Err, Snippa?

The so-called Yellowhammer report is wrong. I can say that with absolute confidence. Every forecast is, and I’ve delivered a lot in my time, always with that caveat attached to them. But in my opinion that does not mean it is not important. That’s precisely its significance.

All it really says with certainty is four things. The first is that we do not know what will happen if we hard-Brexit.

Err, that’s what the report is telling us. What will happen.

He doesn’t even understand what he himself is saying

Jeebus:

I am writing this sitting in a hotel breakfast room. Simple observation shows that obvious that the assumption that we are indifferent to others is false. People are cooperating over the breakfast buffet. That buffet shows that someone cares – and profit alone cannot explain that. The staff are attentive, and very clearly being respected. The interaction of those within the room is interesting to observe – most especially at the tables where colleagues are meeting before a working day: the interactions are clearly about more than personal gain. There are enquiries made as to well-being that are obviously sincere: the ‘other’ matters at a level far beyond their utility.

And we all know this is true. And yet we organise our economy as if it is not. And that is the paradox that is laying our society, our well-being and our lives low in the twenty first century.

That hotel breakfast room is indeed the economy. And look at it, people are cooperating and it all works.

Which is what we do in that economy. You know, interact and cooperate.

Or as we might put it, try not to use the example of a market economy working to rail against a market economy. The logic doesn’t really work if you do…..

You know what’s so lovely about Sustainable Cost Accounting?

It makes no damn difference:

I was asked by a person with a political persuasion to prepare some slides for them so that they might present my ideas on what I call Sustainable Cost Accounting.

The argument is on the production methods of the company. OK. So, apply to an oil company. Their production methods might be mildly emittive. But that’s not the point, is it? The people who buy the products are going to be doing an awful lot of emitting.

That is, this new accounting method doesn’t actually solve any known problem.

Well, he would, wouldn’t he?

This is my kind of macroeconomics:

The abstract says:

The case for central bank independence is built on an intellectual two-step. Step one argues there is a problem of inflation prone government. Step two argues independence is the solution to that problem. This paper challenges that case and shows it is based on false politics and economics. The paper argues central bank independence is a product of neoliberal economics and aims to institutionalize neoliberal interests.

Of course Snippa won’t like it.

The actual aim of central bank independence being to stop politicians inflating the hell out of the money supply as Snippa wants to do.

Not that that’s neoliberal, it’s just a rational constraint on the excesses which public choice economics leaves us prey to.

So who hasn’t read the report then, eh?

To pontificate:

IPPR has issued a report this morning calling for the alignment of tax rates on capital gains tax with the equivalent income tax rate applicable to the taxpayer making the gain. In effect, they are arguing that gains should be taxed as income. This is a policy proposal I entirely agree with, as I noted recently. It is virtually inexplicable that when we are worried about increasing income and wealth inequality in the UK, which organisations as left-wing as the IMF argue is harmful to society, the tax system is designed to exacerbate this trend. I say virtually because for some this is entirely explicable: that increase in inequality is their aim.

The Guardian report on the IPPR proposals is supportive.

Worth actually reading the report really:

The first two are significant: it is a deeply economically orthodox view of tax to think that it is simply a tool for raising revenue that must be maximised in a microeconomic sense as if a government is the same as any other entity subject to the rules of the market, which that microeconomic approach would suggest to be the case. This view, best summarised of late in the IFS’s own Mirrlees Review, is profoundly wrong. It fails to recognise the importance of tax as an instrument of social and economic policy in its own right. I would suggest that the IFS is repeating its own error in endorsing the Mirrlees view in making these comments on the IPPR proposal.

The IPPR proposal discusses, at length, the Mirrlees view and suggests that it’s an entirely viable method of structuring matters. Someone who had read the report before pontificating would know that.

