Adam Lent and Tony Dolphin\’s plan

Interesting way of looking at it:

If so, he would no doubt regard us as simpering cowards. We have just published an IPPR paper which argues, coincidentally, that a forecast of 1.5% growth or below is precisely the point at which the Treasury should draw back from deficit reduction to give the economy some breathing space.

Our reasoning, however, results not from want of backbone but simply because we believe that in a time of extreme uncertainty, it is vital that deficit reduction plans are as responsive as the economy is volatile. Pressing ahead with plan A when the economy is underperforming over the short term will not only compound a bad situation but is likely to make it even harder to meet important deficit reduction targets as tax revenues remain suppressed for even longer than is necessary.

So, in a time of uncertainty we will cdeal with that uncertainty by increasing the uncertainty about what the government is going to do.

Difficult to see the logic in that really.

But unlike the chancellor we believe this should be done not by setting pre-ordained annual targets for the next four or five years as outlined in the emergency budget but by committing to an average reduction in the deficit each year. So, for example, on current forecasts, an average reduction in the deficit of 1% each year would eliminate the structural deficit by 2016-17.

Eh?

Are we to ignore mathematics as well as logic now?

How in buggery would a 1% cut pa in anything at all lead to elimination of that anything in only 5 years?

Given that the structural deficit is around 5, 6% of GDP, what we\’d actually need is a 1% cut in total spending each year to eliminate the structural deficit in 5 years.

Something which is, if I\’m not mistaken, larger cuts than those currently proposed, isn\’t it?

But then Adam Lent is one of those at the TUC who works with Ritchie…..

Will Hutton\’s upcoming report

Britain needs a grown-up conversation about the relationship between its public and private sectors – and a framework in which taxpayers , shareholders, workers and customers can understand why our bosses are paid what they are, and to limit it when it gets out of hand.

Agreed.

I, for one, would like to know why someone who was being paid £175,000 a year to run a charity, and ran it into bankruptcy, is still being employed by that now rescued charity. And how much he is being paid by that now rescued charity (accounts are not available for the period after the bankruptcy yet).

Such rewards for failure will be discussed in your report, eh Will?

JM Keynes on the Laffer Curve

Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget. For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more–and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss.

That\’s how the new Adam Smith Inst report on the tax system starts out.

Well worth reading. Do look to pages 24-28, where they estimate the losses to HMRC from the 50% tax rate. £350 billion to £650 billion.

YVMV but it\’s not an unreasonable set of calculations. Certainly, to reject it, you\’ll need to do more than just \”there is no Laffer Curve\” for as Ol\’ JMK above points out, there most certainly is, it\’s just a matter of where it is not whether.

One of the delights of course is that it repudiates (and refutes, but then I would say that wouldn\’t I?) every single tax proposal Ritchie has made.

The new political economy network: Keynes is dead, hurrah!

So, the new political economy network. It\’s got Duncan Weldon in it. A retired accountant from Wandsworth. The Guardian\’s economics leader writer. Such luminaries: and such luminaries, their words should be taken very seriously indeed.

In their introduction to their report about all this difficult sums stuff, what we should do with the economy, they say:

Labour made the mistake of buying the snake oil of neo-classical
economics. It must now discard it,…

Hmm, well, if you say so boys. Dropping neo-classical economics means dropping:

Alfred Mashall (without whom there is no marginalism), Arthur Pigou (without whom we cannot have green taxation), John Hicks (who created the ISLM model), George Stigler, Carl Menger, Jvons and even John Bates Clarke. Even Walras….oh, and Robinson, Samuelson and possibly even Sraffa.

And, of course, it also means that JM Keynes is right out. Verboeten. For some flavour of Keynesian macroeconomics is the neo-classical othodoxy.

What they mean of course is that Labour went overboard for neo-liberalism (at which point all liberals, neo or not, howl with laughter) the Hayek/Friedman stuff.

But let\’s be serious about this shall we? If these people are just too fucking thick to even know the name of what they\’re against, why on earth should we pay any attention to what they\’re for?

If someone said they\’re against classical music and gave as an example Deep Purple, a mainstay of classic rock, you\’d think they were too stupid to live let alone think their typed drivel worth reading. So it is with those who would confuse neo-classical economics with neo-liberal.

Cretins.

And no, it\’s not just an isolated typo. Larry Elliott in the foreword:

Strategically, those who had fought a
long guerrilla war against neo-classical economics and conservative
politics went into the crisis in a weak position.

