June 2009

Oh dear God above

Richard Murphy has decided to branch out. He\’s going to develop a new economics.

No, really.

Based upon:

And what is the aim? Simply this: to create a new economic model that can be taught as a system, that can replace the dire view of life that is presented in schools and on undergraduate university courses almost everywhere as if it were the truth about how people and businesses operate: that they really do profit maximise in a perfect and unconstrained world in which the gifts of nature are free and boundless.

Traditional economics represents an \”unconstrained world\”? Gifts of nature are free and boundless?

Erm, at the very centre of economics is the thought that human desires and wants are unlimited while the resources available to satisfy them are not. Thus the entire subject is about how scarce resources are allocated.

\”Scarce\”, not \”unconstrained\” nor \”free and boundless\”.

This doesn\’t bode well for the new economics now, does it?

No Polly, it ain\’t

Britain is still a low-taxed country in relation to most of Europe.

Sorry, wrong.

The government\’s share of the entire economy is now above the European and EU averages.

The reason we still have shitty services is because the services are run and provided in a shitty manner.


One of the disadvantages of council housing compared with other sectors is that tenants are less likely to move to take up new jobs.

So why have council housing at all? Why not simply subsidise private sector rentals for those who need* such subsidy?

*Yes, I know, \”need\” is highly subjective but still….

George on drugs

Almost all is sensible except:

His report does raise one good argument, however. At present the trade in class A drugs is concentrated in the rich nations. If it were legalised, we could cope. The use of drugs is likely to rise, but governments could use the extra taxes to help people tackle addiction. But because the wholesale price would collapse with legalisation, these drugs would for the first time become widely available in poorer nations, which are easier for companies to exploit (as tobacco and alcohol firms have found) and which are less able to regulate, raise taxes or pick up the pieces.

I\’m not quite convinced. The wholesale price of drugs in their country of production (ie, before they\’ve had to cross a border, their first serious contact with prohibition) is already very low.

I can see that the retail price will fall with legalisation, but not sure about wholesale.

Bernie Madoff\’s money

One of the biggest mysteries of the Madoff affair is what happened to all the money.


Have I missed something somewhere? Madoff was running a Ponzi sscheme, no? For decades?

He was paying retunrs to early investors, yes?

So that\’s where the money has gone, into the pockets of those who invested with him for decades.

What\’s the mystery?

Not really good reasons

At the moment there are 700,000 dementia sufferers and that figure is expected to double within the next generation.

But the govenrment still spends just 13 per cent of the budget that it does on cancer research. That\’s the equivalent of £46 per person with dementia compared with £124 per person with cancer.

Britain is also in danger of losing its world leading position in research into the disease as Germany, France and the USA now spend considerably more on research than we do in this country.

There are three sets of reasons why we perhaps should not listen to these people insisting that more tax money must be spent upon them and their area of research (over and above the fact that the NHS already refuses to fund certain treatments which delay the onset of dementia).

1) There\’s no direct relationship between how much you spend and what you achieve. Simply \”spending more on research\” doesn\’t get you anywhere. What research are you going to spend money on?

2) Why the insistence upon government money being spent? Yes, I know that basic research is a public good and therefore justifiably (or it can be justified rather) is subsidised from public funds but this is a pittance as compared to what the drug companies are spending. Everyone knows that there is an absolute fortune to be made by developing the pills (and it is almost certainly going to be pills that become the solution, not diet or something not patentable) which will prevent dementia. Big Pharma is, I submit, already spending billions in this area.

3) So what if other countries are doing more research than the UK is? If they find a cure then we simply buy it from them. Called trade.

Sex swap ops on the NHS.

I\’ve often wondered just what is the extent of sex swaps.

We hear a great deal about \”transgendered\” rights as in the T in LGBT but I\’ve never really known what is he extent of the occurence.

SEX-change operations on the NHS have TREBLED over the past decade, official figures revealed yesterday.

More than 1,000 people have gone under the knife since 1999 — costing taxpayers up to £10million.

And now I know. Important to those who have the surgery, of course, but to the rest of us an entirely trivial pinprick in the public finances.

As to the whole T part of LGBT, what, some thousands in total across the country?

Definitely a minority sport then….

Oh, and this is lovely:

Bernard Reed, of the Gender Identity Research and Education Society, said: “Gender confirmation surgery is absolutely essential.

\”gender confirmation\”?

