John Christensen: not an economist

I\’ve had this argument with John Christensen before on my blog.

The government\’s pursuit of tax competitiveness, where countries vie with each other to offer lower corporate tax rates, puts Christensen\’s hackles right up. \”It\’s just a race to the bottom, a beggar-your-neighbour return to the protectionist policies of the 1930s, but these days it\’s not around trade tariffs, but around subsidising multinational corporations through the tax systems.

\”It\’s no coincidence that when this government came into power almost the first thing it did was raise VAT rates so that ordinary people would pay more tax and then cut corporate tax rates.

\”What\’s happening here is that the tax burden is being shifted from capital on to ordinary people.\”

In an open economy it\’s not capital which pays the corporation tax. It\’s the workers in the form of lower wages.

Thus his entire contention is wrong.

When I upbraided him about this he came back with: Ah, but that only works in a closed economy. Which is of course entirely the wrong way around. In a closed economy capital will pay corporation tax. In an open one, labour.

Which is something of a problem, don\’t you think? That when we\’ve got a campaigner trying to change the taxation system for the entire business world, said campaigner is ignorant of the basic economics of the very thing he\’s trying to reform?

Getting the ill-informed to design something rarely works all that well.

Allow me to be entirely cynical here

\”I certainly have seen the benefits that can come from [oil] royalties. Schools are better. There are swimming pools, gymnasium, cars – and jobs – all the result of billions of dollars.\”

Patricia Cochran, a former chair of the Inuit Circumpolar Council from Alaska, expresses the view of many indigenous people on industrial development in the Arctic. Vast oil and mineral wealth have brought huge benefits to some communities.

But her own conflicted feelings about development neatly sum up the dilemma that indigenous leaders in the region face. In Barrow – Alaska\’s oil capital – there are also high rates of suicide and depression, while offshore drilling is a threat to subsistence whaling and the hunting of seals and walrus, she points out. So despite the benefits, Cochran is personally quite negative about industrial development and questions the wider benefit to society.


But even there, local leaders of indigenous people have mixed views about who is really benefiting. And overall the \”community\” representing indigenous people is split down the middle over the issue.

As I say, entirely cynical.

Traditional leaders are going to be against any change. When you\’re at the top of a society you know damn well that change might topple you from that position. And yes, there are those who would rather be top than to be middle or bottom in a much richer society.

Yer average Guardian reader would understand this instinctively about the British aristocracy or the Bullingdon Boys. But they never seem to make the connection with the same thing happening in other societies.

David Hillman, lying scumbag

David Hillman, spokesman for the Robin Hood Tax campaign, said: \”The British government should wake up and smell the coffee. Other governments are moving ahead with a bank tax, while we are letting our financial sector off the hook.

\”A Robin Hood tax on the banks would be the most popular tax in history.\”

A tax which just taxed the banks would indeed be an extremely popular tax.

But as both you, your confreres and fellow campaigners, and I know a Robin Hood Tax would not be a tax on the banks. Nor even upon the banksters.

It would be a tax on all consumers of the products of the financial sector. Which, given that all of us take part in the modern economy which consumes the products of the financial sector would mean all of us.

Now you know this, it\’s been pointed out to you by myself (and one of your colleagues, Owen Tudor, will no doubt have brought my snarls to your attention ) but more importantly it\’s been pointed out to you by the OECD and the IMF. The incidence of a financial transactions tax will be upon consumers, as pointed out by the Nobel Laureates Sir James Mirrless and Peter Diamond. Further, the burden upon consumers is likely to be greater than the revenue raised, as pointed out by the Nobel Laureate Joe Stiglitz.

You know this, your campaign knows this, yet still you market your idea as if it is only the banks which will bear the burden. You are playing off the ignorance of the general public about tax incidence.

Which makes you David Hillman, Owen Tudor, the Robin Hood Tax campaign as a whole, lying scumbags, doesn\’t it?

Laurie Penny will have to work hard to match this

Laurie of course being the Germaine Greer de nos jours.

Also, we are dealing here with literature in translation, but all the judges are anglophone, which is ridiculous.

The prize is for literature translated into English: being a native English speaker is therefore something of an advantage.

Right now, I don’t know. I don’t read fiction – it’s a waste of time.

It\’s a prize for fiction, so perhaps not quite the right judge then Germaine.

By and large, English novels don’t impress the Australian Greer. “The English don’t even write the best novels,” she said. “It’s the French who are the best writers.”

And somewhere the ghost of Jane Austen titters in embarassment……


Being disabled is one thing, being an idiot another

Nobody would think that it is OK to deny someone a job as a result of their sex, race or age, and the same should stand for disabled people, too.

