If only the Co Op had had a banker in charge

Co-op Bank has agreed to pump millions into the pension scheme of the Britannia Building Society.

The struggling lender will hand the group’s pension trustees £50 million over the next seven years, as well as placing a £137 million portfolio of top-rated mortgages or debt into a custodian account with another bank as security for the scheme.

The pension scheme became the responsibility of the Co-op Bank after its disastrous merger in 2009 with the building society and marks the latest financial hit as a result.

Instead of those non-bankers that Ritchie defended so vociferously.

Minority position does not have political party. Boo Hoo

It’s a pretty desperate situation. For many like me, clearly to the left of Hunt and clearly well to the right of the Trotskyists, all that is left is a void where there appears to be no hope of proper political representation.

If you’re a social but not economic liberal; a social democrat with green tendencies but who thinks the label green is too limiting; and whose aim is centred on social, economic and tax justice in a mixed economy that is not dominated by global corporate interests then right now the UK political scene presents you with the prospect of howling into the wind but no immediate chance of securing political representation from a party that comes close to representing your reasonable aspirations for the country, economy, health, education, the planet and so much more.

And political parties operate in a market of course. And if there’s no one else in the country who shares you political position then you’ll find there is no political party for you.

Well Ritchie makes the papers

In a second major policy u-turn the Labour leader announced his support for a “maximum earnings” limit on Tuesday morning only to abandon the policy just hours after proposing it.

He backtracked on the plans just hours later after they were dismissed by his own former economic adviser as a “lunatic idea” and “completely unworkable”.

That peerage ain’t getting any closer though.

Idiot is idiot again

They appreciate what economists don’t, and that is that all this complexity is faux: value is not made by discounting the future. Value is made by doing the right thing now in the light of the uncertainties that we face which we may not be able to quantify but which we believe to be real. And when economists begin to appreciate that we may get better economics.

Net present value, that discounting, is attempting to work out what value will be created in the future by the actions you take now.

How else should you work out what you should do now other than by trying to work out what value it will produce in the future?

All humans do this too. We don’t have the tonic with that 12 th double gin because of the appalling headaches that too much tonic water causes.

Wonder if this will ever break through into his consciousness

Let’s be clear that I am not excusing either party for its haplessness: incompetence is unappealing from wherever it comes and right now it is being offered by the two major party leaderships in Westminster. But if that is the case and continues, as seems likely, what are the prospects?

We’re ruled by idiots and yet obviously politicians should have more power over our lives.

What point the Curajus State if they’re all cack handed morons?

The demand that GPs provide a seven day a week service is one they simply cannot meet: there are not enough GPs to do it. And unlike the junior doctor dispute, no one will die if a GP is not open on a Sunday. Emergency health care of a very high quality is already available seven days a week in the UK. This demand from the government is simply about consumer choice, not medical need. So GPs need to say no.

Which is all you need to know about what the populace wants in said Curajus State really, isn’t it? “Simply” consumer choice?

So he’s actually playing it for laughs then this year is he?

Amazon has apparently patented a floating warehouse system to be located in what are effectively airships floating at 45,000 feet above high density delivery areas. The warehouses are to be replenished with stock by associated ballon or airship systems and staff working at 45,000 feet would arrive and depart in these same way.

I suspect that technically the system has a long way to go before it might work, but let me assume Amazon has reason for thinking this way. Suppose, just for a moment, that the airship warehouse was replenished with stock from another warehouse anchored in international waters. There, is surely, no reason why this is not my possible? Where then is tax paid on the transaction? Might this be the reason for Amazon’s interest? And if so what is the appropriate tax response?

Amazon’s released a bit of PR flummery and he wants to know what the tax implications are?

I am, in general, deeply cynical of destination based sales taxes. Does such a situation require it though, maybe as an exceptional charging basis?

Can’t see why VAT, a destination based sales tax, wouldn’t be charged in the normal manner.

Let alone the fact that any company using such a system might be wholly avoiding the contribution retailers with stores make to the societies in which they work through the local taxes that they pay that Amazon will claim are, quite literally, beneath them?

Local taxation being based upon the use of land, something they’re not using.

I am not saying Amazon cannot develop their ideas. But I do think we need to presume their goal is to subvert tax systems to secure competitive advantage when doing so and make sure we are ready to counter that.

No, their goal is to get every idiot to plaster “Amazon” across their pages.

Tutto nello Stato

Fred Z says:
December 30 2016 at 2:02 pm
“restriction on the free movement of capital that will be needed”

Are you wanting to keep capital from moving into the UK or from moving out of it?