In that case the IFS objection on the grounds of whether or not this policy might raise significant revenue is irrelevant. The whole purpose of equalising tax rates would be to change behaviour. The object would be to remove the incentive to re-categorise income as gains and to as a result minimise the tax avoidance activity that takes place around this rate differential to the benefit of society at large. It really is time that the Institute for Fiscal Studies understood these most basic issues with regard to text design, which their blinkered adherence to orthodox neoclassical economics prevents them doing.

I applaud IPPR’s approach. This change needs to happen.

Well quite. The IPPR models both an inflation allowance and the Mirrlees risk free return allowance. Pointing out that one of the two is – probably – needed in order not to tax illusory capital gains.

But, you know, why bother to read before commenting, eh?

Sniff. Pshaw.

If you want a giggle this analysis of MMT from a hard Marxist perspective is amusing for the politics and economics geek. Written by Adam Booth, it could have been improved by even a little reading of what MMT is about. It makes the most basic of errors. So many in fact, I have no time to point them out.

Actually, the first half – got bored, sorry – looks pretty good.

I think what’s pissing on Spudda’s chips is that Marx was actually correct in that money arises from the desire to track debt rather than state action. That’s so not Tutto nello stato that Snippa just can’t allow it to be so.

Seventhly, it’s the narrative that matters, oh yes!

One reason I have for writing rugs blog is to work out just what the narrative of my life might be. I would suggest that all of us, in our different ways, do this all the time.

At times like the present it is harder to work out what the stories on which we build what we think we know might be.

It’s usually good to start with reality.

We know he is a pathological liar. Once it was just bent bananas.

EU law does in fact state that class 1 bananas for direct human consumption must be free of excessive curvature. And there’s a 6 month spell in pokey and or a £5,000 fine for anyone who breaches that law.

He claims we are ready for No Deal. Nothing can prepare us for a shock of that sort – even if the hit is only 5.5.% of GDP as Mark Carney now suggests.

Carney has suggested that some time down the road we might be 5.5% worse off as a result of leaving than we would be if we’d stayed. That’s not a “hit”. That’s less of a rise.

I am not presuming that those people who think ‘we must just leave’ are stupid. They’re not. But they are misinformed. They have built narratives peddled to them by thsoe with deep pockets and a willingness to lie that this is an option that is in their best interests, even though it is not.

Willingness to lie, eh?

The message is not hard to work out. It is that our leadership has failed us, on many sides. But that we the people do want to co-exist with our neighbours, because we do know we are better when cooperating, and we do know that we have more in common than divides us, whilst recognising that we are not all alike and do not wish to be so. We do therefore want to have a relationship with Europe based on mutual trust, the ability to trade and to move between our countries whioch does, however, respect our differences and lets all make decisions that reflect the fact that those differences are real, but must not be used as a means to oppress others.

So if we – and they – are to be allowed to make different decisions then we’ll have to not be part of the same political construct, won’t we?

The Murphmeister demand investment. The Murphmeister doesn’t understand investment

As we know, no one is to be allowed to just save. They must invest.

You know, spend now, gain later?

Ahem:

Now much less might be right. But, and I stress the bit, only if they explain why. In full. With logic as to why they continue to support loss making operations when it would seem utterly logical for them to retreat from Europe as they would make more by doing so. Shareholder capitalism would require nothing less.

??

Spud’s lovely assumption

And I will also say I do not believe Amazon any less profitable in the U.K. than the US

I know that in fact. If it was it would have pulled out long ago

This is a single global entity with a consistent core business which is mature in the UK

Ford’s been in Europe for a century now. GM had been. It’s reasonably well known that Ford Europe and GM Europe are not equally profitable to Ford US and GM US.

No, not really


So he asked me if I’d take him to the station so that he could get into college in Cambridge on time, which I admit I do not do very often. And I agreed.

My reward was a tirade about how unjust it is that he, as a 17-year-old with a lifetime of living with Brexit ahead of him, will not get the vote at a general election that will decide that issue.