I normally think better of him than that.

Unlike the neo-classical
movement, which in the 1970s had a coherent alternative to
Keynesianism to offer – after writing, thinking and arguing their
case during the three decades since 1945 – the left’s intellectual
wellspring was in danger of drying up.

Sad really….

And yes, they do keep making this same gross error.

There are other problems with this pamphlet but we\’ll only point to one gross stupidity at a time shall we?

I think I\’ll go with Sam Bowman here

The Adam Smith Institute has described the Social Market Foundation\’s suggestion that the Government should raise the minimum wage as \”ludicrous\”.

Steve Coulter, an associate fellow of the SMF and economics analyst for BBC News, said the Government should raise significantly the minimum wage. \”The Government should set out a strategy to significantly increase the national minimum wage over the medium term in order to encourage firms to upgrade the skills of their workforces, boost productivity and reduce \’low-road\’ employers\’ dependence on state wage subsidies like the working tax credit,\” he said in a report published today.

Mr Coulter said research indicates that \”higher minimum wages produce higher productivity in low-wage industries\” because employers \”substitute skilled for unskilled workers\”.

Well quite. Employers substitute skilled for unskilled workers when the price of low end workers rises. Which means that the low skilled workers en up doing nothing rather than something. We thus find ourselves staring at a rise in unemployment among the least skilled workers. You know, like that 20% or whatever it is of the young, people with no training, no observable skills, who are currently on the dole.

But Sam Bowman, head of research at the Adam Smith Institute, attacked Mr Coulter\’s proposals and said that raising the minimum wage would result in higher unemployment.

\”The proposals are ludicrous. Wages are related to people\’s productivity, and people whose labour is worth less than the minimum wage will be a net loss to employers,\” he said. \”Raising the minimum wage would price even more people out of work when jobs are already scarce, and raise labour costs for businesses. Wage controls that price unproductive people out of work are the last thing that the unemployed need – the SMF should be trying to learn from the mistakes of the 1970s, not repeating them.\”

Yes, as I say, I think I\’ll go with Sam here. For there\’s another way of putting the point that Steve Coulter is making here:

Mr Coulter said research indicates that \”higher minimum wages produce higher productivity in low-wage industries\” because employers \”substitute skilled for unskilled workers\”.

If you raise the price of something people will substitute away from it. In this case, raise the price of labour and people will substitute capital for labour: this is exactly the same statement as higher productivity. For it\’s adding capital to labour that raises productivity. Coulter doesn\’t seem to realise that the very thing he\’s arguing for is fewer jobs in total, with the unskilled left entirely outside the job market.

Resolution Foundation: dodgy, dodgy, statistics

And yes this does seem to matter more than the usual wonk tank playing around with things. For Ed Miliband is, apparently, going to base some part of his strategy upon this.

People on low to middle incomes are facing a \”perfect economic storm\”, which is cutting their living standards and dramatically reducing their ability to buy their own homes, new research will show this week.

The independent Resolution Foundation is to launch a major inquiry into living standards among the so-called \”squeezed middle\”, having identified economic trends – in existence since the 1970s – that have led wages for this income group to grow at a slower rate than the economy.

Umm, yes, we know that some incomes are not growing as fast as the economy: we have rising income inequality so the idea that some incomes are growing faster than the entire economy, others slower, isn\’t all that much of a surprise.

But note the little switch there.

Hmm, no, let us have a numerical example. Imagine that the economy is, post inflation, growing at 3% a year. (You can use 2% if you like, the long term average growth lying somewhere between the two).

And let us say that the incomes of these squeezed middle are growing at 1% a year.

Their incomes are growing more slowly than the entire economy. But this is not the same as saying that their incomes or their living standards are falling. For they are not, they are still growing at 1% a year. That\’s our first bit of bait and switch in this story.

The foundation, which aims to improve the lot of 11.1 million people, will reveal evidence that home ownership is slipping out of the reach of those living in households with below-median earnings.

It defines low and middle earners as those with incomes between £12,000 and £30,000 for a couple with no children and up to £48,000 for a couple with three children.

Hmm…this is the second bit of the bait and switch. We\’ve just come out of a period when people buying houses they couldn\’t afford became the major problem facing the economy as a whole.

Complaining that we\’ve solved this by making sure that people who cannot afford a house do not buy a house is off, no?

