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?

Patrick Swayze and Smoking


Actor Patrick Swayze\’s doctors have ordered him to quit smoking as he battles pancreatic cancer. The \’Dirty Dancing\’ star is known for smoking more than three packs of cigarettes a day, and had till now refused to kick the butt. However, his doctors have cautioned him that if he wants to increase his chances of beating his cancer, he needs to stop lighting up, reports The Sun.

Supposedly he\’s got 5 weeks to live. And the 5 year survival rate for pancreatic cancer is something like 3% or similarly miniscule.

This ain\’t a time to stop smoking, it\’s the time to sit back and enjoy whatever it is that you do, eating steaks, smoking tabs or guzzling the finest champagne.

Crazed Economic Thought of the Day

A trade deficit increases the workers\’ wages.

No, no, hold on. We know that an increase in the capital stock raises wages…more machines are bought, productivity rises, capitalists compete for the labour to man those machines, wages rise.

A trade deficit means a capital account surplus: it must do, it\’s an accounting identity.

So a trade deficit means an increase in the capital stock, which thus drives up wages.

What have I missed?

Well Mark

Today we are bombarded with a plethora of wisdom about how to eat and shop. We are told we should eat seasonally, shop locally, buy organically, eat sustainably, minimise food miles, avoid air-freighted produce, and support communities in the developing world.

The problem is that only that last recommendation is in fact wisdom. The others are silly, the very opposite of wisdom.

Good Grief!

He\’s going to get shot for saying this, isn\’t he?

In a speech to the Labour organisation Progress, he will say: "Aspiration and ambition were natural human emotions – not the perverted side effect of primitive capitalism.

"Rather than questioning whether huge salaries are morally justified, we should celebrate the fact that people can be enormously successful in this country. Rather than placing a cap on that success, we should be questioning why it is not available to more people. Our overarching goal that no one should get left behind must not become translated into a stultifying sense that no one should be allowed to get ahead.

"I believe a key challenge for New Labour over the coming years is to recognise that, far from strengthening social justice, a version of equality that only gives you the opportunity to climb so far, actually subverts the values we should be representing.

"Instead, any progressive party worth its name must enthusiastically advocate empowering people to climb without limits, free from any barrier holding them back."

Which brings us to this excellent image.


So, we have adjusted everything so that we can compare like with like. Instead of using market exchange rates, we use PPP, as we should do when comparing internationally. We\’re measuring the standard of living that is.

Further, this is after all of the tax and benefits: so it\’s the actual standard of living that people have. In the paper itself, Smeeding discusses things like health care and food prices (more expensive in the US for the former, in the EU for the latter) and so on. He calls those differences pretty much a wash.

Finally, we\’re comparing these living standards to one simple standard: median US income. So, the way to read this chart is that the poorest 10% in Sweden enjoy 38% of the US median income. The richest 10% of Swedes have 113% of the US median income. Finland it\’s 38% and 111%.


Now, look at the US system. 39% of US median income. So, the living standard of the poorest in the US is actually higher than the living standard of the poorest in either Sweden or Finland. All that horribly oppressive taxation, that huge redistribution of resources, leads to an improvement in the lives of the poor of precisely….umm,… nothing.

But look at the richest 10% in the US: 210% of median income. Climbing without limits, eh, free from barriers.

Clearly the US system, the provision of a minimal welfare state, a safety net, in Bill Clinton\’s phrase, a hand up not a hand out, creates greater freedom and liberty for said climbing that the Nordic system of insisting upon confiscating the majority of the economic product of the successful. And it does so while giving the poor exactly the same standard of living as that crushing of freedom.

So, anyone who believes in said freedom should be looking to move from the Nordic style confiscatory tax regime to the US lighter touch, yes? After all, the poor do just as well, while the others do better: it\’s a Pareto improvement, making some better off while making no one worse off.

This is otherwise known as a free lunch, something that we are always at pains to insist does not exist within economics….until we meet politicians that is, for their actions can indeed be so counter-productive as to leave us with said free lunch if we can only get them to stop committing the lunacies that they currently are.