government.

That\’s interesting:

The federal government spent roughly $86 billion in taxpayer money to bail out the auto industry. That\’s a lot of Monopoly money, folks, and when the industry we know and love was at its weakest point, early projections suggested that that the U.S. government and American taxpayers would never see $30 billion of that money. But as the economy slowly crawls back to life and cars and trucks are beginning to move with greater regularity, those forecasts are being adjusted downward.

A few months ago the Treasury Department proclaimed that the industry could, if everything fell just so, lose only $8 billion by the time the dust settles. We\’re now in October, and according to The Detroit News, the DoT is settling on a loss that looks a lot like $17 billion.

Now it\’s true that the bank bailout looks like making a profit (as long as we ignore AIG, the car companies\’ finance arms and Fannie and Freddie) but that wouldn\’t quite fit the narrative, would it?

And there\’s this as well:

The corporations are getting massive returns on their investment in Obama. Two-thirds of them pay no federal tax on their income.

Oh aye?

Firstly, companies do not pay tax on their income. They pay it on their net income aka profits. Still, why should 66% of US corporations not pay tax on their profits? The original numbers come from here:

Two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, according to a new report from Congress.

Hey, maybe Johann\’s got a number right?

Wayull:

An outside tax expert, Chris Edwards of the libertarian Cato Institute in Washington, said increasing numbers of limited liability corporations and so-called \”S\” corporations pay taxes under individual tax codes.

\”Half of all business income in the United States now ends up going through the individual tax code,\” Edwards said.

Oh, right, so 50% of it all is simply because many US companies are actually organised more like our own LLPs. They\’re transparent to tax and so there is no corporation tax (or, in the US, more precisely, corporate income tax) to pay at all. It gets paid as income tax instead.

And:

Joshua Barro, a staff economist at the Tax Foundation, a conservative research group, told The New York Times that the largest corporations represented only 1 percent of the total number of corporations but more than 90 percent of all corporate assets.

The vast majority of the large corporations that did not pay taxes had net losses, he said, and thus no income on which to pay taxes.

Well, yes, that makes sense too. Not all corporations make profits all the time. As GM and Chrylser have shown us. So while his number is correct it is, at the very least, somewhat misleading.

Oh, and as the final icing on the cake, he rails against corporate political donations. Completely failing, even in passing, to note one of the largest political donors in the country:

SEIU\’s budget for the 2010 election year is $44 million, up from $35 million in 2006, according to Jon Youngdahl, SEIU\’s national political director. That\’s the money that the national union will spend on House and Senate races and statewide races such as gubernatorial races.

Probably best to read young Johann for the partisan rhetoric rather than the informational content, eh?

This just in from Johann Hari

When was the last time Britain\’s public spending was slashed by more than 20 per cent? Not in my mother\’s lifetime. Not even in my grandmother\’s lifetime. No, it was in 1918, when a Conservative-Liberal coalition said the best response to a global economic crisis was to rapidly pay off this country\’s debts.

Well, as we all know, public spending isn\’t going to be slashed by 20%. Nominal spending will rise, real spending shrink a little bit but not much. Certain departments have 20% cuts, to be sure, and others are getting real increases.

But much more fun is that reference to 1918. For yes, there were indeed large cuts to government expenditure starting in that year. You can see them here.

The total budget in 1918 was some £2,893 million. Of which fully £2,404 million was defence. By 1921, the budget was £1.671 million, of which £297 million was defence.

This in an economy of between £5,000 million and £6,000 million in the money of the time. Do note that the cut in the defence budget was larger than the cut in the total budget….meaning that spending on non-defence matters actually rose in this period.

I do wonder slightly at what anyone expected the government of the time to do really. After all, 1918 was the year that we stopped fighting a world war, wasn\’t it? You\’d think that that really would be an appropriate time to stop spending near 50% of the country\’s entire output on the military really.

Unemployment soared from 6 per cent to 19 per cent, and the country\’s economy collapsed so severely that they lost all ability to pay their bills and the debt actually rose from 114 per cent to 180 per cent.

Demobilisation of the near entire male population of fighting age could indeed have the effect of raising unemployment: and one of the dodgy things about GDP statistics is that we do indeed count manufacturing things to then blow them up as an increase in GDP. Something which perhaps we shouldn\’t, making comparison of war time economies with peace time ones something of a confusion.

When an economy falters, ordinary people – perfectly sensibly – cut back their spending and try to pay down their debts. This causes a further fall in demand, and makes the economy worse. If the government cuts back at the same time, then there is no demand at all, and the economy goes into freefall.

Gosh, that\’s an interesting theory. No demand at all? So, err, what the fuck is that £1.4 trillion of economic activity, that £1.4 trillion of demand, going on out there then?

That\’s why virtually every country in the world reacted to the Great Crash of 2008 – caused entirely by deregulated bankers –

An even more interesting theory. Entirely and purely deregulated bankers? Might be worth having a word with Dean Baker there Johann. For as he never tires of pointing out, there was a property bubble. $7 trillion in wealth disappearing from the American economy, around half of GDP (yes, be careful, wealth is a stock, GDP a flow) is going to cause a recession whatever happens to the banking system.

by increasing spending, funded by temporary debt.