The foundation will say that 41% of young low-to-middle earners live in privately rented accommodation compared with 14% in 1988, suggesting a dramatic reduction in the number of those who can afford to get on the housing ladder.

Well, no, not really. This is our third bait and switch. There\’s been a massive expansion of the private rental market over the past 25 years. A quite deliberate policy decision as well. To some extent, there was a quite deliberate post war policy of eradicating the private rental market. It worked quite well too: this will surprise some of the young shavers out there but early 80s it was actually physically difficult to find a private rental. No, it wasn\’t about price: there just weren\’t many. Reforms, most especially to security of tenure and the abolition of \”fair rents\” have led to a huge expansion of this market.

Rents might be more expensive, but it is actually possible to find somewhere to rent.

And, erm, where should \”the young\” live if not in rental accomodation? With the average age of marriage, of primagravidae, now racing past 30, this sounds like a very sensible indeed situation. Given, of course, the situation where single no kids people are never, ever, going to get a look in at social housing of any type.

It will also highlight evidence showing that someone at the lower end of these incomes will take 45 years to accumulate a deposit to buy a home if they save an average 5% of their income a year. This compares with less than 10 years during periods in the 1980s and 1990s.

Might this just possibly have something to do with the rise in the required deposit? You know, this reaction to the troubles we\’ve had from people buying a house without having much skin in the game?

Oh, and this is gorgeous:

It defines low and middle earners as those with incomes between £12,000 and £30,000 for a couple with no children and up to £48,000 for a couple with three children. Broadly, they are defined as not wealthy enough to benefit from private markets but too prosperous to receive benefits from the state.

What does \”not benefit from private markets\” mean? Their incomes are low because they don\’t have ravenously competing capitalists trying to exploit them? Tesco and Sainsbury offer nothing to those with below median incomes? That there are squiddley number of car manufacturers instead of a state owned Trabant factory does not increase the quality, the choice, and reduce the price paid for cars?

Seriously, these numpties are trying to say that \”markets\” only work for those on above median incomes?

And this is going to be the core of Labour\’s revival?

The findings will be seized on by Labour leader Ed Miliband in a speech at the launch.

2015 is looking rather safer really.

Action on Smoking and Health: deluded morons

This woman:

Deborah Arnott is the mother of two teenage boys and director of Action on Smoking and Health (ASH).

Says the following:

So it wasn\’t disparities in tax that led to the growth in smuggling.

As if it wasn\’t bad enough that she wishes to overturn hundreds of years of empirical evidence on tax rates and smuggling, her next sentences are:

And though you report that HM Revenue and Customs officials \”admit that widening disparities between European tobacco tax rates are likely to be pounced on by industrial-scale tax evasion gangs\”, due to changes in tax and exchange-rates in Europe, the disparities are likely to decrease, not increase, over time.

That is, that prices do indeed influence the extent and volume of smuggling, but because the price disparities are shrinking thus the smuggling will shrink.

Despite appearances, I\’m not really a grumpy old patriarchal bastard, I am indeed feminist (for a certain value of \”feminism\”).

But if this is the standard of logic we\’re going to be exposed to as a result of women claiming their righful place in the agora, might I humbly suggest that you\’d be better employed making sandwiches for those teenage sons?

TPA funding

A charity that gave more than £500,000 to the Taxpayers\’ Alliance (TPA) campaign group has been warned by the Charity Commission that its reputation risks being damaged \”if its relationship with the alliance is not properly managed\”.

This does rather amuse.

\”In instances where trustees decide to award all or the majority of its funding to one organisation they must be able to demonstrate that in doing so they have acted in the best interests of the charity,\” it said. \”They should also take appropriate steps to ensure that any risks arising from this decision are appropriately managed – this could include risks to the reputation of the charity if members of the public question the charity\’s independence from the organisation that it gives its funding to.\”

The report continued: \”Trustees should also be aware of the objectives and purpose of the non-charitable organisation and whether association with the organisation could impact negatively on the charity\’s independence or perceptions of its independence.\”

For of course the crowds will be out protesting because the TPA are baby eating bastards because they recommend that more money be left fructifying in the pockets of the populace.

The thing is, this sort of arrangement is simply not uncommon. A trawl through the Charities Commission site will show any number of charities out there whose main, indeed only, function is to raise money to run this or that think or wonk tank, campaigning group etc.

I read through the accounts of one such (having seen someone warbling in the papers about something or other) just this week although I\’ll be damned if I can remember the name of it.

