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October 2010

Do we actually have any poor people any more?

Here\’s why I ask:

According to the analysis, the wealthiest fifth of Britons have a net household income averaging £48,700 and they use public services with an estimated value of £5,400 each year. The poorest fifth have an average income of £13,800 but use public services totalling £11,500.

See? I think I\’m right in saying that median household in come is around mid to high 20ks?

So if the bottom quintile have an average household consumption of mid 20 ks, then is it really true to say that there are any poor people at all?

It is, after all, consumption, not income, which is the important determinant of poverty or not, isn\’t it?

Ritchie on the cuts

I thought this was a quite gorgeous line:

He claims real spending will be at the same level as 2008 – but he ignores the analysis I offered last Friday.

Well how about that and hush ma\’ mouth n\’all.

The Chancellor of the Exchequer ignores a blog post from a Wandsworth accountant who has retired to Norfolk.

These Tories really are bastard baby eaters, aren\’t they?

On protecting the Chaco

Yup:

However, Vidal fails to highlight the most important point facing conservationists – the lack of available funding needed to protect this wilderness.

It costs lots of money. So, you who worry about such things, dig into your pockets and go and buy this land. For the price of that semi in southern England that you live in you could buy 2,000 hectares or so of this forest.

Well, go on, what are you waiting for? Isn\’t preserving the environment the most important thing of all?

In which we answer idiot Guardian questions of the day

Step forward Hadley Freeman:

Now, I ask you, if a man can\’t even keep his own homophobic principles straight, can you trust him at all? If he\’s not even good at homophobia, which has pretty much only one rule to remember, can he really sort out New York\’s public transportation? The education system? The traffic on Second Avenue?

Well, confusion in one area of life does not mean confusion in all: The Pope would be, in certain circles, regarded as very confused indeed over the existence or not of God yet be regarded, by those very same people, as entirely sound upon evolution. Mr. Obama as distressingly obtuse upon certain civil liberties issues while absolutely just fine on health care reform.

However, rather more to the point, is that Mr. Paladino is running for the position of Governor of New York State. A position which does not require him to deal with public transportation, education or the traffic on Second Avenue.

Those are all the responsibilities, in New York City, of Michael Bloomberg, who is Mayor of New York City, and in other areas of the State, of his equivalents.

Please, if you\’re going to try and write about US politics at least take the time to try to understand US politics.

Business paying more for universities

This looks like a good thing:

Morrisons is to announce tomorrow that it is to fund 20 undergraduates a year on its three-year degree course in food manufacturing, which starts in January. The students will spend half their time working in the company\’s factories and half studying for the course, run by Bradford University\’s management school.

The supermarket admits the course will leave little time for the recreational side of university life. Students will not take university holidays, but will have an annual leave allowance. They will receive £15,000 a year and will not have to pay their tuition fees of £3,290 a year. The students are also guaranteed a job once they graduate and must work for Morrisons for at least three years.

Companies, the armed forces, certainly used to run these sorts of schemes all the time. And they\’re really only an advanced form of apprenticeship after all, which are generally assumed to be a good thing.

Plus, this is a nice answer to those on the left who are shouting (I\’m sure the idea originated with Ritchie but it\’s spread) that corporation tax should rise because it is business which benefits from peeps getting university educations.

If market processes produce this (as we are told) desirable result, that business does indeed pump money into universities, then clearly there\’s no need for government intervention to force them to do so, is there?

Although I do have a feeling that this won\’t be considered acceptable: Morrison\’s is spending money on the education that it desires its hires to have: not money on what the education establishment thinks they should have.

Tsk, can\’t have that now, can we?

Not to be played with

The Guardian\’s got a \”cut your own budget\” gadget that you can play with.

Quite dangerous really, but the time I\’d had a go the budget seemed to be about 3 pence and I was going to raise that by charging any MP who wanted to propose a law a fee for the privilege of doing so*.

*Sadly, their gadget doesn\’t actually allow you to be this radical.

What Rooney tells us about football

No, it isn\’t, as Jim White tells us, simply an outbreak or manifestation of greed. Nor is it that some chav is getting above himself, not knowing his place in the scheme of things (recall, we used to have maximum wages in football, to make sure such a shocking thing never happened).

