January 2009

Support the occupations

I\’m not all that sure I do support the occupations. The US in Iraq, Israel in the West Bank, not sure that I do. Not sure that I don\’t either, for I steer well clear of Middle East issues.

But I do have to admit a touch of surprise at seeing Lenin supporting illegal occupations. He\’s always struck me as being rather against that sort of thing.



but the fact of course remains that there is no such thing as a ‘government-funded charity’; the new and politically correct term is ‘quango-with-a-licence-to-beg’.

Hungry people

“In soup kitchens, food pantries and universities across the country, activists are planting the seeds for an overhaul of the way America feeds its more than 35 million hungry people….”

Umm, isn\’t that actually, "overhaul of the way America feeds 35 million people who would be hungry if we weren\’t already feeding them"?


Most amusing.

Davide Boni, a councillor in Milan for the Northern League, which also opposes the building of mosques in Italian cities, said that kebab shop owners were prepared to work long hours, which was unfair competition.

Sadly, that view, while amusing, isn\’t limited to odd Italian politicians. This is also fun:

There is confusion, however, over what is meant by ethnic. Mr Di Grazia said that French restaurants would be allowed. He was unsure, though, about Sicilian cuisine. It is influenced by Arab cooking.

It\’s one of the fixtures of Italian life that anyone from 20 or 30 miles south of wherever the thinker comes from is thought to be a little too Arab or African for the thinker\’s liking. A little like California in this manner: everyone agrees that Southern California is the preserve of nuts and flakes, it\’s just that "Southern" starts a few miles further south from wherever you are.

Schools going bust

So, some private schools are going bust and thus thinking of applying to become academies. That is, become state schools.

Opponents of the academy scheme said it was a major shift. Academies were devised to target children in the poorest areas. John Bangs, of the National Union of Teachers, said: "It\’s bail-out for those schools. It\’s the antithesis of the original expectation of the programme to meet the needs of disadvantaged pupils."

I\’m sorry? The main teachers union is complaining about this? The state gets free buildings, a team of trained teachers, a whole institution to incoporate into its propaganda machine, all for free, and these people are complaining?

They think it would be better to have to build new schools to house these pupils or something?


It\’s hard to believe, given the news, that GM is still the world\’s largest car manufacturer, producing 9.4m cars to No 2 Toyota\’s 8.5m in 2007. Whatever GM\’s problems, low productivity is not one of them.

If someone\’s going to confuse gross production with productivity there\’s not all that much point in listening to them in an economic argument, is there?

Oh my, this is going to be fun

Polly\’s on the warpath about corporate taxation. In fact, The Guardian is going to have a major report on it on Monday. And from what I can see they\’ve swallowed the Richard Murphy view hook, line and sinker.

 Which means that the whole research is going to be most interesting. There will be, for example, no examination of the Guardian Media Group\’s own accounts….accounts which show a 4.99% tax rate in one recent period I seem to remember. Nor of the GMG\’s use of offshore companies to dodge (entirely legally) Stamp Duty.

But much more importantly they\’re making a basic logical error. Companies do not pay tax. Only individuals do. Companies are simply a convenient legal fiction, not real people. The real point about corporation tax is what is the incidence? What mixture of real people carry the economic burden of the tax? There\’s only three groups that can, the workers in the form of lower wages, the customers in higher prices and the shareholders in lower returns. Research shows that it is in fact 70% carried by workers in the form of lower wages and 30% by shareholders (that\’s for the US). Another study shows that every pound of corporation tax paid lowers wages by more than one pound.

So, sharpen your pencils for Monday, as I say, it\’s going to be interesting. They\’re going to be wrong in detail, that we know, but they\’re also going to be wrong in their basic construction. For they simply do not understand the concept of tax incidence.

And as Polly says:

Paying taxes makes us citizens. Living and voting together, citizenship means belonging to the community that decides how much tax to levy and how to spend it.

As businesses cannot vote, they shouldn\’t be paying tax then, should they? For they are not citizens.

My pet theory of the week

Is that there\’s something different about this recession.

America\’s struggling newspaper industry suffered another blow from the financial turmoil as the Los Angeles Times announced on Friday it was cutting hundreds of jobs and downsizing the paper in the fight against "economic realities".

The paper, one of 12 owned by the media giant, The Tribune Company, is shedding 300 positions and will cut the number of daily sections from five to four.

In a memo to staff, the paper\’s publisher Eddy Hartenstein said the cuts "are designed to help us deal with the economic realities of the day".

"Not a day goes by that we don\’t give our readers the latest news and analysis on the deepening troubles of the US economy," Hartenstein wrote. "The same challenges that face the companies we report about also are affecting us."

But the difference isn\’t in the collapse of the banking system or the contraction of globalisation (although those exist) but in the media.

For the media is facing the usual recessionary problems, the fall in advertising and so on. But they are also suffering from the structural change taking place in the industry. Yes, blogs, YouTube, Twitter, digital blah blah blah. And in the reporting of the wider economic problems the two things are getting slightly confused.

