November 2012

Just to remind everyone about Ritchie

So, that’s back to the nonsense of CSR again. Thankfully, some companies realise that is not the way to go:

But one in four companies said EU proposals requiring extractive industries to disclose details of tax payments should be broadened to other businesses.

This is, of course, country-by-country reporting, the accounting concept I created ten years ago.

No, it\’s not country by country reporting as created by Ritchie. The extractive industries idea was floated, indeed had a whole taskforce devoted to it, before Ritchie even thought about it.

What actually happened is that Ritchie say that extractive industries idea and thought that he would adopt it as his pet cause: then extend it.

And as usual he\’s managed to get it wrong. The extractive industries thing is about checking royalties: for oil or minerals. This is the taxation of Ricardian rents and yes, it\’s a damn good idea.

Ritchie has hared off to talk about profits: which is a very different idea indeed. The taxation of Ricardian rents is, like land tax itself, almost entirely non-distorting. The taxation of profits is hugely distorting.

As ever, it\’s Ritchie\’s ignorance of economics on display.

You lot know more about this than me

Is this a sensible idea?

The main cost to LED\’s is that they all have to have a transformer. LED\’s run at low voltages, like 5v, so house current has to be stepped down at every bulb. LED\’s in theory should run cool and be cheap, but they are expensive and run hot because of the transformers.

Which leads me to wonder whether we may start wiring houses for 12v in parallel to 110v. When I grew up, nearly everything I plugged into the wall — lights, motors, appliances — ran on 110V. Now, most everything (other than appliances) that I plug in the wall actually needs 5-12v (computers, cell phones, all my audio equipment except big amps). I don\’t know enough about power lines to know if this is feasible. I am pretty sure the resistance losses for 12V DC would be too high, so it would have to be 12V AC, but a diode bridge and some capacitors is a hell of a lot smaller and cheaper than a full blown transformer. I know my landscape lighting has long runs of 12V, that seems to work OK. It is also a hell of a lot safer to work with.

Obviously, would be a long term change. But if LEDs take off, we\’re all using 5 volt bulbs or whatever, would it be sensible to rewire rather than keep buying the transformer in each and every bulb?

This is an interesting point Polly

People no longer trust one another, the state or any authority: only 35% trust others, compared with Sweden\’s 70%.

So which comes first? The trust that allows a high tax high benefit society? Or the high tax high benefit society that engenders the trust?

It\’s a fairly important question too. If it\’s the first (which I rather suspect it is) then you cannot impose that high tax high benefit system upon a society without that necessary trust. As has been pointed out elsewhere Sweden, just as one example, is a highly conservative society socially. Much more so than this country.

It\’s a bit of a bugger really isn\’t it? The idea that successful social democracy depends upon the underlying attributes of the society, rather than causing or shaping them?

This is good too:

The £435m Work Programme emerges as less effective at finding jobs than doing nothing.

So let\’s do nothing then, eh?

I do wish people would understand this

In its Financial Stability Report (FSR), the Bank revealed that the big four lenders – RBS, Lloyds, Barclays and HSBC – may need to take £15bn of extra provisions on consumer loans and European debt, “a further £4bn-£10bn” to cover fines and customer compensation, and “between £5bn and £35bn” to meet regulatory risk standards.

You can\’t raise capital requirements and also at the same time get the banks lending to support the economy.

This is simply one of those either or things.

You want to make them safer? Fine, do so: but the cost will be lower lending.

You want more lending? Fine: but you\’ve got to be more forgiving on capital levels if you do.

The interesting thing about UKIP

But Ukip’s Jane Collins took 4,648 votes, nearly 22 per cent of those cast, with the Conservatives beaten into fifth place behind the British National Party and Respect, and the Liberal Democrats eighth.

Yes, yes, I know, byelection, fostering row.

But in three byelections on the same day in safe Labour seats UKIP came second, second and third.

Much is made of the way the party (\”us\” if you like) threatens Tories. And it does in marginal seats in the south. But there\’s a good argument that the first actual seats (and I do think they will come) are likely to come at Labour\’s expense in the old industrial heartlands.

It\’s actually quite interesting from inside the party. From the outside we\’re derided as too extreme even for the Tories. While from the inside there\’s a lot of Old Labour, that very conservative English working class thing.

Dick Puddlecoate\’s found a good one.

This minimum alcohol pricing. It\’ll add to inflation.