It\’s a simple effect of the structure of the business. When you\’ve a business which depends upon human talent, slight gradations in said talent, then all the money in the business will end up in the hands of said talent. This is as true of banking as it is football, movies or, dare I say it, the writing of books.

Those who have that extra 10%, 1% even, will see their prices bid up as the moneymen compete with each other to employ that extra 10%, 1% of talent.

It\’s analagous as to why the workers\’ wages in general rise over time. As productivity rises then the capitalists are competing among themselves for the ability to employ that now newly more valuable labour. Thus wages in general get bid up.

Banking, football and movies are simply extreme examples of the general rule. And the only way to stop it is to have some version of monopsony: where there are not different employers bidding up the wages.

Grr, grr

In talking about evolution:

The leopard\’s spots, which are actually rosette shaped, are so cleverly designed that they provide camouflage even when the cat is moving.

We do not say that something \”is designed\”. We can say that \”the design is such that\” but \”is designed\” implies that someone did the designing, which nullifies the whole point of talking about evolution which is that there is no designer, just random mutation and then survival or not of said mutations.

Trival, yes, but still grr.

Richard Murphy, pots and kettles

So, I understand that the Dispatches programme, featuring our favourite retired accountant, Richard Murphy, made some allegations about tax avoiding behaviour by some Tory politico types.

The programme also focuses on Mr Hammond, whose £7.5million fortune makes him one of the wealthiest of the Cabinet’s 18 millionaires.

It suggests that his practice of paying himself share dividends instead of a salary from his property firm Castlemead is a tax-efficient device used by the wealthy.

And it claims that he moved to limit his exposure to the new 50p top rate of tax last year by moving shares in the firm into the name of his wife who pays tax at a lower rate. It is suggested the move could save him more than £25,000 a year.

Hmm. I mean, gosh.

Dividends instead of pay, so dodging NI, and income switching, so dodging some income tax.

I wonder how Ritchie new about all of this?

Oh yes, that\’s right.

Richard is the person who wrote the article showing us how to do this.

And Richard is the person who seems to have run his own tax affairs in exactly this manner.

Now I didn\’t see the programme: but Richard did of course tell everyone that this was what he did so that\’s how he knows it works, didn\’t he?

The Richard Murphy puzzle

And it is a puzzle. I simply do not understand how he can hold violently contradictory views like this:

On the other hand it taxes its companies on a completely perverse territorial basis – so that profit earned outside the US is not taxed until remitted from abroad……..The answer is very obvious: the US needs to reform its basis for determining tax residence for corporations – and tax them on their world wide income.

This is coming from the man who insists that every company should reports its accounts on a country by country basis. So that civil society (ie, Ritchie and his mates in his construction) can check that each company is paying the right amount of tax where they actually do business.

Who promotes this credo:

Tax compliance is seeking to pay the right amount of tax (but no more) in the right place at the right time where right means that the economic substance of the transactions undertaken coincides with the place and form in which they are reported for taxation purposes.

Who was in fact promoting that credo yesterday.

Now I can see how you could believe in either of these ideas.

You\’re a US company, you pay US tax on your profits anywhere in the world. You drill for oil in Angola, sell it in Holland and we\’ll have a piece of that, thank you, because you\’re a US company.

Or, I can see that you can argue that the economic substance of this transaction is in Angola or Holland: thus tax should be paid in either Holland or Angola. And that\’s true whether it\’s an Angolan, Dutch, US or Cayman Islands company: we\’ve identified the economic location and thus the taxing jurisdiction.

But I simply cannot see how you can support both ideas. That tax should be paid where the economic substance of the transaction takes place and also that regardless of where that economic substance is, tax should be paid in the US.

The two ideas are entirely contradictory.

Is there some special operation you can have to enable one to argue that black is indeed white except when I find it convenient to call black black?

Oh dear George, oh dear

Taking Naomi Klein\’s word on matters economic is certain to lead you into error.

