Yup, Absolutely.

My first concern is honesty. Since ID cards manifestly cannot fulfil any of the functions for which government ostensibly desires them – prevention of terrorism and organised crime seem the most childishly simple to debunk since terrorists and organised criminals with access to planes, guns, bombs and currency laundering will just as surely access fake IDs with complete impunity – I would appreciate my government telling me honestly what it really wants these cards for. My suspicion is that it just wants them, and that rather as it is the nature of bees to collect pollen and the nature of teenage boys to collect fictitious tales of their sexual adventures it is the nature of government to collect information about citizens. If they cannot advance any sensible reason for wanting these things then we must conclude that they are driven merely by a compulsion, and should be treated like smokers or heroin addicts – with compassion, certainly, but without going so far as to indulge their craving.

Second I would like some admission on the part of the project\’s instigators that they are familiar with the concept of a sunk costs fallacy, or at least have become so since the Concorde project. That a lot of money has already been wasted on the project is really no argument to continue spending more money now. If there is no good cause to keep plugging away at the thing they can, and should, write the costs off now.

Spot On.

Bravo, Bravo!

But there is a core message, an important one, directed ever more stridently at the poorest people in Britain and designed to deny hope and resourcefulness. If you are poor, the Government\’s message is simple: “You are not in charge of your life and prosperity. We are. Trust us. Keep on voting for us or you\’re stuffed.”

The means by which the message is transmitted is the creaking tax and benefit system. Looming changes in income tax mean that those earning more than £18,500 a year, which is lowish but not too uncomfortable, will be better off when the basic tax rate drops by 2 per cent. But given the abolition of the 10 per cent tax rate, coupled with the continuing feebleness of the personal allowance (you can earn £104.51 a week before you start paying a fifth of it to the exchequer – whoopee!), the lowest earners are hit. Those on £10,000 a year will now pay two or three quid a week more in tax. However, says the message, that\’s OK because they can promptly apply for “working tax credits”, “family credits” and other benefits.

However doughtily and responsibly you work for your 200 quid a week, even if you need every penny of it to survive, the Government will make you hand over a lump and then give it back, ceremoniously, via its huge and expensive bureaucracy. The message is that if you are poor, you must be kept in the status of client and petitioner. It would presumably save billions in administration if you just let low earners hang on to their wages; it would also fortify that sense of personal and family responsibility that government claims to like. Applying for state benefits as a fit person of working age makes everyone feel lousy, unless – or until – they are so desensitised and deprived of pride that they no longer care. But the abolition of the low tax band and the feeble personal allowance has made benefit-claiming inevitable for more people, for longer.

In which case, why is it right to send poor Britons the message that they can\’t trust themselves but only the State? Alistair Darling could ramp up the personal allowance, make it transferable and turn his mind to ways of letting people keep earnings rather than claim benefits. Pigs could fly.

Oh Dear George

Monbiot says the new GP contract, the push for longer opening hours, is all part of the privatisation of the NHS. You see, if the GPs didn\’t give in, then nasty private business would step into the breach.

So why is it so keen on this reform? Because it assists a quite different agenda. To avoid the political firestorm big business rains on any government that stands in its way, Brown must make constant concessions. What business wants most is the 40% of the economy controlled by the state. He must find clever and camouflaged means of delivering it that do not prompt us to take to the streets. This means waging a PR war against GPs and the other public sector dinosaurs who impede choice and change. It means a thousand small steps towards privatisation.

Only one small problem. GPs are, and always have been, private businesses.

Better luck next time George.

Even the TUC Now Gets It

Lookie here:

The difference between men\’s and women\’s pay more than trebles when women reach their 30s, TUC research revealed today. It found women leaving school at 16 and going into a full-time job earn 9.7% more than their male contemporaries. But from the age of 18 – and throughout the rest of their working lives – they earn less than men.

In their 20s, the pay gap for full-timers is a modest 3.3%, but in their 30s women take home 11.2% less than the men. And in their 40s – the peak age for discrimination – the gap rises to 22.8%. The TUC said the undervaluing of women in the workplace was partly due to a "motherhood penalty".

Hurrah! Hurrah! People, yes, even the TUC, aregetting te point that we don\’t have a gender pay gap, we have a child care or motherhood pay gap. Only once the correct cause of a perceived problem is identified can we start to craft policies to solve said perceived problem. Or decide not to solve it, as the case may be.