Implementation of a minimum unit price at any level will increase prices and therefore inflation. As shown in Table 4 the impact of a 45p MUP is estimated to be a +0.2ppts, based on the weight of off-trade alcohol sold in the Consumer Prices Index.

Benefits are uprated for inflation. Benefits bill is £160 billion a year.

So that\’s £300 million right there.

Oh, and the supposed drop in consumption? That\’ll cost £200 million in lost excise duty as people tax avoid by drinking less.

So, half a billion a year out of the public purse.

Still think it\’s worth it?

These people really are morons doing it this way aren\’t they?

Skylon: they need scandium

Just remembered this.

OK, so Alan Bond\’s lot are getting their engine to work. Excellent.

Now someone needs to think about what to build the plane out of. No problems going up. But that wing and fuselage surface is going to take a beating coming down. You know, tiles on the Shuttle and all?

To which the correct answer is scandium aluminide. Doesn\’t even begin to deform until 1,400 oC. Just absolutely the best material on the planet to build it out of.

Makes friction stir welding a hell of a lot easier too.

Now, who is it I know that\’s, Deo Volente, going to be digging up scandium in the spring?


Getting power from human power

Seems most odd:

Turning the human body into a power station sounds like a zany plotline from the Matrix movies, but scientists are starting to take seriously the idea that one way to stem climate change might be to harvest tiny amounts of energy in the form of the body’s heat, movement, metabolism and vibrations.

I can see certain very specialist applications. But as a general rule I\’d have thought this was grossly, grossly, uneconmomic.

For our method of providing the human body itself with power is grossly inefficient. I once did the calculation of how much solar energy (ignoring oil, farming etc, just the evaporation of water into the rain that falls on the crops) we use to provide a calorie of useful fuel to a human. Can\’t recall the answer but it\’s thousands to one.

Would clearly be, except for some very specialist uses, more sensible to just collect the solar power at 10
% efficiency with a PV cell and then use it.

Well, yes Ritchie

Fiona McTaggart MP said in a debate on Google’s tax affairs on Channel 4 on Tuesday that she expected companies to pay their fair share of tax.

Madsen Pirie of the Adam Smith Institute immediately jumped on her argument.

“Who is to say what’s a fair rate of tax?” he demanded (or words to that effect).

Fiona’s response was spot on. “Parliament” she replied.

Quite so. It’s called democracy Madsen. And it sets the rules, and the law.

And as we all agree that absolutely everything that Google is doing is legal then Google is indeed obeying those laws decided by Parliament, isn\’t it?

Dear God these people are stupid

Figures published last night by the PAC, show that Amazon sales from the UK amounted to £3.35bn in 2011, with £2.9bn made up from sales of the company’s UK website,, and the remainder from subsidiary LOVEFiLM and “other business activity” outside of the website.

The figures also showed the company made sales totalling £1.87bn in 2009 and £2.36bn in 2010.

The company has sparked outrage because despite having warehouses in the UK and employing 15,000 people, it drives all of its sales through Luxembourg – which has a lower rate of corporation tax.

Yup. And we\’ve a double taxation treaty with Luxembourg, just as we do with 110 other countries, which says that merely having warehouses, a logistics chain, inside a country does not amount to a permanent establishment which gives rise to liability for corporation tax.

This isn\’t a loophole, it\’s not a dodge, it\’s not tax avoidance. This is specifically written into the law. This is tax compliance.

Sirsly, why are they doing this?

The European Commission has sent a nine-page legal opinion to the British Government warning that minimum prices are illegal – and that the Treasury should increase duty on alcoholic drinks if it wishes to raise the price.

However, ministers appear to have decided to defy the legal warning and yesterday unveiled proposals to introduce a 45p minimum price for each unit of alcohol.

Quite apart from anything else this is going to create massive legal bills as the case is fought through the courts. Bills that we taxpayers will have to pay.

Can\’t we surcharge the fuckers who are bringing in something so obviously illegal?

This is just excellent, isn\’t it?

Unfortunately for her, as I show, there was no Laffer effect at all. Far from income going down in 2010-11 as Laffer would predict, it actually went up once one of tax avoidance was adjusted for.

If we ignore the things that people do to avoid taxes then we can show that people don\’t avoid taxes.

Lord Mitchell really is an ignorant tosser, isn\’t he?

