Idiot stupidity at Compass once again.


UK banks building societies and UK branches
and subsidiaries of overseas lenders would have a
remuneration cap imposed. A low compensation
ratio would be set at around 15%.32

Note 32 says:

32 The compensation ratio is the
percentage of an institutions net
revenue allocated to staff pay

Well, we all know we can play games with the definition of \”net\” revenue.

As a way of tackling flagrant high pay, shoring up
bank balance sheets and providing a level playing
field across the banking sector.
During the boom years investment banks set
aside between 45% and 65% of their net revenue
to pay staff before calculating profits or paying
out dividends to shareholders.33 The latest round
of payouts have had a compensation ratio of
nearer 30–40% as banks try to convince politicians
and the public that they can self-regulate.
High staff costs lead to diminishing profits and
dividends as well as lower capital reserves.

Oh, right…..and this is a giggle:

also puts huge pressure on less profitable institutions
– for example the 2009 compensation ratio
for UBS is 81.2%, which is unaffordable in the
long term.34

Err, yes, we like this. Unsustainable in the long term means they go bust. This is what is suppoed to happen to \”less profitable\” institutions.

But let us ask ourselves what they really mean by only 15% of net revenue to be spent on staff. And I\’m even going to make it really, really easy, and use gross revenue figures for other companies, not net.

As we noted earlier today the staff as a percentage of revenue at the Work Foundation is 77%. So to get that under 15% everyone who works there must have an 80% pay cut.

Hey, works for me.

Or perhaps we might use The Guardian. Staff costs are something like £178 million on turnover of 498 million. About  35% then. So, only a 60% cut in pay to all who work for The Guardian then. My, won\’t they be relieved.

(Best part is that freelancers like myself don\’t count as staff costs, we\’re cost of goods. So they take a pay cut and we don\’t tee hee!).

So, err, anyone think that Compass thought this through before making their suggestion? Anyone at all?

And, of course, we can take the lunacy even further. Here we have a left wing campaigning organisation insisting that, by law, the workers should have a lower share of the production of the sweat of their brows.

Neil Lawson\’s a ringer dumped in there by the Illuminati, isn\’t he? There to make the left look stupid?

Oh dear me Willy

If you start off misunderstanding the very basics of capitalism then of course your prescriptions for making it better are going to be complete nonsense, aren\’t they?

But so should reward be proportional to our extra effort. It is a fundamental part of human beings\’ hard-wiring. The scales symbolically declare that justice is getting our due and proportional deserts.The irony is that capitalism if it is run properly is a means for people to get just that. If they are brilliant entrepreneurs or innovators then it is fair that they should get their proper due desert and make considerable if proportional profits. In fact, inventions are never the result of one individual light bulb moment but the consequence of a lot of social and public investment. Thus a proportion of the profit should go to the state as taxation, as its due desert for having collectively invested in the infrastructure and cumulative stock of knowledge from which invention draws – not least so it can repeat the exercise for the next generation. But the big point is that big rewards are justifiable if they are in proportion to big efforts – because big effort grows the economic pie for everyone. Profit is ethical to the extent it is proportionate to effort and not due to good luck or use of brute power.

No, capitalism is not set up to reward effort. Indeed, if it were, it would be a much less efficient system at generating wealth than it is. Capitalism is set up to reward value generated, regardless of effort. This is why it generates so much value that we all share.

Great effort can be expended in making a scale model of Westminster Abbey out of matchsticks. This is not effort that capitalism rewards. Very little effort might be expended in producing a new piece of software or cats\’ eyes for the roads.

However, cats\’ eyes produce great value and this is rewarded. That scale model might produce a few sniggers and little value: thus no reward.

Two pieces of software might have had the same effort put into them. One produces value for users, the other not. It is the former that will bring rewards.

It isn\’t effort put in which either does or should determine reward: it is value created, however it is done so, which should and does produce rewards. For it is this method that maximises the production of value which is what we all want.

\”It is only fair, they argue, that half a bank\’s revenues should get paid out in bonuses after each year\’s trading.\”

I\’m not aware of any bank that does that actually. I\’m aware of many that have total staff compensation as 50% or so of (net) revenues. But that is total staff compensation, not bonuses.

Oh, and just for a chuckle, can we find an organisation which has a higher staff compensation ratio? Yes, I think we can.

Income of £4.8 million, staff costs of £3.7 million. That\’s a 77% of revenue being paid in staff compensation in 2008.

That\’s also the Work Foundation, prop. one William Hutton.

