This is a very strange Brad Delong piece

BERKELEY – Neville Chamberlain is remembered today as the British prime minister who, as an avatar of appeasement of Nazi Germany in the late 1930’s, helped to usher Europe into World War II. But, earlier in that fateful decade, relatively soon after the start of the Great Depression, the British economy was rapidly returning to its previous level of output, thanks to Chancellor of the Exchequer Neville Chamberlain’s reliance on fiscal stimulus to restore the price level to its pre-depression trajectory.

What?

Our Neville became Chancellor in 1931.

Whereupon he got us off the gold standard and cut government expenditure.

It was a couple of years later, when the currency devaluation thing had done its stuff that he started to expand spending again.

I\’ve not got the numbers for the deficit or national debt in those years. But the idea that Our Nev did \”fiscal expansion\” in 31, 32, seems very strange indeed. Anyone know?

Polly can be ignorant at times

Start with taxing all incomes at the same rate – a worker on an average £26,000 is taxed £5,981, but someone earning the same in dividends pays zero. Those on the 50% tax band only pay 36% on their dividends.

Bleedin\’ \’ell Polly!

Don\’t you know that (in effect) basic rate income tax is collected on dividends by the company? The reason that no more basic rate is paid by the recipient is because we\’ve already used the company to collect it?

Another surprise!

Figures show that the gender pay gap has dramatically narrowed, leaving young women marginally ahead of their male counterparts for the first time.

Female workers aged between 22 and 29 earn just over £10 per hour on average, while men in the same age bracket are paid just under £10, the study found.

Given that young women, on average, now have more education, are educated to a higher level and have better grades in their education than young men this really isn\’t all that much of a surprise.

However, the really important thing is that the average age of prima gravidae has moved to just shy of 30. Thus all those things like maternity leave, career breaks, couple of years out of the labour force, deliberate choices about working hours and family life, these are extant only as echoes backwards in time.

“The gender pay gap may take another generation to close as the pay feeds through to the more senior workforce,” she said.

But that, I\’m afraid, I don\’t think is going to happen. For we\’ve not actually got a gender pay gap. We\’ve got a motherhood pay gap. And as long as it\’s mothers that do the bulk of the child rearing (which I pretty much assume is going to remain the case. We are mammals after all) then that gap is going to remain.

I can see the pay gap disappearing for those who don\’t take the time out: it\’s already gone in fact, single never married women make a fraction more than men in the same age cohorts. I can see it shrinking to almost nothing for those who take only the time out for the stitches to heal. But I can\’t actually see it disappearing altogether, on average across the population, while men and women with children continue to make different decisions (on average, of course) about who works flat out in the market and who works a bit in the market and bit/lot at home.

And I just don\’t expect that difference in choices to disappear. For as I say, we are indeed mammals.

Cousins doing art

An art project (I think this is what it is called? Performance art? Inclusive art? Participatory art?) being done by a beloved cousin.

Here.

If any of my readers who actually know about such artistic things (clearly, the familial art genes did not acumulate in me) would care to track down the project in London and give a more considered view space is available here for such a review.

@richardjmurphy new report: wrong on tax again

Ritchie\’s new report goes to great lengths to try and insist that corporation tax rates don\’t have very much effect on growth. Something which is true, no one has ever said otherwise, but then he takes the great leap into nonsense:

Mike’s trouble is I did not say it did not affect growth: read the report and it clearly says there is a link between corporation tax and growth. I did not deny it: I do not deny it.

True…..

In English that means that at most 7% of growth differences can be explained by differences in tax rates.

We\’ll assume he\’s got his numbers right.

But my point is that Devereux’s choice to ‘control’ for those other factors when coming to this recommendation ignores the fact that my findings suggest that those other factors explain 93% of growth and changes in corporation tax in countries comparable to the UK explain just 7%.

So, when making policy, and deciding how to allocate scarce resources would any rational, objective person, use corporation tax to stimulate growth when it is apparent that this has weak links with growth and that its impact is at best highly marginal or would you instead go off and look at and invest in the other factors that encourage growth?