Joseph Rowntree Foundation: numpties again

\”Water poverty\” will become the new fuel poverty for an increasing number of households as scarcity of supply pushes up bills, according to an influential thinktank that says Britain must deal urgently with climate change.

A report by the Joseph Rowntree Foundation, one of the largest social policy research-and-development charities, says that low-income households are at particular risk because of new methods being introduced to increase the efficient use and distribution of water. It defines \”water poverty\” as when households spend 3% or more of their income on water bills.

Blimey, have you ever seen such a mish mash of logical idiocy in your life?

Assume, for a moment, that the basic premise is correct: that climate change will mean water shortages.

Great, so what do we do about this?

Yup, we have to price water properly:

Water companies are moving away from flat-rate fees to new charging models that bill customers with steadily higher prices according to how much water they use.

Excellent, tiered prices. Basic allowance at cheapo prices, you want to start watering the 10 acre paddock you pay a fortune. Great, just what the economist ordered.

So, umm, JRF are actually complaining about the very solution to the problem they identify.

It\’s all a bit of a let down from the early days, isn\’t it? JR himself, when he saw that there was no decent cheap housing went and built some. His fortune is now used to complain about actually solving problems.

Finally, a decent idea from the Tax Justice Network

This really looks rather good actually:

Tax Advisors Without Borders.

Poor countries often do not know how to run a tax system. And yet recently retired peeps from the rich world often will know how to do so. Put the two together and we might have a winner here.

Do note two very important points:

Compensation of consultants will be limited to modest levels consistent with the compensation typically received by mid-level government officials in the countries in which they reside.

Yes! None of this getting a huge expat NGO wage then.

But also note carefully the tax advice that the proposers think is needed:

For many countries, the most pressing financial task is to maintain effective and fair mechanisms for raising revenues domestically through broad-based taxes, such as consumption taxes and income taxes. In addition, developing countries typically face significant challenges negotiating tax provisions with inbound investors such as mining and agricultural companies…

Quite: they need help in reducing horribly damaging taxes like tariffs and corporation and capital taxes and moving to more sensible taxation policies: on their own citizens, upon consumption and upon Ricardian Rents (ie, mining royalties etc).

Amusingly, given who is pushing the scheme, this advice is entirely contrary to the advice that those pushing this scheme usually give about taxation in poor countries. You know, the TJN insistence that it\’s corporations and capital that must be taxed, with a healthy dose of tariffs \’coz they\’re easy.

The nef\’s report on banking.

This is going to be fun, eh?

For they\’re starting off on exactly the right foot. What actually are the subsidies that the banking system gets?

Number 1 is the too big to fail subsidy. And yes, this is exactly correct, there is indeed such a subsidy, the eventual backstop that the government is not going to allow the entire banking system to collapse. That\’s what the bank levy is supposed to pay for, that insurance that depositors are getting.

In our view, the aggregate underlying value to UK banks is likely to be
more in the range of £30 billion (Baker & McArthur, see Table 1) than the
high experienced in 2009 of over £100 billion.

Ah, no.

What they\’ve done here is averaged the support given over the past three years over those three years. No no. This is like saying that the year your house burnt down you got a £200,000 subsidy from the insurance company. Which of course you didn\’t.

What we really want to know is how much did you pay for your insurance over the years and what was the payout?

We might want to move from house insurance to car actually: over a 50 year driving life you\’re likely to need to call on your car insurance once. Over a 50 year period it wouldn\’t at all surprise me that the financial system would need to call upon the government insurance policy.

But the same point stays: the payout on an insurance policy is not a subsidy to be calculated in just that year that you claim. There\’s only a subsidy if the costs of the premiums over the years/decades do not cover the payout.

Was there such a premium charged before? No. Should there have been? Yes. Will there be in hte future? Yes.

Our interesting question is therefore whether the premium has been set at the right rate for the long term: too low and we\’ve a subsidy there. No, I don\’t know the answer either (although the premium being charged, 0.075% of otherwise uninsured liabilities seems in line with what the FDIC charges in the US, rather above it actually) but that is the question we should be asking.

Number 2 is the gilts profits made from QE. Here at least they seem to be sensible. They\’ve not gone for the Ritchibollocks of thinking that all £200 billion went to the banks. Actually, they say that dealing margins were perhaps £200 million, which seems fair enough actually.