Now we\’re getting into really interesting territory: it\’s worth pondering whether there is in fact debt which isn\’t temporary. Hmm, OK, Consols, so OK, there is such a thing as permanent debt.

Better a deficit we repay in the good times than an endless depression.

Yes, he\’s done it! Confused deficit with debt. We repay the debt created by the deficit in the good times: the deficit itself should have disappeared which is our definition of the good times.

Except when we\’ve got that monocular Scot spending the money of course, he carried on running a deficit at the peak of the longest running good times we\’ve had in over a century. An act which has made the current problems vastly greater: repaying then some of our by then accumulated debt would have left more room for maouvre now.

For the private sector to get all these people into work, as Osborne claims, there would have to be the most rapid business growth in my lifetime. Does anyone think that will happen?

I\’m not entirely convinced that we should be reading the economic tealeaves based upon the personal life experiences of a 31 year old really. Economic history might be a better guide: like, say, the explosive growth in the US economy as they demobilised in 1945/6.

This is absolutely fascinating:

The irrationality of this approach is perhaps plainest when you look at housing. We badly need more affordable housing in Britain. Some 4.5 million people are stuck on waiting lists, and the average age of a homebuyer is now 37. It\’s a cause of constant stress to the real middle class and despair for the poor. By a happy coincidence, house-building is one of the best stimulators of the economy: it employs a lot of people on average wages, who then spend their money quickly in a \”multiplier\” effect.

Yet Osborne has chosen the opposite. There will be on average one new home built per week in the whole of London and the south-east. That\’s one.

I fear that our Johann has fallen over his own rhetoric. Yes, it\’s true, we do indeed desire more affordable housing. And it\’s also true that \”affordable housing\” has become, in certain circles, a synonym for \”council or social landlord housing\”. But when using that synonym you do need to recall that there is also something called \”the private sector\”. And, yes, they too build houses.

It simply isn\’t true that the number of houses built in London and the SE is going to fall from 602 a week (the average in the second quarter of this year) to one. It simply ain\’t.

We\’re not in this together. Who isn\’t in it with us? Them, their friends, and their families. They were asked to pay nothing more in this CSR.

Perhaps someone could explain acronyms to Johann? a CSR is a \”comprehensive spending review\”. Spending, see that word? It\’s a review of where the money goes, not where the money is coming from. Where the money comes from is usually known as the \”budget\”.

To pluck a random example, one of the richest corporations in Britain, Vodafone, had an outstanding tax bill of £6bn – but Osborne simply cancelled it this year. If he had made them pay, he could have prevented nearly all the cuts to all the welfare recipients in Britain.

Err, no, they didn\’t. He didn\’t either. They settled the case for £1.25 billion: a case which had already lasted a decade.

There is one stark symbol of how unjust the response to this economic disaster caused by bankers is. They have just paid themselves £7bn in bonuses – much of it our money – to reward themselves for failure.

You what? In what manner are the gross profits of banks \”our money\”?

Did Ladybird ever publish a book on economics that we can send to Johann? Or statistics, logic or the overuse of rhetoric?

Johann Hari: is he actually a cretin or just ignorant?

For over two centuries, Haiti has been effectively controlled from outside. The French enslaved the entire island in the eighteenth century…

Err, no. The island is called Hispaniola and has been divided between the (originally French) Haiti and the Spanish (originally) Santo Domingo, now the Dominican Republic, since 1697.

To continue his sentence:

….and worked much of the population to death, turning it into the sugar and coffee plantation for the world.

Err, no. They went flat out and killed the population, the Taino, then imported black Africans, sold by their tribal enemies, who they then worked to death.

Now, given that he\’s writing about Aristide, umm, how much belief do we have on his more modern history if he can\’t even get the basics right?

Come on, I mean, geography it can\’t be all that tough, given that it\’s what they always send the sports masters off to teach, now can it?

Update: I think I may have been overly harsh given that Hari has responded both politely and pointing out that it was edited down for space reasons without his knowledge.

Bloody annoying when people are reasonable after you\’ve been rude, isn\’t it?

Johann Hari: can he read?

Blindingly wonderful piece of hyperbole from Johann Hari this morning:

and there are now 20,000 unidentified corpses in Baghdad morgue alone,

Err, no. There are not 20,000 rotting corpses in the Baghdad morgue. There are also not 20,000 carefully refrigerated or even 20,000 frozen corpses, not even 20,000 skeletons.

We can see where he got his numbers from though:

At the morgue, more than 20,000 of the dead, which even sober estimates suggest total 100,000 or more, are still unidentified.

That\’s the New York Times, from only four short days ago.

What there actually is is this series of photographs of these unknowns in the Baghdad morgue. The number of such unknowns having been mounting since the invasion to this total of 20,000. The bodies have of course all been buried as Islamic tradition would dictate.

Those searching for those missing can view the photographs to try and identify their loved ones so that they can visit the grave(s).