The right choice is very obviously to look to recreate growth using other mechanisms.

Ah, no, that\’s the leap into the dustbin of bad ideas.

Recall what it was that the OECD was saying in the first place.

Different taxes have different effects on the rate of growth. No, not that taxation is the only influence on growth, that would be an absurdity. Just that *for the same revenue raised* you\’ll get more growth with one tax mix than you will with another.

And we can construct a table, as the OECD did do, which tells us which taxes *for the same amount of revenue raised* give us more or less growth. From the most growth *for the same amount of revenue raised* to the least growth *for the same amount of revenue raised* it\’s property taxes, consumption taxes, income taxes and then with the very least growth *for the same amount of revenue raised* we get capital and corporation taxes.

And Ritchie has calculated that this effect might be able to explain 7% of growth at best (for he is indeed looking at only corporation tax rates and growth).

Which gives us that lovely rarity in economics, the free lunch. By changing our tax mix we can have more growth than if we don\’t change our tax mix. If we have lower corporation tax than we do and higher VAT, or higher property taxes than we do, then *for the same amount of revenue raised* we\’ll have more growth. Our children will be richer by our doing this.

So, is this what Ritchie does? Says that, well, of course corporation tax rates are not the whole story but the evidence is clearly that lower corporation tax will boost growth and therefore we should have lower corporation taxes?

No, don\’t be silly, of course he doesn\’t. He says that given that there is a free lunch we shouldn\’t eat it.

He makes the choice ‘do you cut taxes, or not?’. Well if that was the only option then you might cut taxes. What my work shows is that Devereux asks the wrong question, uses statistics badly and as a result comes to the wrong answer, which is inevitable when your political blinkers mean you ask the wrong question, which is what I think he’s doing.

Quite. When Ritchie\’s research shows that cutting corporation taxes and raising other taxes so that we can go and do all of those other things as well, changing the tax mix *for the same amount of revenue raised* makes us better off, Ritchies\’s conclusion should be that we should change the tax mix *for the same amount of revenue raised*and also go off and do all of those other things with that revenue raised.

Which he doesn\’t suggest for when a report:

uses statistics badly and as a result comes to the wrong answer, which is inevitable when your political blinkers mean you ask the wrong question,

you will, as Our Retired Accountant From Wandsworth says, come to the wrong answer.

 

Well yes, Mr. Huhne

Huhne will say: \”If the oil price doubled, as from $80 last year to $160 this year, it could lead to a cumulative loss of GDP of around £45bn over two years. This is not just far-off speculation: it is a threat here and now.\”

And of course your own plans to douple, triple*, the cost of electricity will have exactly the same effet.

Making energy more expensive will have costs for the wider economy, whether it\’s via a general rise in global prices or through your tariffs, taxes and quotas.

*Exaggeration for effect.

Anna Chapman

United Russia, the Russian prime minister\’s all-powerful party, has already pencilled in Miss Chapman as the next MP for the Volgograd region in southern Russia according to the daily Nezavisimaya Gazeta newspaper which said it had seen the list.

The former spy is all but guaranteed electoral success as Russia is a de facto one-party state and the United Russia party is expected to keep its dominant position for years to come.

Well, yes, I guess that does confirm that she actually was a spy then…..

Guardian editorial numptiness

What is needed is policy and a body which will support films that can secure European co-funding. Not Hollywood sell-outs but commercially successful British films with their own distinctive audience.

If they\’re commercially successful then they won\’t need taxpayer subsidy then, will they?

Numpties.

Surprise!

A Moscow court Monday found tycoon Mikhail Khodorkovsky guilty of embezzling and laundering billions of dollars worth of oil from OAO Yukos, the company he once controlled, confirming widely held expectations of a conviction in a case that has come to define the rule of Vladimir Putin.

Couldn\’t see that one coming, could we?

Help please: thorium reactors

I\’ve been contacted by a very major investor type who wants to know more about thorium reactors.