Number 3 is making the customer pay. That is, recapitalising by widening interest margins rather than by cutting pay, bonuses or dividends. And sadly, on this, they make a complete bollocks of it.

Using figures from Moneyfacts on the average rates offered for the
benchmark two year tracker mortgage since June 2007, we can see that
rates have fallen from 6 per cent to 3.5 per cent. But the Bank of England
base rate has fallen by much more – from 5.5 per cent to 0.5 per cent. We
calculate that the mortgage interest rate spread has therefore increased
from around 0.5 per cent to 3 per cent. As we argue above, some
readjustment in mortgage pricing was necessary, but even taking a
conservative view of long-term spreads as being around 2 per cent. The
increase to 3 per cent since the crash represents additional interest
revenue of around £1.6 billion per year from 2009 gross lending and a
further £1.5 billion per year from 2010 gross lending.

Sigh.

The cost to a bank of two year funds (which is what they need to finance a two year mortgage deal) is not the base rate: it\’s the two year funds rate. Which hasn\’t fallen in line with the base rate, for the further out the maturity of a deal, the more it is the market, not the Bank, which sets interest rates.

Indeed, this is the very point of QE which they mutter about above. Only QE, not changes in hte base rate, can move longer term interest rates. So I\’m afraid that they\’re conceptually wrong in their estimations of the interest rate spread.

And finally we come to the glory. Oh, come on, it wouldn\’t be an nef report without one piece of howling lunacy now, would it?

There is no doubt that the hidden subsidy to bank revenues that arises
from banks? ability to expand the money supply is substantial. This
„seignorage? benefit arises across the system as a whole and cannot be
calculated for individual banks, although it is logical to assume that the
larger a bank?s market share of lending, the larger the implicit subsidy.

Oops! No, the banks do not make seignorage profits from the creation of new money: no, not even from the creation of new credit.

What\’s happened here is that they\’ve disappeared up their own arseholes. One of their intellectual founders (dunno, might have eben a real founder as well) was a bloke called James Robertson. And he wrote a paper detailing how the banks do make such seignorage profits. It\’s here, although it used to be on the nef pages. And we went through his misunderstanding of the situation here.

He has, very sadly, got entirely confused between seignorage and what I would call the banking float. The profits he\’s identifying come not from the creation of new credit (which of course the banking system as a whole does, even if not banks individually) but from the fact that we all leave bits and pieces of money in non-interest bearing accounts.

Now, it may be that we don\’t leave much in such accounts. Individually that is. But crank through the average schmoe\’s monthly acounts. Earning perhaps £24,000 (I\’ll ignore PAYE for a moment) he\’s got £2,000 a month moving through his current account. Not saving much (as Brits don\’t very much) we\’ll just, for the moment, say that at the beginning of the month he\’s got £2,000 in there, at the end £0.

So, the average balance over the month is £1,000. And there\’s, what, 48 million adults? 50 million?

Great, so the banks get £50 billion in interest free money which, given the glories of fractional reserve banking, they bundle up into longer term loans which they then farm out to others at 5%, 10%, 29% on your credit card.

Actually, there\’s more than this in the system not being paid interest and that\’s where we get to their £20 billion a year of \”super profits\”. Do note though that this is gross, not net, margin. For out of this they\’ve got to run those \”free\” bank acounts that we all use. You know, \”free\”, paid for by the interest we don\’t receive on our individually piddling but in aggregate quite large sums.

Robertson (and thus the nef, and Anne Pettifor is another suspect) have gone completely argle bargle here. They are identifying as seignorage, the profits from credit or money creation, what is actually the creation of having a huge interest free float.

Well, quite, it wouldn\’t be an nef report if there wasn\’t at least one piece of howling lunacy in it, would there?

Such a pity: they did at least start out by asking the right question.

Liberal Conspiracy\’s mindless troll actually says something interesting shocker

“Critics of Social Security and Medicare frequently invoke the words and ideals of author and philosopher Ayn Rand, one of the fiercest critics of federal insurance programs. But a little-known fact is that Ayn Rand herself collected Social Security. She may also have received Medicare benefits.
An interview recently surfaced that was conducted in 1998 by the Ayn Rand Institute with a social worker who says she helped Rand and her husband, Frank O’Connor, sign up for Social Security and Medicare in 1974.
Federal records obtained through a Freedom of Information act request confirm the Social Security benefits.”

Now that is funny.

Stewart Lansley: innumerate or what?