And he’s right. Of course, I’m biased about him: that’s a father’s duty. But I’m not about his friends. And he, and they, are more than capable of making an informed decision on what they want from a government, and their future.

It’s a farce that they will be denied a vote on an issue so important for them.

That’s he’s currently going to college is proof perfect that he and we regard hims as currently insufficiently educated. Why in buggery should he have the vote then?

A threat!

I will have no choice but vote tactically when the chance comes: the future of parliamentary democracy demands it

Oooh!

I will be voting Lib Dem.

I am not a Lib Dem. I have major reservations about the Lib Dems, but only they can unseat the Tories in the seat I live in, which is South East Cambridgeshire.

Ahem.

In 2015 and 2017 Labour achieved the largest increase in their share of the vote, and in 2017 achieved their highest ever vote share in the seat (27.7%) and overtook the Liberal Democrats for the first time since 1997; despite this, the Conservatives achieved over 50% of the vote in the seat for the first time since 1992.

Well done to Ritchie

The alternative is to ensure savings are actually used to fund real investment, which is possible (and I do understand MMT). As I have argued, if savings were directed via pension funds and through ISA accounts into Green New Deal related investments then those funds would be available to invest in the transformation of our society needs if it is to survive. Those Green New Deal investments might include government gilts, but are more likely to be dedicated to the purpose. So, it could be green gilts. But better still they would be issued by a National Green Investment Bank to fund the Green New Deal, either directly or by making loans to those businesses that will actually supply much of this activity on the ground. In addition, I think that there could, and should, be housing bonds to fund new net-zero carbon social housing. And I see no reason why we should not have transport bonds and energy bonds as well, and I also happen to think that all of these could come in regional forms so that people could direct their funding towards the aeria where they live, if they so wished

From the discussions that I have had these ideas appear to be very popular.

Maybe that is because I add another suggestion. In my opinion the minimum funding required for the Green New Deal is £50 billion a year. I have shown that none of this need come from taxation if savings are properly reorganised using tax incentives. But in that case I think the least that we can do is pay a decent rate of interest. Right now that need be no more than 2%. If that was on offer are present the money would pour into these accounts: all the funding we need to transform society would be readily available, and at a cost of just £1 billion a year to fund £50 billion of investment.

2% eh?

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 2.0% in July 2019,

You’re to get a zero real return on your savings for your retirement. anyone want to work back to the savings rate required for that?

The Consumer Prices Index (CPI) for the 12-month period to March 2019 stood at 2.0% – down from 2.1% in April 2019, according figures released by the ONS.

Less than zero return?

The Senior Lecturer tells us of the future

And there is a serious need for reversion to former patterns of land use, which will include significant replanting

Apparently we’re to go back to proper organic farming with cowshit as fertiliser. So, plough up every available piece of land so as to be able to feed everyone.

I am not an environmental expert and have never claimed to be.

Well, obviously.

Third, there is the issue of population. Most people don’t mention this, but I will. We are heading for 10 billion people on this planet. That will stress it to its limits. We do have to encourage birth control. There really is no other way to put it. We’re not going to stop population growth. But we do need to manage it.

We are managing it. By getting rich. As people get rich fertility rates fall below replacement levels. Has happened everywhere it has happened. And is happening everywhere it is happening. And contraception is some 10% or so of this. The other 90% is people getting rich. So, to curb population we must all get rich.

It’s impossible to suggest all the ways in which this change can happen,

Yes, quite, that’s why every economist on the subject insists that we must use markets in our solution. Because only markets provide the incentives to explore every possible piece and part of the solution.

So, if continual growth has been the singular prevailing narrative of government for 75 years – and I would suggest it has been – then that can no longer be the case.

Idiot. Actually, twat.

So RCP 2.6 is the one in which we conquer climate change. We o everything necessary and we save ourselves, the ice caps and Flipper.