Richard Murphy says:
December 30 2016 at 2:27 pm
Potentially both – depending on the situation

Financial capital cannot be assumed to be benign

Ed Seedhouse says:
December 30 2016 at 7:30 pm
Surely a monetarily sovereign government like the U.K can create all the capital it needs to fund anything. This being so, how is the flight of foreign capital a risk in any sense?

Richard Murphy says:
December 30 2016 at 7:58 pm



Those damn foreigners can’t just come in here with their money. They must be CONTROLLED!

He wants to make us poorer now

The first is that leaving the EU ends the obligation for the UK to partake in the free movement of capital. It’s not just free movement of labour that is guaranteed by the EU: so too is free movement of capital and there has always been a fundamental problem in linking to the two. Because capital can move vastly more quickly and easily than people (it has no family ties or school arrangements to worry about, for a start) having freedom for both capital and always meant that reward was going to shift from labour to capital because capital has the greater agility. The time has come then to make clear that it is restriction on the free movement of capital that will be needed if the return to labour is to improve in the UK.

We import capital in the UK. That capital adds to the productivity of labour and thus the wages of labour. It’s possible that stopping the free movement of capital will change the share of GDP going to labour and or capital. But it will be of a smaller GDP.

He’s going to make us poorer.

How odd this is

The blog will, however continue. I was never funded to write or publish it: it has always been something I have thought I have done in my time.

Didn’t his annual accounts show that, or claim that, his grants were to write his blog? Could he have been lying to Companies House? To stakeholders?

Spud strives mightily to bring forth

That said in some areas the state is much more likely to be managing activity than now, and will do so without any pretence that it is mimicking the market. The confidence of the public sector in its own ability to manage in the public interest which cannot be determined by the power of consumer spending alone will be greatly enhanced. The key performance indicators may recognise financial constraints but it will be service priorities that will predominate.

Taxes may, or may not rise. It is highly likely that those on financial wealth will. Their power to avoid obligations will be broken by international cooperation, enhanced accountability and the sensible use of bank and other financial data to identify those who really owe taxes on the reward they make from the societies that provide them with benefits. Some of the resulting taxes will be new, but taxes on income and consumption, the use of land and trade will all still be found. Accounting though may look very different: a system of reporting that is at least as much concerned with returns to employment as it is with capital will look very different to one that seeks to hide financial power from view.

What will be certain is that the social safety net will become more central to the relationship between the state and those who live in its jurisdiction and it will be the state who will be supplying most of the associated services.

To put it another way, such a system will redraw the boundaries of power, management and control and redefine the reason why they exist. Capitalism – in the form of the power of the market – will be embraced and encouraged to allocate resources to maximise the return to people across a range of interests, from being consumers, investors, employees and fellow citizens (each of which it will be realised can exist simultaneously and not discretely) – but the limits to that power will also be recognised. When there is a natural monopoly there is no effective market. When there is no choice the consumer is disenfranchised. When the market cannot price returns there is no point pretending that it can. Then the state has to act and use its discretion, and there is also no point in pretending that when doing so it is not rational: truly accountable democracy provides that rationality.

And gives birth to fascism.

He really does have to go and look up the economics of fascism, doesn’t he? Even if only to make sure he’s getting it right.

Spud you didn’t like

George Fox says:
December 27 2016 at 7:43 pm
*Have* to pay import tariffs? We will only *have* to pay import tarriffs if *we* for some bizarre reason chose to impose them.

Richard Murphy says:
December 27 2016 at 8:34 pm
I clearly need to look at this, but I believe WTO rules require tariffs be imposed

But I accept I may be wrong

George Fox says:
December 27 2016 at 11:08 pm
WTO rules are that tariffs must be no more than 5%. Zero is less than five.

Richard Murphy says:
December 28 2016 at 6:56 am
Where did you get that one from?

Well, actually, I got it by phoning up the WTO and asking them:

To insist, meanwhile, that we must raise tariffs on the imports we desire is to misunderstand the WTO system. As a source in Geneva explains, Britain is a WTO member in its own right and will still be so even after Brexit happens. This means that we have promised not to charge higher than the allowable ceilings in tariffs upon imports from other WTO members. The Most Favoured Nation clause also states that whatever we do decide to charge ourselves, we must apply the same rate to the same products from all different WTO countries.

But not charging higher than the allowable ceilings does not commit us to charging anything at all. We can apply a 0 per cent rate (yes, I checked) if we so wish.

That is, being outside the EU means we do not have to charge the EU external tariff rates upon anything and can insist that we pay ourselves nothing on all sources of food from everywhere.

You know, actually checking stuff?