Before I go back to him with what I know (essentially, they work, but it\’s a regulatory thing….that\’s about as much as I know) I want to throw it out to you guys.

Details and specifics of thorium reactors: what are they good/bad for, why aren\’t we using them?

Timmy Elsewhere

At El Reg again.

How to work out what will be said at a press conference by not going to the press conference.

Read last year\’s report!

Actually, there is a more important point here: I would lay a goodly chunk of money that most reports about this, umm, report, in the papers tomorrow do not manage to make the important distinction. As G. Monbiot managed not to when he saw a preview of it a few weeks back.

Does not compute

This is an odd thing for an economist to say:

If houses could be bought relatively cheaply, it was because local councils once provided \”social housing\”. Council houses were sold off by Margaret Thatcher – leaving housing entirely to the market,

Flogging off council houses increases the supply of houses that can be purchased. Other things being equal (which of course they weren\’t, I\’m looking at this one single point) that would make houses to buy cheaper, not more expensive.

Then again, Irvin is an \”economist\” at SOAS and they do things differently there.

Oh well done Ritchie!

Quite marvellous. So, our favourite retired accountant notes that crime is increasing in the Cayman Islands.

OK.

To Ritchie this is clearly to do with the fact that the whole place is simply a bunch of gangsters, Vampire Squids sticking a straw into the bloodstream of the global economy.

Only occasionally, but persistently none the less, have I argued that their business models are also deeply and fundamentally dangerous to the people who live in the small island secrecy jurisdiction.

There are two reasons why I have argued this. First of all, is is obvious in the case of the Crown Dependencies, Cayman and others, the model is incapable of funding the necessary functions of government.

Second, as in Turks & Caicos and Antigua, corruption has destroyed the state already.

This social unrest is spreading. You cannot build a state on the corrupt premise that is inherent in the abusive structures promoted by secrecy jurisdictions – structures that were always and solely designed to facilitate crime and, I will candidly suggest,  for no other purpose – without crime spreading, including in your home jurisidiction.

Cayman is the latest jurisdiction where this is being seen. It is suffering enormous tension in an island of just 55,000 people, an outbreak of violence and murders and has an inability to now police itself – showing how absurd is its claim to be an independent territory.

Cayman is collapsing fiancially.

Cayman is collapsing as a society.

Who knew accountancy could have such effects?

Looking at his actual source document though shows something a little different:

To counter the crime rise, the police commissioner cancelled all rest days and vacation for police officers and put them on 12-hour shifts. Nonessential services were suspended to boost police visibility on the streets.

Drawn from a number of Britain\’s police forces, the reinforcing officers, who will be on four- to six-week assignments, were investigators and detectives with expertise in running murder inquiries and tackling gang-related crime.

\”It is not about bringing in a SWAT team,\” said Baines. \”It\’s about filling in the skill shortfall we have because our existing detectives are stretched.\”

Like most of the local police force, the reinforcements will not carry firearms, but will be backed up by armed officers if the need arises, a police spokesperson said.

Varying factors like the release of violent gang members from prison, a greater prevalence of firearms and leadership battles appeared to be contributing to the violence.

Gangs, which gained a foothold in the Caymans in 1996, have been involved in transhipment of drugs to the United States, as well as in the local drug trade, said Detective Chief Inspector Patrick Beersingh of the Joint Intelligence Unit.

Shipments of marijuana and cocaine from South and Central America are brought into the Cayman Islands via Jamaica, Honduras and Panama and then moved on to the United States. So-called Jamaican canoes also frequently smuggle in guns.

Police say there are some 30 criminal gangs in the Caymans with names like Jamaican Posse, Central Crew, West Bay Mobsters, East End Crew, Fern Circle and Wild Dogz. They each have special hand signs, colours and tattoos.

Ah, the islands are being screwed over by exactly the same thing that is screwing over Northern Mexico (a place which, we might note, doesn\’t have any offshore financial system): the absurd prohibition of drugs in the US and the military nature of the \”War on Drugs\”.

A