The long hours and intensity of senior positions deterred mothers from seeking promotions for which they were qualified.

Erm, that is, mothers were not qualified for such positions because they don\’t in fact want to do them might b a better way of putting that.

The hourly earnings of women working part-time were 23.4% less than the male rate in their 20s, 41.2% in their 40s.

No, not true, that\’s the old lie once again. Here are the correct figures.

But we are at least moving in the right direction. Now that we\’re getting the causes of the gender pay gap correctly identified, it\’s children, then we can do two things. First, decide whether this is something we want to do anything about and second, decide what.


The Irish Economy

Morgan Kelly, of University College Dublin, said the government is almost powerless to stop the downturn becoming a severe slump. "We\’re in a classic post-bubble recession, yet we can\’t do anything that a country would normally do in this situation because we\’re inside the eurozone," Prof Kelly said. "We can\’t cut interest rates, we can\’t devalue, and there is a lot less room for fiscal stimulus than people think. We\’re stuck.

It\’s that pesky euro again.

A British Day

A new public holiday should be introduced to celebrate Britishness, a review commissioned by Gordon Brown will urge today.

So, err, how are we going to celebrate that then? We\’re not allowed to get pissed any more. Having a parade costs a fortune in licences, you can\’t even get a band to play without asking permission.

Here\’s what will actually happen. This will create an extra long weekend. And as with the other long weekends through the year, Britons will bugger off to Riga, or Tallin, or Split, or Bourdeaux, there to get pissed.

That is, we\’ll all celebrate British Day by leaving Britain.

Apt, don\’t you think?

Politics as She is Done

Barack Obama vowed to raise the minimum wage, intervene to prevent more houses being repossessed by predatory mortage companies and pay teachers more so educational standards would improve and the United States can compete better with China and India. "Everywhere you go people are working harder just to make do," he said at a rally in Mississippi, which holds its primary Tuesday. "They\’ve never paid more for college, they\’ve never paid more for gas at the pump."

OK, so money\’s tight. And your solution is going to be to make everything people buy more expensive and to raise taxes?

Interesting solution, certainly.

Fingerprints at Heathrow

Has anyone else seen this?

Millions of British airline passengers face mandatory fingerprinting before being allowed to board flights when Heathrow’s Terminal 5 opens later this month.


All four million domestic passengers who will pass through Terminal 5 annually after it opens on March 27 will have four fingerprints taken, as well as being photographed, when they check in.

To ensure the passenger boarding the aircraft is the same person, the fingerprinting process will be repeated just before they board the aircraft and the photograph will be compared with their face.

BAA, the company which owns Heathrow, insists the biometric information will be destroyed after 24 hours and will not be passed on to the police.

The reason given is that the lounge is shared between local and international passengers. I for one will refuse to fly BA through Heathrow.

But there\’s something else which I hope one of our resident security peeps will be able to tell me. How accurate are fingerprints? How many false positives and false negatives are we going to have out of 4 million domestic passengers: and presumably tens of millions of international ones?



Oh Dear Eliot

Oh Dear:

An affidavit presented to the court said that a wiretap recording captured a man identified as Client 9 confirming plans to have a woman travel from New York to Washington.

During several phone calls with an Emperors Club booker, Client 9 negotiated the arrival of his "package" — a pretty petite brunette.

The prostitute later rang the Emperors Club to say she had been paid $4,300, after spending around two and a half hours with him. Sources said investigators believe that Mr Spitzer was Client 9.

His statement was widely seen as a pre-emptive strike before the full details of the allegations were made public.

Federal prosecutors rarely charge clients in prostitution cases, which are generally seen as state crimes.

However, the Mann Act, passed by Congress in 1910, makes it a crime to transport someone between states for the purpose of prostitution.

As attorney general, Mr Spitzer prosecuted at least two prostitution rings as head of the state\’s organised crime task force.

In one such case in 2004, he spoke of his revulsion and anger after announcing the arrest of 16 people for operating an upmarket prostitution ring out of Staten Island.

It\’s not the shagging of the tart that\’s the problem as far as I\’m concerned, it\’s the hypocrisy of prosecuting the behaviour in public that you indulge in in private. Still, couldn\’t happen to a nicer man, his antics as a prosecutor were appalling.

That\’s the end of his political career, thank God.