This is also Spud idiocy:

John Whiting says:
December 27 2016 at 8:49 pm
I have just done a quick bit of googling and it seems that under WTO rules the UK can’t impose tariffs on imports higher than the the EU imposed, but the UK could adopt the same, lower or no tariffs on imports.

Richard Murphy says:
December 27 2016 at 9:18 pm
So we give tax to others…….

Interesting game play

Now you know why we did VAT

He’s still not getting tariffs, is he? They’re paid by consumers within the tariff barrier (if there is to be any revenue at all that is). Thus tariffs on imports into France are paid by French people, not us. Who is giving away revenue?

Spud, spud, really

Labour did borrow more on average. The difference is small though and neither borrowed anything like as much as wartime coalitions did.

The biggest difference is that when Labour saved it really saved: the Conservatives did so only marginally.

A result driven by the Attlee years after WWII.

A time when they ran a budget surplus and also built the welfare state. See, it’s not actually necessary to run a deficit to do these things.

Spud questions we can answer

Which UK universities are you happy to see go bust because of a shortage of EU students?


How precisely will we be better off when we have to pay tariffs on most things we import?
We import more than we export. How are we going to win from tariffs?

And there’s why. A professor of practice in international political economy at City University thinks that leaving the EU means that Britain must charge import tariffs.


Well done Spud, well done

I have, for example, no idea how or when politicians get time to think because their schedules are always too packed for them to ever have the chance to do so. That’s good explanation for why they are so event obsessed and so often way behind where the public are on issues of importance.

That from the man who wants the unthinking to have ever more power over our lives.

There is an alternative explanation here

Labour have accused the Treasury of failing to fully tackle tax avoidance as it claimed to have identified a £2.6bn black hole created by downgraded revenue forecasts.

John McDonnell, the shadow chancellor, said that information buried in the small print of last month’s Office for Budget Responsibility report showed that three tax avoidance measures were now expected to raise significantly less than when they were first announced.

Which is that there’s less tax avoidance going on than some think….

Spud and the Magic Money Tree

Spud notes the Telegraph stating that there’s a magic money tree:

The well repeated line that “there is no such thing as a magic money tree” is heard almost everywhere. Even Prime Minister David Cameron has uttered this phrase.

But it’s completely untrue. If the will exists, the central bank can issue unlimited amounts of currency.

And then goes on to note that:

So why the continuing lie about the magic money tree? There is only one possible explanation. That is that its use to fund investment to meet real need, like housing, or to boost productivity by investing in infrastructure and so promote earnings growth, or to boost our green future and so provide hope,

Yes! Spud insists that the magic money tree should have been spent on real assets!

That is, he entirely misses the next couple of lines of the Telegraph piece:

So when people say there’s no such thing as a “magic money tree”, it would be far more accurate to say that there is no such thing as a “magic resources tree” or a “magic value tree”.
There certainly aren’t enough resources in existence to satisfy every demand for them. This is the problem of scarcity, and addressing it is the key thing that economics sets out to answer.

But that’s what Murph is insisting there is, a magic resources tree.

Ritchie’s Christmas Wishes

A new economic policy which says that:

More is not always better

Enough can be sufficient

People, and the quality of their lives, matter more than things

Education is of value for its own sake

Money is our servant

Having the time to be is the greatest goal of humanity

Most of our current economy is designed to stop us getting to that goal.

Hmm. Except for that last – where the truth is that our modern economy is the most efficient method anyone’s ever found to get us to that penultimate line – these are all things in standard neoclassical and even neoliberal economics. Which makes me wonder why he’s so dead set against those two. Presumably it’s because he simply does not realise that all of those are already incorporated.

Things can indeed have negative marginal utility. That first litre of water a day has a very high marginal utility, most of us like being able to use a few hundred gallons a day and none of us wants 5,000 gallons flooding the basement. We all satisfact meaning that we do agree that enough can be sufficient, quite right people matter, we’re the only people here. If you value education for itself then good luck to you, amenity, value and utility are, by definition, personal things. Money is indeed a servant, it’s just a better one than barter and it’s really not at all an odd observation that as people get richer they take more of that wealth as leisure.

It really does seem that he’s just ignorant of what the subject he wants to critique already says.

Idiot is idiot

Labour productivity isn’t rising very much. Training budgets appear to be falling. So, the Spud tells us:

If you want an explanation for the first graph it’s in the second. We just don’t invest enough in people in this country.

Hmm, perhaps we could devise a solution? What if we reduced the taxation of returns to capital so that people invested more capital so as to raise labour productivity?

But then Spud is the one calling for a 23 percentage point rise in the taxation of returns to capital (NIC on investment income) isn’t he?