We do deny people jobs because of their age: 14 year olds do not get hired as delivery drivers. We do deny people jobs on the basis of their sex: there are no male wet nurses. As to race: there aren\’t that many black models being used to advertise tanning salons.

Disabled means differently abled. We don\’t hire the blind to be delivery drivers, the deaf as piano tuners nor the dyslexic as subeditors.

Yes we do, and should, deny people a job on the basis of disability. You know, the inability to do the job in question?

Is this drivel or dribble?

\”The scale of the land deals being struck is shocking\”, said Mittal. \”The conversion of African small farms and forests into a natural-asset-based, high-return investment strategy can drive up food prices and increase the risks of climate change.

Growing more food through investing in growing more food is going to drive up food prices how?

That screeching whine is the TUC gearing up

In contrast, the real wages of top professionals such as doctors and lawyers has more than doubled. The pay of many relatively unskilled and semi-skilled workers (including bakers, forklift-truck drivers, packers and bottlers) has actually fallen in real terms since the 1970s.

Yes, that\’s what happens in an economy.

As technology changes the demands for the labour to perform certain tasks changes. Wages then change to reflect the differences in supply and demand for those certain skills.

Since the 1970s baking has become ever more mechanised: pallets reduced the need for forklift drivers. Similarly with packers and bottlers, we\’ve mechanised more of the task.

We just don\’t need as many of them as we once did.

In any and every economy with any form of dynamism technological change will change the wages of some forms of labour. To complain about this is to be Canute, or as the Norwegians misspelled his name, a Cnut.

Questions in The Guardian we can answer

As food prices reach record highs, how much is the speculation in agricultural commodites to blame?

Zero. Nada. Zilch.

Next question?

And that\’s not the only stupidity in this piece by Ms. Lawrence.

After intense lobbying, banks won deregulation of commodities markets in the US in 2000, allowing them to develop these new products.

There was no deregulation in 2000.

There was simply a clarification of the pre-existing law. It was confirmed by legislation what the Common Law (or common practice) already allowed.

CME argues that the volume of speculation is not a problem, because the overall composition of the agricultural commodities market has not changed; the increase in activity by index funds has been matched by an increase in trading by those who are commercial participants, that is those who have a direct interest in the physical goods.

Quite, for each and every long position there must be an equal and opposite short one. That\’s simply true, by definition, of any derivatives market.

\”That\’s an indefensible position,\” Chicago–based hedge fund manager Mark Newell of Quiddity retorted. He and another hedge fund manager, Mike Masters, prepared testimony to the US Senate when it was looking into the effect of speculation on food prices in 2008.

\”When billions of dollars of capital is put to work in small markets like agricultural commodities, it inevitably increases volatility and amplifies prices – and if financial flows amplify prices of food stuffs and energy, it\’s not like real estate and stocks. When food prices double, people starve ,\” Masters said.

I really wouldn\’t want one quite so ignorant of basic economics managing my money.

If you go off and speculate in something, and if your speculation increases price volatility, then you will be losing money. The aim is to buy low and sell high, recall? So when you buy low you\’re reducing the price volatility at the bottom of the cycle. When you sell high you\’re reducing price volatility at the top of the cycle. You\’re taking in over-supply at one point, increasing supply at the other.

The only way you can be increasing price volatility is if you\’re buying high and selling low. Which means we don\’t really have to worry about you too much as you\’re not going to be in the market all that long, you\’ll be bust.

Speculation can move high prices from the future to the present, sure, but that in itself reduces long term price volatility (Wealth of Nations, Book IV, Chapter V, start at para 40).

Can we please get this straight? Speculation can change prices, yes. Can increase them or reduce them. But it does not increase price volatility, it does the opposite, it reduces it.


On why Oxfam are drivelling fools

That Oxfam report into the food industry insisted that poor farmers need better transport links, better seeds, acess to better inputs. Plus better ways to get their outputs to market.

The same report also attacked the major commodity traders.

The way-markers today are grain silos, agricultural hangars for harvesting machines, and banner adverts across nearly every field for agrochemicals and genetically modified soya seed.

Occasionally, the green and orange logo of Monsanto\’s Roundup glyphosphate herbicide gives way to an election poster for the Perónist president, Cristina Kirchner, or to a rival chemical or seed company\’s billboard. But there\’s no question who dominates the landscape here.

Less visible at first, and strangely unfamiliar to consumers in the UK, are the big four transnational exporters that dominate the other half of the soya complex, the so-called ABCD group of companies: ADM, Bunge, Cargill and (Louis) Dreyfus.