Since the end of the 1970s, earnings for the bulk of the workforce have been falling behind increases in wider prosperity. As a result, the share of national output taken by wages has been in freefall, shrinking from around 60% in 1980 to 53% in 2007. In contrast, the share taken by profits in that year stood at a near post-war high.

Moreover, this squeeze has been felt most heavily by middle and low earners. While real earnings for well-paid professionals more than doubled in the three decades to 2008, middle earners enjoyed a rise of 56% and pay for those near the bottom tenth rose by a mere 27%. Some unskilled and semi-skilled jobs now pay little more in real terms – and in some cases less – than they did in the late 1970s. As a result, the proportion of the population working on low pay has almost doubled from 12% in 1977 to over 22% today.

This sustained shrinking of the earnings pool,

What?

While economic capacity has been rising at 1.9% a year over this 30-year period, wages have been rising by only 1.6%, a gap which has been getting even wider over the last decade. Between 2000 and 2007, productivity increased at almost twice the rate of real wages. It was this trend that has been the main cause of stagnant real earnings.

What is the gibbering nonsense?

Having told us that real wages have been rising for decades, having given us the actual number by which they have, how can you then turn around and say either that the earnings pool has shrunk or that real wages have stagnated?

Did you not read the earlier sentences you wrote?

It is true that the workers are getting a smaller share of a larger pie. And if that smaller share of said larger pie led to the total amount, the size of the slice, being smaller then I\’d be just as appalled as you\’re pretending to be.

But as you point out, this isn\’t true. The pie has grown so much larger that that smaller share is actually a larger slice.

Which brings us to a Chuck Norris is wearing Spandex point: your argument is invalid.

Will Straw\’s weird, weird logic

But in a forthcoming paper for the Institute for Public Policy Research, innovation expert Charles Leadbeater argues that alternative models of capitalism are increasingly paying dividends. He points to the \”mission driven\” approach where businesses such as Facebook and Google pursue a specific goal (enabling people to share; organising information) and make money as a by-product. The Financial Times columnist, John Kay, has made this concept a key part of his latest book, Obliquity, in which he argues that \”many goals are more likely to be achieved when pursued indirectly\”.

OK, lovely.

The move away from the narrow shareholder value form of capitalism requires the support of public policy.

No it doesn\’t you miserably stupid little twat.

If being mission driven rather than profit driven leads to greater profits being made then those companies which are mission driven will out compete those which are profit driven. If concern for stakeholders increases profits then similarly. If higher wages for the workers, care for the environment, better pensions, cuddly care or iced buns for tea on Thursdays increase profits then profit maximising businesses will do such things.

This is why we have markets for fuck\’s sake. So that companies can experiment with methods of profit maximising!

Fun fact from the New Home Front report

Andrew Simms tells is that the huge effort made to recycle led to 111,000 tonnes a week of scrap metal being collected.

According to the Reportlinker report, the volume of scrap metal consumed in 2008 stood at 5.6 million tonnes

Oh, so you mean the same amount that the market unadorned now recycles then? A hundred and something thousand tonnes a week?

The New Home Front

A report from Caroline Lucas:

The changes now underway in our climate, if unchecked, pose probably the greatest threat to Britain that we have ever faced. Our health and security, our society and way of life, our natural environment, even our coastline, are all at risk from uncontrolled natural forces – disease, drought, flood and storm. In terms of the human and financial cost in the UK and internationally, the impact over the coming decades has been compared to the world wars of the twentieth century.

Has it now? Only by someone who doesn\’t know what they\’re talking about I think.

In 1918, fully 50% of the economy was being spent on the war.

M\’Lord Stern has said that if everything goes wrong (that is, that climate sensitivity is high, that if we have a regionalised and localised capitalism powered largely by coal) that in 2100 the costs of climate change might be 20% of the vastly increased (some 7 times present) GDP of the time.

Not really the same, is it?

That’s why I commissioned this report from the leading writer and analyst Andrew Simms,

Oh God, it\’s going to be a stinker, isn\’t it?

Use of household electrical appliances dropped 82 percent. A war on waste, new social norms and rationing helped general consumption fall 16 percent (and more so at household level).

So, households were more than 16% poorer (this is indeed what a greater than 16% fall in consumption means) and this is something to be praised is it?

