February 2018


Much brain power is being overused in attempting to make the US tech giants contribute more to Her Majesty’s Revenue. The initial complaint, that the current international business taxation system doesn’t deal well with digital, is entirely correct – it doesn’t.

The problem is that almost all of the suggested solutions to this inconvenience run up against two rather harsh economic facts. One is that businesses never really pay any tax at all, and the other is that the problem of not paying any taxes at all is already largely solved.

If only Ritchie could grasp both points, eh?

In other news, am doing a piece for the Independent, writing my little fingers off at Continental Telegraph and how are you all?

Yes, things will happen here once we’ve got that running……

An interesting question for the Senior Lecturer

That said, this means that government bonds are an asset with very low inherent risk. As a consequence, gilts have the lowest interest rate paid in any market. Despite this they still have great appeal to pension fund trustees and insurance companies, both of which have an obligation to settle liabilities far into the future.

Despite isn’t the right word there, because might be. Assuming we leave aside the regulatory insistence that they hold gilts that is, a form of financial repression.

In particular, companies seeking to place millions and even billions of pounds on deposit overnight seek security for their cash. They achieve this security not by placing the funds in bank accounts, but by temporarily purchasing government bonds from banks. These they then sell back to government the following morning at a very marginally higher price to cover the interest earned. This is called the ‘repo’ market.

Repo involves purchasing from banks and selling back to the government, does it? Blimey, the things you find out in a policy briefing.

A growing economy requires general price increases, or inflation.

It does? Or perhaps this is to misunderstand the point, which is that a tad of inflation eases the relative price changes that come about from a growing economy. Need therefore being the wrong word.

Except under unusual circumstances, a general increase in prices requires an increasing money supply.

Not really, no.

A fiscal deficit is the only way in which money can be injected into an economy continuously.


It follows that governments must run a near perpetual deficit or face the risk of creating a liquidity crisis due to a shortage in the money supply, which would then create a risk of deflation.


And now the set up for our question:

A government can never default on a bond that it issues in its own currency because it can always instruct its central bank to create the money required to make repayment of a bond when redemption is due. As a consequence the owners of gilts have an absolute guarantee that their funds are safe. This is fundamental to the financial security of an economy.

If you bought a consol in 1945, just to give a date, then held it until Osborne bought them in a couple of years back, were your funds safe?

Show your workings and define your terms.

My own intuition, without looking anything up, is that you might have got back a thruppeny bit on your £. As capital that is, not going to try and headwork the interest received….

Ahhh, shit

This is the hardest post I have ever had to write. It’s nearly three in the morning and I can’t sleep, so I am putting my thoughts onto the page, because I need to.

On Friday, Mrs L, that anchor who travelled along side me as I navigated life, who was always there, with a quiet word, who shared my strange humour, died of the cancer that had made her so ill this past few months.


I noted yesterday that the suggestion that Google, Facebook and other tech companies should pay tax on their turnovers would give rise to all sorts of problems, almost certainly be regressive, and be a move in the wrong direction on corporation tax reform. I suggested an Alternative Minimum Corporation Tax as an alternative where, in effect, tax be charged at a reduced rate on the global weighted profits that would appear to arise in a country if the local tax paid appeared to be inappropriately small, probably because of the use of tax avoidance activities. Some people asked me for a worked example, so I have done one.

Ritchie takes revenue that Google says comes from a country to do his calculations. Hmm. When ticked off about this he says:

Richard Murphy says:
February 24 2018 at 11:25 am
You are ignoring the concept of permanent establishment (PE) for taxation. This is a complex area, especially for what are in effect digital companies. But in effect it says that if an activity is managed in a territory then even if it is owned elsewhere it is taxable in the territory on the profits arising there.

Google et al have to sell. They do not do all of this on line: they have significant numbers of people doing so on the ground. The whole argument is about whether or not these people are the PE for tax.

I think they are: selling ads is the whole raison d’etre of these companies. They make value no other way. Their IT is useless without sales and valueless without them. So the sale is all that matters. I accept a fee for back office services – to the place where they really occur – is fair. But the argument is that the destination of the sale is key here. And I would contend – as do many – that tax law needs to reinforce this.

That is the direction of travel around the world. Until it happens what I propose is an interim step.

Yes. lovely. But those PE rules are what Google operates under now, aren’t they? So those “UK” revenues aren’t in fact taxed in the UK. They’re not even legally recognised as UK source revenues. In law they’re Irish income, aren’t they?