The International Gender Pay Gap

The ITUC has released a report on the gender pay gap around the world. On average it\’s 16%. I\’ll go into it in more detail later, but this little bit jumped out at me:

Many believe education is the key to closing the gap, but on the contrary, one of the most sobering findings of this report is that more educated women often find themselves on the wrong side of an even bigger pay gap.

This is entirely consistent with my commonly made assertion that we\’re actually looking at a childcare pay gap, not a gender one.

Education is of course an investment in human capital. That\’s what the employers of the educated are paying for, the interest, the profit, to be made from said investment. Those who take one or more one or two year breaks from the labour market to have and care for children are going to have less of such human capital from which the employer can profit. Thus they are likely to be paid less. This also applies, in a smaller way, to those who are likely to do so in the future.

By extension, we can see this as a validation of my assertion. If the gender pay gap were a result of taste discrimination, then there\’s no particular reason why the educated or the un-educated should face a larger or a smaller one. But if it is about career breaks, or the possibility of them, then those hired for the human capital are indeed likely to face a larger one, as above.

Tax Incidence Again

I\’ve had a response to an earlier post from John Christensen of the Tax Justice Network. Essentially, he takes issue with my contentions about tax incidence: the idea that just because a company is handing over a cheque for corporation tax, it doesn\’t mean that it\’s the corporation bearing the burden of that tax. Here\’s what he says:

I am an economist.  The idea that the tax incidence might be shifted, in some circumstances, from shareholders to workers or consumers, is based on very specific assumptions relating to the nature of the economy in question (i.e. it is a closed economy), the structure of the labour force (full employment is assumed) and the capital market (assumed to be perfectly competitive).  Back here on planet Earth, we recognise that these assumptions don\’t apply, and the model is merely an exercise in academic guesswork.  In real life very economies (other than North Korea) operate as closed economies, and companies do pay tax on behalf of their shareholders: hence the huge effort made by the corporate sector to avoid paying taxes and lobby for tax breaks.   Greetings from planet Earth.   John

Note please that he insists that such shifting of the burden depends upon it being a closed economy.

Here is the Congressional Budget Office on the subject:

This study applies a simple two-country, five-sector, general equilibrium model based on Harberger (1995, 2006) to examine the long-run incidence of a corporate income tax in an open economy. In equilibrium, capital is assumed to be perfectly mobile internationally in the sense that the country in which a real investment is located does not matter to the marginal investor. In addition, each country is assumed to produce at least some tradable corporate goods for which the country cannot affect world output prices. Like the original Harberger (1962) model, the worldwide stock of capital and the supply of labor in each country are fixed. Under those assumptions, the model provides closed form solutions and easily understood predictions about its comparative static equilibria. As with any simplified model, the analysis is silent about some potentially important issues – such as the effect of the corporate tax on savings, growth and other dynamics – that may also have important effects on corporate tax incidence.

We are, of course, still using a model, but we\’re certainly not assuming a closed economy. Their finding?

Burdens are measured in a numerical example by substituting factor shares and output shares that are reasonable for the U.S. economy. Given those values, domestic labor bears slightly more than 70 percent of the burden of the corporate income tax. The domestic owners of capital bear slightly more than 30 percent of the burden. Domestic landowners receive a small benefit. At the same time, the foreign owners of capital bear slightly more than 70 percent of the burden, but their burden is exactly offset by the benefits received by foreign workers and landowners.

John, given that the assumptions you make about the model are wrong, might you want to address this issue of tax incidence again?

As to the rest of you, well, make up your own minds. You want to believe a buddy of Richard ("tax is not a cost") Murphy or the Congressional Budget Office?

Idiot BBC Question of the Day

From the World Have Your Say people at the World Service. And remember, this isn\’t paid for by the licence fee, this is out of tax money:

Has Robert Mugabe got this right? He’s approved new laws giving local owners the right to take a majority share of foreign companies operating in Zimbabwe. (51% must belong to black Zimbabweans.) Would you like a similar law in your country?

Nigerians, could this apply to oil? Ghanaian, could this apply to gold or cocoa? Kenyans, could this apply to tea? I could on.

Will such laws boost local wealth, or drive away companies which bring jobs and expertise?

Do you work for a company that operates in Africa? Do you agree with these measures?

And wherever you are, should all companies in your country be under majority local ownership?

Is a complete ignorance of economics and business actually a requirement for working for the organisation? Or is this a happenstance?