Public sector pensions

OK, this number ain\’t a surprise:

The true cost of pensions for all current public sector workers has been estimated at £1.2 trillion — equivalent to 85 per cent of Britain’s GDP and worth £20,000 for every man, woman and child in Britain.

But this is interesting:

Vince Cable, the Liberal Democrat Treasury spokesman, said yesterday that public sector pensions were “in danger of running out of control”. He said that changing the system was “the big test of political courage”, adding: “The system has to be reformed and there are various options, including shifting to an average salary basis and raising employee contributions, which must be pursued.”

He added: “Behind the fat-cat culture in the public sector is a wish to enjoy the rewards available in the private sector without the risks. But the truth is that many of those senior civil servants, parliamentarians, local government bosses and others who feel underpaid on their generous packages would sink without trace if they had to manage a business through the recession.”

D\’ye think that Polly and Ritchie, those who have been praising Vince to the skies recently for his grap of economic issues, are going to be praising this?

Jeebus Maddy!

Every other modern narrative – communism, socialism, even those that were destructive, such as neoliberalism and fascism –

You mean that communism and socialism were not destructive?

Can we get a little perspective please on the \”destructiveness of neo-liberalism\”?

Even if we assume that everything that is happening now is purely the result of such, we\’re losing a year or two\’s worth of growth. We\’re back to 2006 perhaps in our living standards. Trying to compare that to the decades long stagnation brought about by communism, to the gross poverty of actually existing socialism like Cuba, is simply absurd.


Shepherd admitted higher energy costs would be a hard sell to the public, but said it was not unthinkable. Part of the revenue could be generated by a carbon tax that took the place of VAT, so that the cost of an item took into account the energy and carbon footprint of a product.

Why not just charge standard VAT on energy?

Ah, yes, that\’s right, because the special low rate was intorduced by Gordon Brown, wasn\’t it…..

Adding to the unemployment rate

Immigrants and other people who wished to move into an area where they had few links would be moved down the priority list – a policy which will raise concern among Labour backbenchers who have warned the leadership not to get panicked into populist policies by the BNPs recent electoral success.

Now, we know that house ownership increases the unemployment rate. Having to sell up and buy again if moving for the sake of a job obviously makes the labour force less mobile (as against a purely private rental market).

Social housing is even worse, as moving across a local authority boundary area takes years long than selling a house. And now Brown has just made it even worse. And one effect of this change will be to increase the structural (as opposed to simply cyclical with aggregate demand) level of unemployment.

Well done Gordo!

An offer to the BBC panjandrums

I have a serious suggestion for the BBC. Let the senior people who control its spending each sit for a day at the back of a magistrates\’ court that is dealing with TV licensing cases. Let them see the procession of poor, usually female, usually bedraggled people who trudge through court, having, under the new fine guidelines, three-figure fines imposed, plus costs and (!) Victim Surcharge. Of course there is a proportion of people who just don\’t like paying any bill, but let\’s put this into perspective. The licence fee is more than two weeks of Jobseeker\’s Allowance, and about a day-and-a-half\’s worth of the average wage. The £2000 spent on flying the boss\’s family back because Sir had to sort out the Ross/Brand fiasco represents more than 33 weeks\’ worth of JSA for the poorest licence payers. So come and have a look at JPs fining the unlicensed in – note – a criminal court. Then, next time you want to charge up a £200 lunch at the Ivy for two people who are already well-off you will have a better idea of where the money comes from. I\’ll be happy to arrange it, and I might even come along myself.

And a good one too.

New air passenger duty rates

In future passengers on a typical domestic return flight, such as Manchester to London, will pay £12 tax each way.

Passengers flying to the US will pay £60 in tax (a 50 per cent increase), while those flying to the Caribbean will pay £75 (an increase of 87.5 per cent). Travellers to Australia or New Zealand will pay £85 in tax (an increase of 112.5 per cent), meaning a family of four flying Down Under face a tax bill of £340.

Sounds about right. London LAX (round trip) is around 2 tonnes CO2, London New York 1.5 tonnes or so.

Social cost of CO2 is, according to Stern, $85 per tonne.

So the Pigou Tax is at least roughly right, in the correct range.

What many seem to miss though is that this is all we have to do. We internalised the externality and that\’s it. Problem solved. We don\’t have to restrict runways, ration emissions or anything else.

We\’re done.