So what\’s your excuse?

nef: lying cretins

Their latest report.

Many people work longer hours than 30 years ago. Since 1981 two-adult households have added six hours – nearly a whole working day – to their combined weekly workload.

No they haven\’t. This is simply a lie.

Leisure hours have risen: so working hours must have fallen.

And to think, our tax money pays for these cretins to type away.

  • Today, nearly 2.5 million people can’t find jobs. Cutting labour to save money without changing working hours means some are burdened with overwork while others lose their livelihoods.
  • As a result of this growing inequality in working time, the unpaid components of life are suffering. Family life, neighbourhood networks, time with children and quality of life for older people are all diminished, with painful results for society that sometimes get lumped together and lamented as ‘Broken Britain’.

I\’m sorry? More leisure time leads to a diminution of social life?


Doesn\’t this rather obviate their own crazed logic?

The Marmot Review on health inequalities


These serious health inequalities do not arise
by chance, and they cannot be attributed simply to
genetic makeup, ‘bad’, unhealthy behaviour, or difficulties
in access to medical care, important as those
factors may be. Social and economic differences in
health status reflect, and are caused by, social and
economic inequalities in society.

I agree, I\’ve only skimmed the summary, but I see no reference at all to the counter proposition. Even to reject it. That ill people become poor because they are ill rather than that poor people become ill because they are poor.

I don\’t claim that this is the be all and end all of the subject: I would claim that it does in fact happen though.

And not to consider it seems, well, umm, something of a failure in the review actually.

In fact, if I were the Minister receiving such a report I would be shouting at people, demanding to know why they hadn\’t at least considered this, if only to reject it as an explanation.

Can they even read the reports they quote?

Myth 5: Workers in highly paid jobs work harder
It has been claimed that workers at the top end of the income scale work long hours and therefore ‘deserve’ higher earnings. There are several factors, however, that are not usually taken into consideration when calculating hours worked.
One of these factors is the fact that the poorest in our society are just as likely to work long hours in a main job and/or to take on multiple paid jobs. Many need to do so to make ends meet.73 Neither does this myth take account of the number of hours worked outside the market economy. It is often argued that providing care in a family setting should not be included in national accounts because production of services within households is a self-contained activity, with limited repercussions on the rest of the economy. This, as feminists and others have shown, is simply not true. As has been extensively documented elsewhere,74 the non-market economy (or the sphere of reproduction) is necessary for a more complete understanding of the market economy (the sphere of production).Without the reproduction of labour power on a daily and generational basis, productive activities would grind to a halt.
In this sense the inclusion of hours worked in the non-market economy for different income groups is crucial to the understanding of people’s contributions to the economy as a whole – both in the productive and reproductive spheres. Data from ONS’s Time Use Survey 2005 show that people at the bottom of the income scale spend, on average, 82 more minutes per day on ‘providing housework’ than their higher-income counterparts.
If these figures are disaggregated further, considerable differences arise between lower and higher income groups in providing certain types of housework, such as cooking and cleaning. In addition to this, data shows that lower-income groups provide 13 more minutes per day in childcare than higher income people do. Although the difference of care provided for adults is quite small, one could still argue that lower-income groups spend approximately 18 more minutes per day solely on care, which accounts for 8.4 extra hours of work per month. In summary, if we consider the impact of unpaid labour on paid labour, or even the interrelationships between them, we can certainly make the point that lower-income individuals work just as hard (or even harder) than their higher-income counterparts.

Err, the low paid have more leisure time than the highly paid. It\’s one of those things which the Time Use Surveys show. More leisure equals less work when you sum together market and non market production.



What Marx correctly predicted was that real wages, or returns to workers, would be eroded over time.

Right, they\’re talking complete and total bollocks then. Real wages have not been declining. Marx was not correct. Thus everything else they say on the subject is entirely bollocks then, isn\’t it?

And this is bollocks

Prevailing wisdom would say yes: pay is a reward that reflects merit.


Pay reflects scarcity. To do job x the skills a,b,c and d are necessary. If we\’ve more people with skills a, b, c and d available than we have jobs x which need them then pay will be low. If we have fewer then pay will be high.

This is also very good

Build social and environmental value into prices. Until goods and services reflect the real costs and benefits of their production, incentives will be misaligned with the kinds of positive behaviours society wishes to promote. Getting the prices right would affect relative profitability and so would align what wages could be paid with the value that is created. Consumption and corporation tax are two vehicles for doing this, but they need to be applied in a progressive way.

Sure, let\’s get all externalities, positive and negative, incorporated into prices then let the market rip.