The first such opportunity was provided by General Pinochet\’s coup in Chile. The coup was plotted by two factions: the generals and a group of economists trained at the University of Chicago and funded by the CIA. Their ideas had already been comprehensively rejected by the electorate, but now the electorate was irrelevant: Pinochet used the crisis he had created to imprison, torture or kill anyone who dissented. The Chicago School policies – privatisation, deregulation, massive tax and spending cuts – were catastrophic. Inflation rose to 375% in 1974; the highest rate on earth.

You see, the thing is, the Chicago Boys didn\’t take the economic reins until 1974/5.

In 1972, Chile\’s inflation was at 150%.[4] According to Hernán Büchi, several factors such as expropriations, price controls, and protectionism led to economic problems.[5] The Central Bank increased the money supply to pay for the increasing deficit. Büchi states that this increase was the primary cause for inflation.[5]

Immediately following the Chilean coup of 1973, Augusto Pinochet was made aware of a confidential economic plan known as El Ladrillo [6] (literally, \”the brick\”), so called because the report was \”as thick as a brick\”. The plan had been quietly prepared in May 1973 [7] by economists who opposed Salvador Allende\’s government, with the help from a group of economists the press were calling the Chicago Boys, because they were predominantly alumni of the University of Chicago. This document contained the backbone of what would later on become the Chilean economic policy,[7] recommending a set of economic reforms that included deregulation and privatization. Among others, they privatized the pension system,[8] state industries, and banks, and reduced taxes. Pinochet\’s stated aim was to \”make Chile not a nation of proletarians, but a nation of entrepreneurs.[4]

[edit] Reforms

The first reforms were implemented in three rounds – 1974-1983, 1985, and 1990.[2]

So what was actually happening to the economy in 1974 was the holdover from the previous regime: from Allende and his socialists.

In which Aditya Chakrabortty explains the left

The academic concluded that a significant proportion of even smart people neither understand nor remember numbers. Instead, they are guided by repetition and familiarity (Pepsi being a cornerstone of America\’s caffeine-industrial complex). And no matter how stark the numbers, how they are presented is far more important.

Yes, the left is that portion of the population that is innumerate.

For example, we keep being told of all these cuts acoming….yet in cash terms government spending will rise.

Eh? You mean they don\’t already?

BBC bosses fear that the coalition government is gearing up for a £500m-plus raid on the licence fee, by forcing the broadcaster to meet the full cost of free television licences for the over 75s.

The benefit – which was introduced by Gordon Brown when he was chancellor – costs £556m, and is currently paid for out of general taxation. But ministers are considering passing the bill on to the BBC as part of this week\’s comprehensive spending review.

I\’m shocked that they don\’t already carry this cost.

So that\’s an easy one: stick the BBC with the bill, pronto.

Allow me to translate this for you

Labour is to stick to its target set before the election of halving the UK\’s deficit by 2013-14, the shadow chancellor Alan Johnson said today, but will slightly increase the contribution to be made by higher taxes, as opposed to public spending cuts.

Alan Johnson is to fine tune his posturing and preening about that economy that he has no power over.

He\’s the \”shadow\” chancellor, recall?

Erm, no

In any case, tidal energy is guaranteed unless the Earth stops turning; wind isn\’t.

Tidal power (well, at least most of it, the Sun has some influence) comes from the Moon going around the Earth.

It\’s actually wind (and wave, which comes from the wind) power which comes from the rotation of the Earth.

Chris Packham: Twat

No, I\’ve no idea who he is either but I can tell you that he\’s a twat.

Chris Packham, the wildlife presenter, has called on world leaders to limit population growth in order to stop the mass extinction of species including tigers and pandas.

A fair enough call.

But he said different policies could be developed in different areas of the world to encourage people to have less children such as promoting contraception, cash incentives and taxes.

And that\’s why he\’s a twat.

Because, having worked himself up to such a (hugely, absolutely no doubt about it,) moral fervour he\’s forgotten to go and find out what we do know about limiting, even reversing, population growth.

Which is economic growth of course.

You want to save the pandas, tigers, gorillas and so on? Great, I think it\’s a great idea. Fully with you. But only if you\’re prepared to learn what will actually save them: globalised capitalism red in tooth and claw.

Otherwise you\’re just being a twat.