We should therefore welcome the immigrants?

No one living in Britain is truly British, scientists have said after finding that the builders of Stonehenge were nearly totally replaced by European immigrants.

The original indigenous Brits were near totally replaced by immigrants.

The aim and purpose of life is to have offspring wh go on to have offspring.

We should welcome a new wave of immigration why?

Gissa job!

First I think think that the lack of experience Lady Stowell has makes her wholly unsuited for this task. If the supposed crisis at Oxfam suggests anything it is that the charity sector should no longer be the preserver of the enthusiastic but unskilled amateur and that appropriate skills are required. It is a failure of leadership to appoint someone without the required skills to the Charity Commission in that case.

Second, I do not believe that resigning your party membership when you have previously been appointed by that party to high political office breaks your association with a party or party politics and it is absolutely clear that party politics is not a part of UK charity activity. To have someone in charge of the sector who has been partisan to the date of their appointment and whose resignation is solely motivated by that appointment pushes the boundaries of credibility on this issue both for those who suspect that this is a political appointment and for those who want fair play to be seen to be done, as I do as someone who is very clearly interested in politics but who has very clearly not endorsed a party line and has been critical of all parties when I think it appropriate.

There is only one man with the skills necessary who has not been a member of a political party.

Step forward Richard Murphy, head of the Charity commission!

So, a new project and game for us all

I’m trying a new idea. therefore, pieces are going up elsewhere.

At Continental Telegraph. Yes, there is a comments section.

It’s all a bit new, most of the site is still cod pieces just to make spaces right and so on. But the general intention is to get this up and running as a truly Worstallian newspaper…..something a bit more than a blog, perhaps a little less than a newspaper in fact.

As a general layout, the usual ranting and shouting will be there. Then, added excitement of pieces aimed at search engines etc. The game to see whether sufficient traffic to support a lifestyle can be gained. There will obviously be the occasional pieces here as well. Stuff that even a Worstallian paper wouldn’t publish.

Lifestyle requires 20,000 page views a day once running properly. Can this be done?

A useful form of rationing

So it’s time to challenge the university shibboleth of the more the merrier. Using better data, we should decide on the right number and reintroduce a cap on student numbers in conjunction with social quotas for every university. These must ensure that places are reserved for young people from the most disadvantaged backgrounds.

Say, 10% of the age cohort and that’s your lot?

Erm, as we did 40 years ago?

The joy being that we get to sack 80% of the current professoriate.

Why those empty homes?

On a short street in London’s travel zone one, where residential skyscrapers rise as symbols of the city’s affordable housing crisis, four family homes stand empty. Three are owned by Southwark council, which has 11,000 families on its waiting list for social housing. They have been “voids”, as the council describes them, for more than six months, the government’s definition of long-term empty. No 20 has been empty for more than two and a half years. The fourth house, which can be traced to an Italian commodities trader, has been empty for almost a decade.

They’re going to sell it/them apparently.

But there we have it, empty homes etc. And – agreed, very limited sample – 75% of the problem is councils taking too damn long. Comrade Corby’s plan to nick that one off the Italian isn’t going to be the solution, is it?

The NFU’s double prong

The government must not allow farming standards to slip or be undermined by bad trade deals after Brexit, the National Farmers’ Union has said in a reference to fears that food standards will be sacrificed to seal deals with the US.

Those who advocate a “cheap food policy” should bear in mind the price that is paid in terms of standards, traceability of produce and shifting the environmental impact to other countries, the NFU’s president will say at the union’s annual conference where delegates and politicians including the environment secretary, Michael Gove, will meet on Tuesday.

Anything to maintain he subsidies. Including insisting upon certain standards that can only be met through subsidy…..

Better by far to open the floodgates. And those who want those higher standards can pay for them, those who don’t also have the choice.

There’s a solution to this

Westminster city council’s deputy leader has emerged as a contender for the title of the most schmoozed politician in Britain, receiving entertainment, meals and gifts more than 500 times in the last three years.

From tickets to the hottest West End shows to exclusive dinners in London’s finest restaurants and trips to the south of France, the official declarations reveal an extraordinary lifestyle that included one day in Mallorca, when Robert Davis managed two lunches, the first at the home of Andrew Lloyd Webber and the second at the home of the Earl of Chichester.

Davis, the Conservative deputy leader of the central London borough and until last year the chairman of its powerful planning committee, was entertained by and received gifts from property industry figures at least 150 times since the start of 2015 – a rate of almost once a week.