Leave aside for a moment whether the war should have happened, whether the number of dead is worth it (or indeed, whether anything would be worth that number) and just admire the hyperbole.

20,000 unidentified dead over a period of five or six years (a figure not all that different I would wager from the results of any modern war), the records of those 20,000 being held so that greiving relatives have at least the possibility of closure, is transformed into a mountain of 20,000 corpses in just one building.

B- Johann, must try harder.

Johann Hari: even when he\’s right he\’s wrong

Yes, he\’s absolutely correct that we should legalise drugs. No doubt about it.

Then he puts in absurdities like this:

You can see this any day on the streets of a poor part of London or Los Angeles, where teenage gangs stab or shoot each other for control of the 3,000 per cent profit margins on offer.

Facepalm. Is it actually necessary for graduates in \”social and political science\” to be innumerate?

You cannot have a profit margin over 100%.

\"\"

A margin is, by definition, calculated as a percentage of the revenue and thus cannot be over 100%.

What he means is mark up, which is calculated as a percentage of the cost of goods and thus can be over 100%.

Even then he\’s wrong as he\’s got the teenage gangs fighting over the markup/profit from the entire supply chain, from coca leaf in the Colombian forest to the nostrils at the Tory Boy dinner party in Notting Hill. And of course they\’re not fighting over that entire sum, as several Colombian cocaine barons would be only to happy to point out.

countries like the US and Britain – both led by former drug users –

Must admit first I\’ve heard about the tooting habits of Our Own Dear Queen.

Johann Hari and economic statistics

It\’s quite lovely to see Johann meeting some numbers he doesn\’t understand.

Perhaps we shouldn\’t be too hard on him for of course we all do this. Stray off the reservation of our own knowledge base and end up misunderstanding the technicalities of what the numbers mean. Not note or even realise that there are qualifications, hems and haws, well maybes but you\’ve not quite caught the subtlety of what is being said sorts of things.

An example:

Professor Peter Cappelli studied 122 companies and found that lay-offs most often shrank their future profitability, instead of swelling it.

Would be interesting to know how he dealt with causality there: a company that is shrinking in profitability will be laying off workers just as much as it is possible that one which lays off workers shrinks in profitability.

But much more importantly:

The facts backing this up are striking. The OECD has studied developed economies over a 20-year period, and it found labour productivity growth was much higher in the countries where it is hardest to fire people.

Hmm. Here are the OECD labour  productivity stats and here are the stats for changes in labour productivity. Make of them what you will. But the reason given:

The better you treat a workforce, the better they work.

That doesn\’t really pass the smell test. Are we really trying to say that some bureaucrat somewhere, absolutely and totally impossible to fire, is going to work harder and provide a better service than someone who at least has the possibility of being turfed out for, say, vomiting over the boss and then screwing his pooch?

OK, that\’s an extreme. So instead let\’s take as being true that countries where it is harder to fire a worker have both (yes, we\’ll be nice, and say both) higher productivity per worker and also have had stronger rises in that productivity.

They should therefore be vastly richer….you get more out of the labour you\’ve got available then you really ought to be richer. But this last bit doesn\’t seem to be true. Italy, where it\’s almost impossible to fire a worker doesn\’t seem to be richer than the US, where anyone and everyone (near enough, outside that tiny unionised part of the workforce) is on an at will employment contract and can thus be fired at lunchtime. Nor does Italy (or take any of the other such hard to fire labour markets) seem to be richer than Denmark which is similarly fire at will.

So there must be something wrong with this story: we cannot see the effects which should flow from it being hard to fire to the greater wealth that higher labour productivity should bring.

Why not?

So here\’s the caveat. We do note that those countries where it is hard to fire have higher unemployment rates than those where it is easy to do so. The usual story is that making it difficult to get rid of people makes it a much more serious decision to take someone on and that thus fewer people do get taken on.

Worse than that, we see labour markets in places like France and Spain (and to some extent here in Portugal as well) separating out into two very different levels. There\’s those who get the full time, protected job, and those left to the twilight world of short term contracts. It\’s not unusual for it to take into their mid 30s for someone in any of the three to get a \”real\” job. With all of the concommittant employers not training up workers because they\’re on short term contracts.

Anyway, what we do see is those higher unemployment levels where it is hard to fire people. So the reason that they\’ve got high labour productivity for those in work is that they\’ve got lots of people not working at all (yes, labour productivity is measured this way, it\’s from those working, not total labour force).

And, not surprisingly, employers hire those with higher productivity and leave those without much to rot on the dole.

So while we might indeed see higher labour productivity in those places where it\’s hard to fire people the mechanism isn\’t as described at all. It ain\’t that cuddly management gets more out of them: it\’s that realistic management never hires the unproductive if they know they can\’t get rid of them.

Now, me, I like the easy to hire, easy to fire system: it\’s the only way I\’ve ever managed to get a job at least. And yes, you can differ on which system you prefer.

But if you\’re going to start quoting economic statistics at people in a national newspaper then it really is incumbent upon you to understand the subleties of said statistics.

Otherwise we might just think you got the job because you\’re in one of those easy to hire, easy to fire, countries.