This is why he’s not been around

Political discussion in the UK should henceforward stick to the propositions advanced by Larry Elliott. “Liberalising markets did not lead to economic nirvana; instead the orgy of speculation led to the financial crisis of 2008 … The record shows that the managed capitalism of the cold war delivered better results than the unmanaged capitalism since.”

So Managed capitalism should therefore include a land value tax to control property price inflation which got out of control in the liberalised markets immediately prior to 2008, although LVT was the stabilising element in the laissez-faire system proposed by Adam Smith in The Wealth of Nations in 1776. People will eventually rumble that increasing the money supply only makes matters worse if it just inflates land values and, by taking undue rents and mortgage payments, diminishes demand for goods and services that people produce.
DBC Reed


SEBASTIAN SHAKESPEARE: Multi-millionaire property tycoon Kevin Cash is on the brink of bankruptcy after the ‘McMafia’ death of best friend Scot Young who plunged from his balcony in London

If he’s bankrupt then he’s not a multi-millionaire then, is he Sebs?

The department of the bleedin’ obvious

The average age of a car on Britain’s roads is at its highest level since the turn of the millennium with the proportion of motorists behind the wheel of an old banger surging.

UK cars and vans in 2017 had an average age of 8.1 years which is believed to be the first time that the average age has been above eight since at least 2000.

We’ve just had a deep and bad recession. People delayed replacing capital equipment.

We’re surprised, right?


Unfortunately this gets worse, for the impact of greater regulation and the imposition of higher-than-market-wages on that regulated and formal sector can — indeed will — make it more difficult for people to leave the informal economy and enter the formal one. In this sense, it’s actually better that regulation of terms, conditions, and wages be weak, not strong.

No, not because it’s morally objectionable that people get a fair day’s pay nor that work is safe, but because too strict a set of standards means the vast majority of them are excluded from even the most basic and minimal protections.

Sadly, this is something that near no one in the rich countries understands, including most to all of those who sign petitions and drive the NGOs in their insistences. Which is why they keep insisting upon such damagingly expensive policies for those in the formal employment sector.

Again, this isn’t to say that people don’t deserve good wages and good working conditions. Instead, it’s just to insist that such things come with a cost. And in a poor — which Bangladesh still is, sorry — and improving — which Bangladesh most certainly is and for that, huzzah! — country, the people who suffer are those locked out in the informal sector.

So, what’s at fault here?

An art student was arrested and charged with making “revenge porn” for including a naked photograph of her former boyfriend in a university project. Lauren Smith, 26, included a heavily-cropped photograph of the man in a piece of artwork, which was awarded a first and published on her artwork Facebook page -but none of her personal social media accounts.

The University of Lincoln student was charged with disclosing a private, sexual photograph with intent to cause distress – the charge commonly known as “revenge porn” after her former boyfriend claimed to have identified himself and was “embarrassed”.

The original image had been ‘topped and tailed’ to edit out the head and genitals, but the complainant argued he could identify himself in it.

The artist made no reference as to who the image, set within a number of other photographs, depicted, a court heard.

Ms Smith denied the charge, alleged to have been committed between May and September last year, and was due to stand trial at Maidstone Crown Court on Wednesday.

Yes, of course it’s a stupid law and crappily written too. But what’s worse, the basic idea or the crappiness of the drafting?

Just a thought, but if we extended this idea to words – we cannot cause distress by revealing private, sexual, stuff – that’s most of the poetry of Sylvia Plath dealt with then, isn’t it?

Egregiously egregious

Second, most extractive companies are valued not on their current profits but on the reserves that they hold.

No, they’re not. Can’t recall which way around this works to be honest, did the checking of it a long time ago. But between BP and Shell one has more reserves than the other. And it ain’t the one worth more either.

And as my old friend and fellow Green New Dealer, Jeremey Leggett, has long suggested, most of their known reserves are going to have to stay in the ground if the world is not to fry.

So, third, we face both a massive energy crisis and a financial one too as the enormous valuation placed on those reserves in the world’s financial markets collapses, as surely it will.

It’s Ritchie who keeps insisting we mustn’t discount to net present value, isn’t it? Which is a pity, for that’s what the stock market does, discounts the future income from a stock at the market interest rate. Note, not the gilts rate, the one applied as the discount rate to future stock market incomes – 7% is a reasonable guess here. And the NPV of income 20 years out at 7% discount rate is, well, it’s spit, isn’t it?

The Egregious Professor Assume the Efficient Markets Hypothesis is correct

We’ve all seen Ritchie shouting that the efficient markets hypothesis is incorrect.Markets don’t get prices right, politicians with thumb up arse do better.