Although how you have progressive consumption taxes I\’m not really sure….given that the poor will always consume more of their incomes than the rich.

Now to be fair to the drivellers

This is indeed true:

This report is not about targeting any individuals in the highly paid jobs it scrutinises. Neither is it simply suggesting that people in low paid jobs should be paid more. The point we are making is a more complex one – that there should be a relationship between what we are paid and the value our work generates for society.

Sure….but the most important point we have to decide first is who gets to decide?

Policy wonks feeding off the government teat? Or individuals voting with their own money as they purchase goods and services?

More dribble!

If high pay is partly intended to compensate for risk, stress and long hours then we would expect dangerous jobs to be well rewarded. Fishing is the most dangerous job in Britain, with roofers and scaffolders also high up on the danger list, and waste recycling collectors are at number 18. Yet in none of these industries are rank-and-file workers highly paid.


Fishermen, roofers and scaffolders *are* highly paid…..compared to other jobs that require the same levels of human capital. It\’s actually one of the poster children of the study of different wage rates. That those doing dangerous jobs get a wage premium for the danger of their jobs.



Twats in search of some press copy. How else to explain this?

The Centre for Economics and Business Research (CEBR) says Britain, which was the world’s fourth largest economy as recently as 2005, has slipped to seventh this year behind America, China, Japan, Germany, France and Italy.

By 2015, it predicts, Britain will be outside the world’s top 10, behind Russia, Brazil, India and Canada. Slow growth and a weak pound will be responsible for the slide.

Sigh, come along now. We don\’t measure relative sizes of economies using market exchange rates. We do it using PPP exchange rates.

Bit pissed off we hadn\’t been in the papers for a few days were we?

Well, yes Sunder

Sunder Katwala of the Fabians:

The Taxpayers\’ Alliance may just be a pressure group, but it aspires to represent all UK taxpayers and speak in their name. It is very keen on accountability, so why won\’t it reveal who its donors are? I am sure there is nothing to hide, so why refuse reveal all donors over the value of, say, £5,000?

So, err, I thought I\’d see how the Fabian Society lists its income.

Here\’s the site.

Clearly my Google JuJu isn\’t all that good for I cannot find anything detailing accounts, donations, annual reports……

Anyone know where they actually are?

The Happy Planet Index 2.0


The nef have done us proud and given us the Happy Planet Index 2.0.

Whoo hoo!

You\’ll not be surprised to hear that they\’ve changed their measurement techniques. Version 1.0 had Vanauatu as the top place on the planet. Clearly and obviously they couldn\’t allow the likes of me to make cheap shots about penis sheaths and worshipping the Duke of Edinburgh as a Living God as their prescription for the Good Life. So, a change in methods and a change in what is the Good Place.

Costa Rica actually, and I\’m sure it is a nice place to live. But let\’s see what else they say:

Meanwhile, the problems that plagued us before, risk becoming even more acute: more than half the world’s population lives on less than $2.50 a day; inequality continues to rise even in richer countries.
And yet, with crisis comes opportunity. The dogmas of the last 30 years have been discredited. The unwavering pursuit of economic growth – embodied in the overwhelming focus on Gross Domestic Product (GDP) – has left over a billion people in dire poverty, and has not notably improved the well-being of those who were already rich, nor even provided us with economic stability.

What glorious writing! No, seriously, there should be a prize for this sort of stuff. Absolutely no mention at all of the fact that the last few decades have seen the greatest reduction in poverty in the history of the entire species. Hundreds of millions of people have risen up out of that $2.50 a day poverty. Global inequality has fallen, whether you measure Concept II (by country, weighted by population) or Concept III (global population as a whole).

Of this we get not a whisper. Way to be open and transparent, no?

This amuses:

How can one compare the impact of using a gallon of oil with a gallon of water, or a tonne of potatoes with a tonne of potassium?

Well, price is a pretty good indication of the resources being used. Not perfect, but pretty good.

The best available approach is currently the ecological footprint, developed by ecologists Mathis Wackernagel and William Rees, and championed by a range of organisations including the Global Footprint Network and WWF.54 The EU statistical agency Eurostat is considering incorporating the ecological footprint into its sustainable development indicator set,55 whilst the Welsh Assembly Government has already adopted it as one of five headline indicators of sustainability.
The ecological footprint of an individual is a measure of the amount of land required to provide for all their resource requirements plus the amount of vegetated land required to sequester (absorb) all their CO2 emissions and the CO2 emissions embodied in the products they consume. This figure is expressed in units of ‘global hectares’. The advantage of this approach is that it is possible to estimate the total amount of productive hectares available on the planet.