Between them, these firms account for 75-90% of the global grain trade, according to some estimates. They provide the fertiliser for the soya, and here, as elsewhere, dominate the processing industry that divides the beans into oil for food manufacturing and protein meal for animal feed. When you reach the ports of Rosario and San Lorenzo-San Martín, they are unmissable, however, with their dozens of crushing plants, biodiesel refineries, grain terminals and elevators towering above the river.

This is where about 55m tonnes of soya a year, worth $24bn (£14.7bn), starts a journey through the docks to the importers – China, India and Europe.

They\’re complete cretins, aren\’t they?

It\’s the very commodity traders who are providing the access to inputs, the storage, the transport to export, that those farmers need and Oxfam desires.

How did the lunatics gain the keys to the asylum?

How not to defend Brutalist architecture

These works are mostly public buildings, built by local authorities, and by a kind of civic confidence going back to Victorian times that, it would turn out, was in its death throes. They are also socialist. They tend not to maximise the commercial efficiency of their sites, preferring a generosity of space that now makes them vulnerable to property developers who can multiply their profit-making area by factors of two, three, four and more.

No, not just the word \”socialist\”.

So, knocking down these monstrosities will allow a three or four fold increase increase in the value that can be created from the underlying land.  Land is indeed a scarce resource: they\’re not making any more of it for a start. Further, we keep being told that the ever onwards march of concrete across our green and pleasant land has to be stopped. We must use brownfield, not greenfield, sites for our urban architecture.

So, by knocking them down and replacing with higher value buildings, we are moving an asset from a low to a higher value use. This is the very definition of wealth creation.

Perhaps the best way of defending, of perserving, Brutalist architecture is not to point out that we\’ll all be richer by knocking them down.

Manic stupidity about Marx

This is one area at least where Marx certainly knew what he was talking about. In 1854, Commodore Matthew Perry sailed into Japan\’s harbours threatening military force if Japan did not open its borders to free trade

Yes, yes, I know Mark is supposed to have been some sort of prophet but the communist Manifesto was written in 1848 you twat, 6 years before Perry turned up to shout at the sons of Nippon.

The community group shakedown

As ever, a \”community group\” is trying to shake down one of the supermarkets.

In this case it\’s one in DC, trying to extort from WalMart. Worth reading the whole list but these three stood out for me:

  • Provide free shuttle transportation to and from the nearest Metro station to each D.C. store every 10 minutes.
  • Commit to traffic alleviation studies.
  • Provide up to 2.5 free or low-priced parking spaces per 1,000 square feet of building space.

Umm,what sort of idiot demands free parking and traffic alleviation?

Cretins, I tell ya\’

Popcorn time!

The Guardian prints an article saying that not everything is peachy in Cuba.

And of course, we all count down, 3…2…1… see how quickly the comments section starts to slag it off.

A child born in Havana will still live longer than a child born in Washington.

But apparently the Amerikan \’freedom\’ to choose from several different types of salt/mobile phones/whatever, is more important than the education and health of the population.

Only a man resident in Amerika could write about \”tyrants\” with such a straight face. Your resident country has been illegally trying to kill Castro for decades.

That was comment two. Interesting point he\’s amking actually. I\’d never realised that the health and education of the population required the near complete absence of political or economic freedom. Schools\’n\’ospitals, yes, possibly even government of tax funding of such. Could even be that the governemnt actually has to run them directly.

I\’ve just never really considered the point that shooting anyone who says \”Castro is a poopyhead\” was a requirement as well.

Anyway, if you\’re looking for the socialist loons then they\’ll be the ones spluttering in this comments section.

How conservative can Maurice Glasman get?

It started with Jon Cruddas and I going down to the Guildhall in the City of London with the Billingsgate porters, all dressed in their whites and boots, to protest against the fact that the Corporation of London was taking away their civic inheritance. The court of common council was voting to abolish \”the fellowship of the Billingsgate porters\” which has been recognised since 1632.

Civic inheritance?

They\’re a closed union shop, an hereditary medieval guild. How bleedin\’ conservative do you need to be to try and argue in favour of the retention of something like that? Even the Conservatives don\’t do that any more!

More UKuncut nonsense

We had talks outside Lehman Brothers’ old headquarters, expressed our solidarity with USUncut outside the Bank of America who paid $0 in tax last year….

So, err, why did Bank of America pay $0 in tax last year?

Umm, 2010 results:

Bank of America posted a $2.24 billion net loss

2009 results?

income applicable to common shareholders was a net loss of $2.2 billion, or $0.29 per diluted share.

BoA didn\’t pay any corporate income tax because there wasn\’t any corporate income to pay tax on.

Are these uncut people all irredeemably stupid?