RCP 2.6
This scenario might be described as the best case for limiting anthropogenic climate change. It requires a major turnaround in climate policies and a start to concerted action in the next few years in all countries, both developing and developed.
Global CO2 emissions peak by 2020 and decline to around zero by 2080. Concentrations in the atmosphere peak at around 440 ppm in mid century and then start slowly declining.
Global population peaks mid century at just over 9 billion and global economic growth is high.

Actually, he’s a cretin, isn’t he?

According to the standard and accepted science solving climate change involves high economic growth.

And if it has been assumed that wealth would trickle down – and that has been the assumption even though the evidence for the theory has been very thin on occasion and virtually non-existent of late – then this approach to the relief of poverty and the redistribution of well-being has to also end. If everyone is to have a chance now that can only happen as a result of positive action by government. Nothing less will do.

What’s actually the economic tale of the past 40 years? The manner in which growth has been pro-poor of course.

Whilst if government has for the last 40 years of the neoliberal era believed it’s been its job to stand back and let business take the lead in society because markets can apparently generate the answers to all problems then we also need to radically change that assumption as well. Markets have led us to where we are.

Oh, right.

Man’s remarkably ill informed isn’t he?

And we’re out of control. The invisible hand has proved to be remarkably malign. Government has to believe in itself like it never has in the time most people alive have known of it. That’s the most massive challenge.

Just a thought but the Millennium Development Goals included the idea that we halve absolute poverty globally. The only one of the targets that was overachieved and early. All due to those neoliberal markets of course, government action had nowt to do with it.

But that then means that government must spend to good effect. And it also means that tax policy must be designed to reinforce the policies of government.

Well, yes, as all the economists have been saying, have a carbon tax.

This is possible. To achieve this goal I suggest that the government must impose a new accounting demand on businesses. All but the smallest of businesses would be required to prepare a plan for them and their supply chains to be net zero carbon by 2030. Those businesses must cost this plan. And they must publish it. And the costs of the whole process of change must be included in their accounts by no later than 2022. If as a result they cannot either indicate how they might make this change, or if they think that they can but cannot see a way to fund that transition then they must be declared carbon insolvent. That would mean that they would not make it to the era when we have a sustainable economy. Let me not beat about the bush. This would mean that they would have to close. And the capital that they now use would have to be reallocated to those businesses that can operate sustainably.

The business of being the Sage of Ely requires transport – not carbon neutral in the Britain of today. Heating of a house at least, not carbon neutral in the Britain of today nor by 2022. Food ain’t carbon neutral here either.

So, looks like we get to close down the business of being the Sage of Ely.

Or we could just ponder that demand in itself of course.

Public transport must be transformed to cut the waste within private transport systems. This may well require nationalisation of large parts of this system to deliver the required degree of co-ordination between networks. The future is not the electric car. The future is either not travelling or doing so on public transport charged with renewable energy.

Even the Soviets allowed you on a list for a car.

I find this question rather boring. What it implies is that we have a choice about doing these things. We don’t. I do have a choice when it comes to the life of my dog – and yes I have one. Given his age there would definitely be a cost I would not pay for him if a vet asked me to do so. I am not apologising for this: that’s, literally, a dog’s life. But ask me the same for my children and there is no price I know of that I would not pay if I had to. And that’s what this is about. How much does this cost? ‘Whatever’, is my answer. And it will still be a price worth paying.

An interesting question. Does the Senior Lecturer also think that any price is worth paying when it’s societal resources? For example, would he demand that more than £30,000 per Qualy be spent upon the lives of his children?

That said, best estimates are that it will cost the UK as a whole at least £50 billion a year, or about 2.5 per cent of GDP.

Abolishing cars and building out public transport by 2030 will cost 2.5% of GDP per annum will it?

But given the climate crisis we face we need to stop the continual flow of funds into the purchase of second hand shares – which is all that stock markets have to sell – and second hand buildings, which is all that most commercial estate agents have on their books. These are utterly unproductive savings mechanisms. We have to instead direct savings to where they might be used – and right now that is likely to be government based savings schemes used to provide capital for the Green New Deal.