If such a politician didn’t have so much economic power then rather fewer people would attempt to suck up to him. So, reduce the power of the politicians.

The Germans just can’t do it

The problems came after KFC switched its deliveries from Bidvest Logistics to DHL in a deal struck last year.

DHL said “operational issues” meant several KFC deliveries over recent days had been incomplete or delayed.

It added: “We are working with KFC and our partners to rectify the situation as a priority and apologise for any inconvenience this may have caused.”

But business is just so easy, isn’t it? Open the doors and the profits just roll in. Or so half the Guardian would have you believe.

The other half are so deluded they think the State can do it……not realising it doesn’t take all that much to cock it up.

Dawn Foster still doesn’t get it

Poverty is a trap: it should be eradicated. It’s no real answer just lifting a few children from families stuck on low wages into a different social milieu.

We have eradicated poverty. It simply does not exist in Britain. Barbara Castle pointed this out back in 1959.

We have inequality, sure we do. A great deal less than many suppose – consumption is the only form that matters, not income or wealth – but sure, we’ve got it.

But inequality and poverty are not the same thing.

Rhiannon Lucy is all growed up now

There is not a day that goes by where I don’t feel grateful for the fact that I am no longer embedded tit-deep in the feminist movement. Though I remain a feminist – my commitment to the cause is unaltered – it is a relief, not to mention immeasurably better for my mental health, to find myself no longer overly concerned with putting a step wrong somewhere and facing the wrath of, well, everyone. “Did you see the fallout from so-and-so’s column?” a friend who is very much still involved in the feminist media circus asked me the other day. “Nope, don’t care,” I replied. She looked at me with wonder in her eyes.

Women are so frequently pitted against each other that it feels somewhat disloyal to admit that some of the worst tearing downs to which we can be subject are often from other women – so much for sisterhood.

All of which makes one wonder why we pay so much attention to those not yet growed up?

Peeps still aren’t understanding Iceland’s equal pay law

On the face of it, Iceland is a good place to be a woman. For nearly a decade, it has been rated the world’s most gender-equal country. It was the first to directly elect a female president, nearly half its MPs and company directors are women, and first-class daycare and parental leave help ensure almost four in five women have jobs.

So it came as a shock for Fríða Rós Valdimarsdóttir to learn, when she was managing a key team of 10 home carers at Reykjavik council a few years ago, that male colleagues in other departments, with far fewer responsibilities than her, were being paid a great deal more.

“It has been illegal for decades, for jobs that are worth the same, to pay people differently because of gender, but still it happens – it’s simply been allowed,” says Valdimarsdóttir, who is now the chair of the Icelandic Women’s Rights Association, in her bright offices in the country’s capital.

Despite an equal pay act that dates back to 1961, Icelandic women still earn, on average, between 14% and 20% less than men. So Valdimarsdóttir and her association were one of many campaign groups to back a plan that finally resulted, last month, in the island becoming the first country in the world to legally enforce equal pay.

They’re not enforcing equal pay. They’re enforcing equal pay for the same – or very similar, to be fair – job.

It is still true that different life choices, different commitments to career, different deployments of talent, will lead to different pay outcomes.

Within four years from January 2018, any public or private body in Iceland employing more than 25 people that has not been independently certified as paying equal wages for work of equal value will face daily fines.

Be fun to see the lawyers arguing as follows.

“My client pays different amounts because they regard the work as being of different value. The proof that the work is of different value is that it is paid differently. QED.”

At which point, my prediction. The country will still have a gender pay gap even after this is all bedded in. And people will still complain.

Apposite placing of stories

Telegraph news page:

Oxfam chief executive under investigation over handling of sex abuse claim

Child sex crime accusations reach record high, says charity

Is that ‘coz Oxfam is ‘fessing up?

Charles McKay was right

Sure, he concentrated upon financial markets but delusions and madness of crowds aren’t limited to those:

Measles cases rose by 300 per cent in Europe last year as parents across the Continent shunned vaccines.

More than 20,000 people were infected as the disease rebounded from a record low to cause 35 deaths, according to World Health Organisation figures that reveal the damaging after-effects of the measles, mumps and rubella (MMR) vaccine scare.

Young people in Britain who are part of the unprotected “Wakefield cohort” — named after the disgraced former doctor Andrew Wakefield, who raised fears that the triple vaccine caused autism — have been urged to get vaccinated before trips to countries such as Italy.