And what you\’re not told there, nor are you by Mathis Whackerdoodle, the CO2 absorbed by the food grown for you to consume is not counted as part of the recylcing of the CO2 of your lifestyle. So there\’s gross double counting.

Oh, yes, nuclear power is ascribed a footprint the same as coal, rather than the around and about hydro or wind power (and much lower than solar PV) that it actually has.

Improving living standards in poorer countries can only be achieved in parallel with declining resource consumption in richer ones.

Jesus Sam (yes, Sam Thompson, sometime reader of this blog, is one of the authors). That\’s ludicrous even by your standards. You\’re the people arguing that consumption of resources doesn\’t lead to higher living standards in the real and meaningful manner: so how on earth can improving living standards require more use of resources?

It doesn\’t even make sense in neo-liberal terms: GDP measures added value, remember, not resource consumption.

This gets even fucking worse:

It only attained its quasi-mystical role when GDP was placed atop the podium of indicators with the development of the United Nations System of National Accounts, in 1947. At that time, focusing on productivity growth made sense.

Productivity is not, as these lentil knitters seem to think, producing more. Nor is it consuming more, nor using more resources. It is, in fact, the opposite of that last. It is producing more from the same resources….or producing the same from fewer resources.

The notion of GDP growth almost seems to have a halo around it. It has reached the status of motherhood and apple pie.

Yes you twats! GDP is \”value added\”! That\’s exactly what we want! whether we use more resources, the same, or fewer, we still want to add the maximum value to them we can!

Is there something about being a vegetarian prodnose that destroys brain cells?

But this feature of the system sets it at odds with a widely noted fact about human nature – that once our basic material needs are comfortably met, more consumption tends to make little difference to our well-being.

And research shows that living in a society without growth makes us unhappy…..

In the same year, Eurostat, the European statistical agency commissioned a consortium of experts, including nef, to consider the feasibility of a well-being indicator for Europe.

Yup, these people are being paid by the European Union to peddle this tripe to….the European Union. As \”experts\” for the Lord\’s sake.

Statistical tests reveal the mean life satisfaction, life expectancy and HPI scores of small islands to be significantly higher than non-islands – whilst their income levels do not diverge in the same way.133 These results should come as no surprise to anyone who has read Karl Polanyi’s increasingly popular, classic work The great transformation. In it he presents various types of social and economic organisation on islands as evidence against some of Adam Smith’s more sweeping assumptions on the central role of markets.134 Complex forms of ‘gift exchange,’ in which people partly meet their needs not through markets mediated with cash, but through the giving and receiving of gifts, operated over vast areas, reveal a system that not only meets people’s needs in a challenging environment but bonds society together by emphasising economic relationships based on cooperation and reciprocity, rather than individualistic competition.

Pathetic. Smith did note the ease of using cash in mediating markets: but he certainly didn\’t try to say that gift exchanges were not markets. This is a fairly desperate grasping at straws by these people.

And their suggestions:

We might, for example, only work three or four days a week (Box 5) and in turn, take advantage of this shift to reduce unemployment by sharing work more equitably.

Lump of labour fallacy. Morons.

With potentially more time on our hands, might we think of a future in which we invest more in civil society – perhaps by volunteering or participating in democratic decision-making? Or maybe we would use the opportunity to achieve greater reciprocity within communities and in the delivery of public services, ensuring public money is able to achieve more with less?

Excellent! Let\’s work less for pay and more for nothing!

Meanwhile, perhaps the priority for technological development will be to cut down on the inefficient use of non-renewable resources?

Anyone remember how to do that? Ain\’t it a capitalist, free market society?

Oh, and their ranking of happy countries? The right places to live upon this earth?

1. Costa Rica

2. Dominican Republic

3. Jamaica

4. Guatemala

5. Vietnam

6. Colombia

7. Cuba

8. El Salvador

9. Brazil

10. Honduras

11. Nicaragua

12. Egypt

13. Saudi Arabia

14. Philippines

15. Argentina

16. Indonesia

17. Bhutan

18. Panama

19. Laos

20. China

You know, the first thing that leaps out of that list is that if you want to use few resources try and live in a tropical country: not much energy needed for heating is there? And a poor one so no one has A/C. The other one is live in a Spanish influenced one.

Siestas, that\’s it, that\’s the secret to a long, happy and non polluting lifestyle.