Which is interesting:

As he notes:

The yield curve [that shows the difference between expectations on long and short-term interest rates], is sending a clear message, however. The fear of a Fed mistake is increasing. The spread of 10-year over 2-year Treasury yields is almost back to a post-crisis low, while the spread of 30- over 2-year yields is indeed now at a post-crisis low: If expectations for interest rate rises for the next two years are growing, but not expectations for longer rates, the implication is that the market thinks that the Fed will indeed deliver rate rises, and go too far — leading to slower growth, and therefore lower yields thereafter.

I agree with him.

He’s using market prices to make his point. From which he must be assuming that market prices encompass all available information – that the efficient markets hypothesis is correct then.

Well, yes Owen

Imagine this. The BBC appoints a prominent radical leftist, a lifelong Bennite, the chairman of the publisher of a prominent leftwing publication no less, as its flagship political presenter and interviewer. This person has made speeches in homage of Karl Marx calling for the establishment of full-blooded socialism in Britain, including a massive increase in public ownership, hiking taxes on the rich to fund a huge public investment programme, and reversing anti-union laws. They appear on our “impartial” Auntie Beeb wearing a tie emblazoned with the logo of a hardline leftist thinktank. Their BBC editor is a former Labour staffer who moves to become Jeremy Corbyn’s communications chief. They use their Twitter feed – where they have amassed hundreds of thousands of followers thanks to a platform handed to them by the BBC – to promote radical leftist causes.

This would never happen. It is unthinkable, in fact.

Paul Mason wasn’t the economics editor of Newsnight, was he? To be replaced by a drone from the TUC?

Listen to me! To Me! TO ME!

In 2015 Jeremy Corbyn adopted the policy of People’s Quantitative Easing when seeking to be leader of the Labour Party. He borrowed the idea from me. Since being elected he and John McDonnell have little used the idea. This is hard to understand since it was probably the most distinctive part of his whole economic appeal in 2015, letting him suggest that the funding to build the new infrastructure this country required would always be available if the physical resources to deliver it on the ground existed.

Well, yes, OK.

So, in other words, all the legal and structural arguments against People’s Quantitative Easing fall away: it has already been authorised and is already legal. Labour could say so and they would be entirely right in doing so.

The question then is why aren’t they doing so? After all, we are still not living in ‘normal economic times’, whatever that might mean now. And there is not a shadow of a doubt that we are suffering underemployment that is resulting in low productivity and so under-usage of capacity which only needs the availability of credit (which is, note, the reason for QE) to bring it into use. This is exactly what a National Investment Bank could deliver. That Bank could, of course, offer its bonds to the market, most especially as a form of National Savings, I suggest. But the backstop for its funding could and should still be People’s QE.

The result would be that in every constituency those ‘shovel ready’ jobs that we know need to be done could be funded.

Great, now, hands up everyone who thinks there are available physical resources in he building trade these days?

Quite so……

The pure delight of Howard Reed’s economics

Howard Reed says:
April 10 2018 at 9:45 am
I think the 2017 manifesto was much better than anything Labour had put out since 1974 (I’ll ignore 1983 as that manifesto was a bit of a mess for a number of reasons)

Hmm, OK:

While I would say that commitment to a balanced budget is an obstacle in the way of a good economic policy, it’s not an insurmountable obstacle. One area where John McDonnell was relatively radical was that he committed to large-scale infrastructure spending funded, effectively, by money creation – i.e. the capital budget wasn’t included in the balanced budget rule, it applied to current spending only. I would argue that a very major component of govt spending is actually investment – including not just infrastructure but public sector workers’ salaries, and indeed a large portion of benefit expenditure (it delivers huge returns to the economy in terms of improving children’s life chances, reducing homelessness and ill health, etc). So one option would be a sleight of hand – reclassify most of public spending as capital instead of current and then you could still have a balanced budget rule, it just wouldn’t matter that much as the majority of spending would be outside it and not subject to it.

Spending upon benefits for scrotes is investment. Although what in, other than votes, isn’t entirely apparent.

He also seems to have missed that this was already Gordon Brown’s definition of investment.

Ritchie really does want to bankrupt us

It could also, of course, continue the line of attacking the tax gap which I pretty much created for it from 2008 onwards with work for the TUC and other unions. It has worked; let’s not deny it. But as current research I am doing shows, that’s mostly because the constraints that politicians have put on themselves (balance the budget, constraint debt to GDP ratios, keep within EU 3% budget targets, etc) have over time meant that tackling the tax gap has been the only game left in town to a government that says it wants to increase spending, even if none of those constraints really exist.

Or it can blow the constraints away. It can say it is government spending that can create jobs in every constituency, as a Green New Deal would, and nothing else can. And it is government spending that can push up productivity when it looks like the private sector has run out of ideas on this issue. As well as the fact that government spending can build houses, transform our energy and transport systems, and so much more, all of which we could do if only we had the money.

And Labour should be bold. It should say we have the money. It’s ours to make. And if more tax is needed that will only be because there is more income to pay it from. And that’s a good thing.