The nation’s health improved. After an initial upward spike at the beginning of the war mortality rates fell dramatically among both men and women as active health policy was introduced, diets changed and people become more active.6

Might be worth mentioning the rather large spike in mortality caused by bombs, guns and tanks really, no? And \”becoming more active\” is a euphemism for hard labout digging the veg patch, isn\’t it? Gosjh, how wondrous that millions got to return to the peasant lifestyle, eh?

A determination to enjoy life grew. Spending on ‘amusements’ went up 10 percent

Eat drink and be merry for tomorrow we die…..

Britain faces the need for a rapid economic transition in the face of climate change targets, energy insecurity and the peak and decline of global oil production. Based on recent trends, and using a cautious, conservative estimate of environmental risk, in just 71 months from January 2010, taking us to the end of 2016, the accumulation of greenhouse gases in the atmosphere means that it will become ‘more rather than less likely’ that temperatures will rise by at least 2C.10 This is generally considered a critical threshold, after which environmental dominoes begin to fall more unpredictably and potentially uncontrollably. In other words we enter a world of ‘climate roulette,’ in which warming becomes possibly irreversible.

This is a calculation made by Andrew Simms to get himself a 100 piece contract from The Guardian: one a month detailing how close we\’re getting to this \”crisis point\”. There is no validity to said calculation.

Lloyds of London recently predicted that problems of supply not matching demand could see oil at $200 per barrel by 2013.

You what?

No, not $200 a barrel: that could indeed happen. But what is this drivel about supply not matching demand? You\’ve just said that the price will be $200, which will therefore be the price at which supply equals demand. For supply matches demand at a price.

Turn this around for a moment to see the stupidity of it. Solar cells: it would be really great to have a system that we can put on the roof for 50 cents. Certainly solve and awful lot of problems if we could. But we don\’t have such: systems for the roof cost £20,000 (say). So supply doesn\’t match demand at 50 cents but it does at £20,000. Complaining about oil being $200, where supply matches demand, is exactly the same as complaining that solar power systems cost £20,000, not the 50 cents we\’d rather like to pay.

The UK’s reliance on imported energy is rising and has risen steadily since 2004 when declining North Sea oil production meant we first became unable to meet our own energy needs since the North Sea’s heyday.

This international trade thing\’s pretty shit hot, isn\’t it?

Innovations like the Green Investment Bank and Green bonds and pensions to help pay for the transition will create a healthier finance system too.

Oh dearie me, that\’s the voice of Ritchie there. And they\’re still not getting it.

Green bons and pensions don\’t work: because there is no mechanism by which the social benefits (the getting rid of those externalities of climate change from emissions) can be paid to the investors. So there isn\’t actually a return that can be distributed.

Except, of course, if you manage to create a viable system of subsidies, Pigou taxes and so on which will enable a return to be made. But, and here\’s the kicker, once you have created that system you no longer need Green bonds or pensions. Because now such investments are attractive in their own right, as normal bonds and normal pensions.

So either Green bonds cannot exist, because there\’s no return to them, or Green bonds don\’t need to exist as such investments are attractive anyway.

Thirdly, moving to levels of economic equality comparable with that, say, of Denmark, would create an economic safety net to buffer the process of change.

Eh? That\’s a bit of a leap isn\’t it? That a Gini of 0.25 rather than one of 0.35 (dimly remembered numbers) is part of the solution to climate change?

There\’s just a hint of a soupcon of a suspicion that perhaps climate change is being used as an excuse to pile in the kitchen sink n\’all of Mr. Simms\’ desires, no?

Have a look at pages 16 through 18. He\’s positively frothing at the mouth at being able to run a vast propaganda campaign backed up by rationing and sumptuary taxes. I rather get the impression that Our Andrew would like to have this power over his fellow citizens, climate change or no climate change.

Also worthy of further exploration is the relative success in war-time Britain of efforts explicitly to substitute cultural activity and production – theatre, music, film, art, festivals, sport, and numerous other local entertainments – for material consumption.

All very cultural commissar isn\’t it? You will sing Kumbaya rather than play Call of Duty. Although I would certainly support Mr. Simms asking Julie Bindel to reprise the Windmill Theatre productions.

All people needed was ‘to be told precisely what to do’

Yup, he\’s positively foaming with the desire to impose rationing.

While people grumbled about rationing, and were often prepared to bend the rules or buy black market goods, it was still seen as fairer than the alternative of allowing prices to govern demand, so that goods became unaffordable to all but an elite, as in Soviet-era Russia.