No, I\’m not saying that the media being gloomy is making everything worse, rather, that some of the gloom in the media isn\’t from the general economic problems but is from the structural stresses that they alone face. Everything is thus being painted as being rather darker than it actually is.

Current estimates are that GDP will shrink by 2-3%, peak to trough. This is giving up one single year\’s growth (and of course missing out on another years\’ such) which isn\’t the death knell of capitalism in any manner at all. Given that it\’s only capitalism which produces that 2-3% consistent growth over the decades and centuries.

Anyway, that\’s my pet theory of the week. That because, for technological reasons, the media is screwed long term, they\’re more gloomy than they ought to be about the minor shafting the whole economy is getting.


The second would be a state-funded programme to build 100,000 houses a year, which would provide homes for those who need them and create 50,000 jobs in the construction industry.

Is John Cruddas seriously trying to say that each house built requires 6 man months of labour?


Although January may have the reputation as the peak month for relationships break up, new statistics show Saturday night is due to be the year\’s biggest night for first dates.

People tend not to stay at home too long mourning the last relationship these days, do they?

Thus the peak month for breakups is going to be the peak month for first dates…because, not although, no?

Carbon Markets

Oliver Tickell is a strange bloke, isn\’t he?

But the carbon market also has to provide a secure, long-term price signal if it is to attract private investment in clean energy infrastructure on the scale we need – and the current carbon-price yoyo is failing entirely in this respect. Wild fluctuations create a risk that deters some investors altogether and makes others demand a significant risk premium, putting up the price of capital. We therefore need to create a floor price for carbon within the European trading system at which the EU will buy back allowances and so underpin the market. This floor price needs to be high enough to pitch the investors\’ preference away from coal and gas and towards renewables.

Ideally there would also be ceiling price at the top end to prevent damaging price spikes which can cause economic damage while doing nothing to encourage long-term investment.

We need a market in carbon but we don\’t want to have the prices which that market reveals to us?

Not much point in having a market then, is there, if you\’re going to ignore what information said market reveals. Why not just set the price of the permit?

That is, let\’s have a carbon tax, not cap and trade?

I\’m sorry, but I don\’t understand

Seumas Milne:

That is the process which this week saw Bolivians vote, in the land where Guevara was hunted down, to adopt a sweeping new constitution empowering the country\’s long-suppressed indigenous majority and entrenching land reform and public control of natural resources – after months of violent resistance sponsored by the traditional white ruling class.

Why is it such a big deal that the indigenes are able to exercise political power? If I advocated Anglo-Saxon (or Norman, or Viking, Celt, for we\’ve had a number of waves of groups who end up being indigenes to the next wave) rights in hte UK I would rightly be derided as a racist.

Why isn\’t this true when Trots talk about other countries?

Save the oil companies!

Do you remember, just those few short months ago, when we had people screaming for a windfall tax upon the oil companies? You know, people like those frothing lefties, Compass?

And there were a few people around who were pointing out (modesty doesn\’t permit identification) that this was an artefact of rising crude prices and the way that accounting was done for inventory? And that as and when crude price fell those same oil companies would report shocking losses on the same accounting basis? You do? Good:

The net loss was $2.81bn after an $8.47bn profit a year earlier, Shell said today. Excluding gains or losses from inventories and one-time items, profit was $3.89bn for the quarter, lower than the estimate of City analysts surveyed by Bloomberg.

See, net losses as a result of the treatment of inventories during a time of falling crude prices, just as the earlier profits were in part from the treatment of inventories at a time of rising crude prices.

However, if, logically, those "excess profits" should be windfall taxed away in the good times then those "excess losses" should be subsidised in the bad times, no? So why isn\’t Compass out there calling for a subsidy to Shell?

Two possible reasons I suppose. The first being that they\’re too dim to understand what is going on, the logic of their own position. The second is that there was no logic to their earlier demands for a windfall tax. That it was just a circle jerk for frothing lefties.

I have to admit that I can see truth in both explanations.


And, yes, we\’re back!

And as we come back I find that Microsoft has actually released some interesting and useful software.

When the vocals of famous songs are run through the software, the backing tracks it adds are so unlikely that the end results often turn out as surreal reinventions of the originals.

Dozens of Songsmith reinterpretations have been posted on YouTube, including a hillbilly version of Billy Idol\’s White Wedding, The Beatles classic Sgt Pepper\’s Lonely Hearts Club Band as if performed by a plodding hotel quartet, and a techno take on Wonderwall by Oasis.

Many of the videos have been viewed more than a hundred thousand times. The reaction from commenters has been mixed, with most appreciating the absurdity of SongSmith\’s efforts while others protest the "massacring" of their favourite tracks.

Truly interesting and useful software.



Well, yes

When it comes to reviving the economy, tax cuts do not work as well as smart public spending.

This might even be true. But where are we going to get *smart* public spending from given the dullards, pecksniffs and plain idiots that go into politics?

In other news, those disposed to higher public spending suggest that higher public spending will make kittens cuter.