At the same time Labour should make clear that those who will pay more tax are those who will make most – but they will still be better off because they always get more than their fair share of any boost to the economy. There is then no punishment planned: just fair recovery of the new wealth that Labour will liberate within an economy that is in the doldrums.

And I think people will buy that idea. In fact, I think that’s the sort of thing they are hoping for. A little red tinkering at the edges is not enough to inspire them to think Labour will change their lives. Who owns trains will not, ultimately, do that. Even NHS reform, passionate as I am to make sure the waste of faux markets is removed from it, will not be apparent to most people. That’s manifesto material for geeks. What matters are jobs, secure incomes, communities where people live, housing, good schools and secure old ages with an underpinning of comprehensive healthcare. Nothing but breaking the balanced budget constraint can deliver that.

Firstly, he argues that more spending will increase the tax take, so that we’d have a balanced budget. Then he tells us that only by ignoring a balanced budget can we have increased spending.


But the lovely bit is that all these things we want, we can only have them without a balanced budget. That is, they cost more than we’re willing to pay for them. That’s not exactly a rigorous proof that they’re worth having, is it?

Now it’s true that I could be wrong here but

Third, I’d like them to actually make clear that audit is about ensuring companies are solvent when at present this fundamental requirement of UK law, implicit in the duty of an auditor to check that a company is able to pay a dividend without prejudicing its creditors, is ignored by the FRC.

I am under the impression – mistaken no doubt given that I appear to disagree with the Egregious Professor – that it is the duty of directors to ensure that a company is a going concern, is solvent.

I can’t really see any other way of this being done either. Audit is a once a year procedure, taken after year end. Companies go bust throughout the year….

We knew about this, oh yes we did

Former hacktivists have reacted with bafflement after the Conservative MP Kemi Badenoch admitted that she hacked Harriet Harman’s website in 2008.

Badenoch confessed to the hack, which carried a jail sentence of up to five years at the time she acted, in response to a question about the “naughtiest” thing she had done.

Badenoch gained access to Harman’s website by guessing the credentials (she later gave an anonymous interview revealing that Harman’s username and password were “harriet” and “harman”), and posted a hoax blogpost claiming the then Labour minister for women and equality was supporting Boris Johnson in the London mayoral race.

We knew about it at the time. “We” being those who knew about it of course, a somewhat select group to be sure.

Interesting observation

Worried about the information Facebook has on you? What about TfL?

We take protecting the privacy of our customers extremely seriously (How to keep data truly safe? Don’t collect it in the first place, 4 April). Aside from cases where it is essential that we know the identity of a holder of an Oyster card – such as when checking customers are entitled for free or discounted travel – there is no requirement for anyone to share their personal details with us.

For all cards, including those Oyster cards where proof of identity is required, we deliberately break the link in our systems between the card and the journeys made with it as soon as that link is no longer required for customer support, such as processing fare refunds.

No, not what they say they do, what could they possibly do?

Self solving problems

Varoufakis has found someone to fund his idea of contesting the EU elections as one party across the continent. He insists that this is very important:

What we need, in the UK and in the EU, is a combined municipal, national and pan-European strategy to tackle our common crises: private and public debt; the low levels of investment that contribute to precariousness, unemployment and poverty;

He is an economist. Perhaps not a ground breaking one but certainly a competent one. Thus he knows that we’ve already solved that low levels of investment problem.

As everyone continually complains, capital returns are up, capital is gaining ever more of the economy (not actually true but they keep complaining it is) and asset prices are sky high. As any economist does know that increases the incentives for capital formation and investment, doesn’t it?

Thus we’ve already solved that problem.

Hills just can’t let it go, can she?

Don’t let Brexit undermine Ireland’s peace
Hillary Clinton
Those who say the Good Friday agreement has run its course are wrong. Reinstating the Irish border would be an enormous setback

Boilerplate blather etc.


Even now, I can picture clearly my husband’s first trip to Northern Ireland as president. On a cold winter night in 1995, Bill and I joined thousands of people at Belfast city hall for the lighting of the Christmas tree.

Still her best claim to fame is her hubby, eh? Strong independent woman or what?

Elsewhere again

We’ve just managed to make the British economy a little more medieval, which really isn’t an improvement. A reasonable and useful reading of Adam Smith’s Wealth of Nations is to see it as a railing against the guilds and their control of the medieval economy, followed by an insistence that we must instead have a market economy, one with free entry into lines of work and production. Certainly, this discombobulates the producers who find the protections of their economic rents withering away under the force of competition, but then that’s the point.

It’s more than a little odd that in this neoliberal age we seem to be starting to rebuild those protections. But that’s what we’re doing as estate agents become the latest protected occupation. Mini-driving spivs who show you the front room of a “des res” will have to have a professional qualification. This will mean that showing people around front rooms will become a protected occupation, and only those with the appropriate piece of paper will be able to do it.