Eh? Since when did Soviet Russia use prices rather than rationing? Quite barking.

Anyway, the conclusion is essentially that we\’ve got to do everything that nef has been suggesting over the past decade. From personal carbon rationing to fiorced collectivisation of \”underused\” property.

The only thing really missing is the reason why? Oh, they talk about \”climate change\” a lot but don\’t quite manage to tell us why a move to a non-cabon emitting energy system (say, thorium cycle, or solar PV plus fuel cells) wouldn\’t solve the problem rather than having to appoint froth mouthed loons like Andrew Simms to rule over us all.

And that really is the important question that has to be answered, isn\’t it?

Neal Lawson: same old cretinous error

For the vast majority of people life has become relentlessly anxious, stressful and exhausting as we desperately try to keep up on the treadmill of a learn-to-earn-to-spend culture in which there is no time for the things and the people we really value; no time even for ourselves. Life just feels like a relentless slog to keep our head above water.

Leisure time has been increasing for the past friggin\’ century, you twat.

We have ever more time for ourselves.

What hope is there for compassion in a world of endless competition? When the rewards of those at the top crush every hope beneath them, and the ruthless logic of the market tramples all over our planet, how can we hope to find any meaningful sense of control and therefore freedom in our lives?……And our planet can better sustain itself as we decide that there is more to life than searching for meaning through materialism. So the good society demands proper restrictions on the time we spend working so we can think, rest, play and have the space to be citizens.

How did someone so ignorant ever get to be taken seriously in the world of politics? It\’s that very market system which has made us all so pig rich that leisure has increased and we have the time to think, rest, play and have the space to be citizens.

But what brings the good society to life is democracy: the only tool we have to take control of our lives.

Fatuous wittery. Freedom, liberty, are the tools we can use to take control of our lives. Democracy is all very well of course, but it\’s actually the tool by which we take control of other peoples\’ lives: that tyranny of the majority.

The IPPR really is most glorious

So they\’ve got this piece up at \’T\’ G about how these cuts are just going to be so horrendous for young couples expecting a child.

Take one scenario, a couple in their mid-20s expecting their first child in May 2011. Based on data from the Office for National Statistics, we estimate that there are about 525,000 families who are expecting to have a baby post April 2011. Let\’s assume that this couple live in Stoke-on-Trent, bought a flat several years ago (for the average price, which was £90,000 in 2006) and are paying a mortgage on it. They have never been in receipt of benefits.

Since leaving school, they have both always worked, mostly full-time. They currently earn the median income, which in April 2010 was £538 a week for full-time male employees and £439 for women. Both could be worried about their future job security with a volatile local labour market.

So, thinking ahead, what might 2011 hold for this couple with a baby on the way?

According to the latest figures, the average weekly household expenditure for couples with no children is £529.50. This rises to £615.30 for a couple with children. With the increases in VAT (calculated at 1.5% as VAT is not added to every household purchase), this could conservatively add an extra £413 (calculation based on expenditure with no children) to the family budget in 2011. On top of this, the health and pregnancy grant (worth £190) for expectant mothers is being scrapped and so is the child trust fund (worth £250) for every child. Taking all this together, compared to if they had a baby in 2010, our imagined couple will be more than £800 worse off in 2011.

Now there\’s a few choice bits in there. They\’ve got the local cost of a flat about right (although, for Stoke on Trent it looks a little high maybe) but they\’re using the national median wage, not the local.

Judging from the cost of my own UK mortgage I\’d estimate their repayments at around £500 a month….not all that accurate but close enough for a blog post. £6,000 a year.

But now look at their incomes: that\’s £50,800 a year! Umm, they\’re between the fourth and fifth quintiles for household incomes! And they\’re in friggin\’ Stoke on Trent! With only £6,000 a year to pay in mortgage!

And, get this, look how much worse off they\’ll be as a result of the cuts. £800 a year. 1.6% as a share of gross income, 1.8% as a share of pretax but post housing income.

Umm, isn\’t this what we actually want? That the rich carry their share of the pain?

I have to admit I do wonder what the IPPR were smoking when they put this example out there…..

Blimey, at last!

From a PR email:

Worldwatch Institute\’s State of the World 2011
Shows Agriculture Innovation Is Key to
Reducing Poverty, Stabilizing Climate

It\’s taken them what, 30 years to work this out?

Technological advance is the solution to most problems?

Better late than never I suppose…..