By Jove, I think we\’ve cracked it there. Nope, really, the nef has found out (and I bet you could indeed construct from their numbers a chart showing a correlation between siestas and a high HPI) that the way to save the planet is that we all have an afternoon nap.

Would have been a rather shorter report if they\’d just told us that in the first place.

Funding the new economics foundation

I receive a comment from Sam Thompson of the new economics foundation:

Amount of money nef receives from the current government = £0


Sam, might I suggest that you read your own accounts?

Principal funding sources
Our funding sources are diverse and we receive funding from trusts and foundations, local, regional
and national government and through consultancy contracts.

There is of course wibble room here for the nef.

The aim of nef is to work to establish an economy as if people and the planet mattered.
To advance this aim we work in fotlr Centres:
The Centre for Global Interdependence
. The Centre for W ell-being
. The Centre for the Future Economy
The Centre for Thriving Communities

It\’s the four Centres that get the government dosh, not the nef directly. But since they do mix funds, do transfer and do lift up funds from the Centres to the central body:

e) Restricted funds are to be used for specified purposes as laid down by the donor. Expenditure
which meets these criteria is identified to the fund, together with a fair allocation of overheads
and support costs.

Mhm, hmm…..

Support costs are, umm, £567,000 or so.

So, we\’re told that nef gets no money from the government. nef\’s accounts say they get money from local, regional and national government.

From the apparent structure, the government money goes to the four Centres, each of which are charged support costs, those support costs being what pays for the nef.

This is no government money goes to the nef is it?

Still, I suppose it\’s a paragon of clarity and simplicity compared to the normal reports from that quarter. Remember the Green New Deal which suggested we could increase the capital available for investment in green lovely thingies by lowering interest rates and imposing capital controls in a country that has imported capital for decades? Admittedly, I think that section was written by Caroline Lucas but then who would be stupid enough to let her write anything about economics?

At least we know they\’re being misleading rather than the more normal ignorance of the real world.

Dr. Katherine Rake

She leaves the Fawcett Society (those who continually lie to us about the gender pay gap) to head up a Fake Charity.

So far, so normal for those in \”civil society\” who such at the Government\’s teat.

This is good though.

Yesterday her husband said he hoped he was a hands on father. He refused to comment further on his wife\’s remarks, saying: \”I\’ll have to check with her before saying anything.\”

Technical question

So, all mobile phones have SMS or texting on them.

Is there any way to turn that feature off?

Specifically, a way to turn it off so that anyone who tries to text you knows that it didn\’t go through? And that it won\’t?


Marvellous, Quite Marvellous

Ben Goldacre sharpens his pencil once again. That Reform report on how we should have more mathematicians.….

….but let\’s round up like the angry maths profs did and say that about 20% of maths graduates enter financial services. Not 40%. I call this "arithmetic".

Not good so far. But then the report makes two economic howlers.

And even more so when the dubious reasoning begins, like with their idea that if there were simply more people around with maths knowledge there would therefore automatically be more (and more lucrative) jobs around requiring that knowledge, into which the new maths graduates would lucratively and instantly fall. I\’m not entirely sure it works like that – I am of course not an economist –

Nor am I an economist but there is a saying around that supply creates its own demand. However, even when people claim it to be true they don\’t mean that supply of a specific good or service creates demand for that specific good or service. Otherwise the Ford Edsel would have sold rather better than it did. So no, having more mathematicians would not create more jobs for mathematicians.


They reason thus: "Each of these students would have earned an additional £3,080 a year due to the market premium on A-level mathematics, equating to £136,000 over their lifetime. The total gain to the economy over the period would have been over £9bn."

Now we\’ll put aside the fact that the BBC said "a maths A-level puts on average an extra £10,000 a year on a salary [not £3,080], says Reform" because I can\’t get £9bn for that period with those numbers (I get £12bn assuming a linear decline, although they may have access to more detailed data), and in any case Reform makes assumptions which are not, at face value, tenable, including the notion that the extra earn would have survived a widening group of people with maths A level.

Quite, if we increase the supply of people with a certain qualification then we\’re going to decrease the earnings premium that said qualification earns (well, unless something truly weird goes on like we need a critical mass of a certain skill before people start to employ it). As indeed has happened with male art degrees….not so long ago (well, OK, eons ago, when I were a lad) an arts degree produced an earnings premium over those without such a degree. Nowadays, with the huge expansion of tertiary education, there is no (on average of course) premium at all for a male holder of an arts degree.

So that £9 billion they claim rather diappears in a puff of economic logic.

Pity, Reform\’s usually rather better than this.