Payday loan companies, such as QuickQuid, Wonga and Payday UK, have drawn heavy criticism for charging annual interest rates of up to 4,000 per cent a year. The firms have been accused to pushing vulnerable people into debt.

Lord Welby, the incoming Archbishop of Canterbury, recently said that some payday loans are \”usury\” and claimed that curbing them was a \”moral\” issue.

After a day of political manoeuvering, the Government said that it will give the new financial regulator – the Financial Conduct Authority (FCA) – the power to cap the interest rates charged by payday lenders.

Yes, yes, we all know those 4,000% rates are APRs, entirely unsuitable as a way of measuring the fees and interest on a 7 day loan.

But it will almost certainly be the APR they\’ll try to cap. Which will of course have its largest impact on the small and short end of the market. Where the fees of a £10 or something contribute to that exorbitant APR. So far so silly: and here\’s where M\’Lord is a tosser:

Lord Mitchell praised the minister\’s \”very welcome statement of intent\”.

He told peers: \”This issue is now where it should be – beyond party politics. The winners are those who have tirelessly campaigned for this change in the law and I must mention Stella Creasy MP, who has been relentless in her pursuit of justice.

\”The other winners are those who live in the hell-hole of grinding debt. Their lives will become just a little easier.

\”The losers are clearly the loan sharks and the payday lending companies.

No, the loan sharks will be the winners. They\’re the people who don\’t obey the law, recall? And they\’ve just had their competitors in that short and small end of the market banned by legislation. They\’re going to clean up, aren\’t they?

Welcome to knee breaking as a standard method of debt collection…..

I wouldn\’t say I entirely believe these figures but….

It would be very interesting if they were accurate, wouldn\’t it?

Around two thirds of Britain\’s highest earners deserted the UK after the 50p top rate of tax was introduced, according to figures.

While some 16,000 workers declared an income in excess of £1million in the 2009/10 tax year to HM Revenue and Customs, that number dropped to just 6,000 after then Prime Minister Gordon Brown brought in the new tax rules.

Tax paid by the top earners fell from £13.4billion before the top tax rate came in to £6.5billion in 2010/11.

That would make the peak of the Laffer Curve for the UK\’s income tax somewhere below 50 %, wouldn\’t it? And given that we\’ve actually now conducted the experiment, got an answer, we know this and we\’ll not increase tax levels over the peak of the curve again, eh?

Interestingly this empirical result also accords with the theoretical one in Diamond and Saez. Which was, you recall, that the peak is up over 70% in a system without allowances in an America where you can\’t just leave the country. But is 54% in a system with allowances. And that is the total tax rate, not just the income tax rate. So one needs to shoehorn in the employers\’ national insurance under that 54% rate.

How excellent, theory and reality agree: the peak of the Laffer Curve for the UK is under 50%. Now that we know this we can put the matter to rest, eh?

On the meaning of homophobia

It is commendable to strive for accurate, neutral reporting and \”homophobia\” or \”Islamophobia\” are not ideal, as they denote solely the fear motivating prejudice. But they are the best we have. While fear may not be the only force behind such attitudes, it is invariably a chief component.

That\’s an assertion, not a proof.

Given this, I can report with a certainty rarely enjoyed by straight journalists that being anti-gay is, without exception, at least partly fuelled by fear. Fear of the unknown, fear of unwanted sexual attention, fear of gender roles being flouted, fear of humanity being wiped out by widespread bumming, fear of a plague of homosexuals dismantling marriage, the family, the church and any other institution held vaguely dear. And, of course, never forget: fear of what lurks repressed and unacknowledged in the homophobe. Irrational fear. It\’s a phobia, people.

And that isn\’t a proof. It\’s anecdata.

Do some people dislike Teh Gayers because they\’re afraid of either Teh Gayers or Gayness? Sure. All? You\’ll need to come up with better proof than merely personal experience sonny boy.

If you want to see what real bank fraud is like…..

Afghanistan\’s biggest private bank was a massive fraud scheme from its founding, with £540 million ($861 million) diverted to a clique of beneficiaries including the president\’s brother, a British-funded audit has found.

For example:

Sources familiar with the audit told The Daily Telegraph that when the bank foundered, 92 per cent of its loan portfolio, or $861 million, was ultimately made out to 12 individuals.

That\’s fraudulent banking, not the pissant little mistakes that the people in The City made.