Everything that is already built or created therefore has no value as there is no market for it. This will also be true of everything that is built or created as there will be no second hand market for it. At which point how the hell does anyone get their capital back? To, you know, use again to build another thing?

He’s basically demanding that everyone invest with no possibility of exit.

Err, yes, man’s an idiot. And a remarkably illinformed one too.

Now redo the numbers

The tax subsidy the private sector pension now receives annually has already provided the private pension sector with more cash each year than it has paid out in payments to those in retirement. The result is that the situation has already arisen where every single penny of pension paid in this country is at cost to the state.

He’s measuring tax relief now against pensions being paid now.

But the correct calculation is tax relief now as against pensions to be paid from the funds that have received the tax relief. And at that point we’ve also got to work out what will be the tax paid on those pensions so that we can deduct that from the amount of tax relief being offered.

No, I’ve no idea either but that is at least the beginning of getting the sums right.

Amazing how up to date the Senior Lecturer is

But on this occasion she cannot avoid responsibility precisely because her role is constitutional and it is the. constitution that is in jeopardy. She does, therefore, have to act. It is her duty to reject Johnson’s call, which has the sole purpose of denying parliament its proper role.

If she does not do so then I think they days when she has a role are over.

And in that case there is no justification for the civil list.

Her Majesty should think long and hard: I’d suggest there is rather a lot at stake here for her and her legacy as well as the rest of us.

Well, yes:

In the United Kingdom, the Civil List was, until 2011, the annual grant that covered some expenses associated with the Sovereign performing their official duties, including those for staff salaries, State Visits, public engagements, ceremonial functions and the upkeep of the Royal Households. The cost of transport and security for the Royal Family, together with property maintenance and other sundry expenses, were covered by separate grants from individual Government Departments. The Civil List was abolished under the Sovereign Grant Act 2011.

That expansion of the universities to include Islington Technical College was a really great idea, wasn’t it.

Message for the Senior Lecturer

A pension tax trap has hit the Armed Forces, as leaders say it has affected thousands of service personnel. A former defence minister revealed that some senior soldiers had even spurned promotions rather than face a financial loss as a result of the pension rules.

Between 2017 and 2018 there were 3,840 members of the armed forces pension scheme who breached their annual tax-free pensions savings limits.

Earlier this month the Treasury said it would review the controversial tax rules on pensions introduced by the former chancellor, George Osborne, which sees higher earners restricted from putting more than £10,000 annually into pensions without facing taxes.

Marginal tax rates really do actually matter…….

For The Sage Of Ely

A famous theorem in economics states that a competitive enterprise economy will produce the largest possible income from a given stock of resources. No real economy meets the exact conditions of the theorem, and all real economies will fall short of the ideal economy—a difference called “market failure.” In my view, however, the degree of “market failure” for the American economy is much smaller than the “political failure” arising from the imperfections of economic policies found in real political systems. The merits of laissez-faire rest less upon its famous theoretical foundations than upon its advantages over the actual performance of rival forms of economic organization.

If only it were possible to beat this point into him.

Looking around the world, we don’t have any examples of countries with successful model of state-run economic organization that have consistently over the long-term provided a higher level of standard of living or faster growth than the many countries with market-based systems–that is, not just a different set of constraints and rules to a fundamentally market-oriented economy, but a genuinely different model where the economy is run primarily through the political system. That fact tends to confirm Stigler’s suggestion that real-world political failures in economic management can be severe.

Ooooh, we likes this we does

That is spot on. The absurdity that is faced by almost everyone around this country is that what is recycled, and how, varies considerably from place to place. This has to end. If it’s worth recycling then doing so must be enforced and nothing less than a national framework will do. That’s what a Green New Deal requires.

A rigorous examination of what’s “worth recycling”? Bring it on.

Assuming that it will in fact be a rigorous examination of course.