Ragging on Ritchie

My word, this is a surprise

A new Tax and Financial Transparency Bill to recover billions of pounds of lost tax, by forcing companies to be more transparent in their accounting, is on the agenda for debate in Parliament on Friday (10 June).

The Bill, launched by the MP Caroline Lucas in March this year,

Gosh

Tax Research UK estimate

Wow

The PCS Union today issued a statement saying they also backed the bill.

My word.

Tax Research UK is Richard Murphy, Richard Murphy works for Caroline Lucas and PCS.

Thre\’s nothing actually independent about any of this.

Ritchie fails to note how people collaborate

Lordy but the man can be dim:

There is a problem: integration is not the opposite of competition. Collaboration is the opposite of competition.

Integration implies a disparate selection of independent bodies have to be meshed as well as possible one with another, with at any time there being risk of one component being replaced with an alternative. Relationships will be defined contractually: trust will be low because at any time the risk of a component being rejected and a replacement being sought is high. Defensive behaviour will be prevalent, focussing on the need for survival of the constituent parts, not the behaviour of the system as a whole. The patient will have low priority in that case.

Collaboration means people working together towards a common goal. If collaboration is the target the aim is to achieve a common goal. The risk of component failure is covered by seeking high standards of behaviour universally: the result is risk can be taken to achieve that aim. The relationships are built on trust, not contract. It is maximum and not minimum performance criteria that matter.

Which model is likely to produce the best health outcomes? Clearly a collaborative one.

Now, I admit we have not got such a model now. That is the fault of governments past, both Tory and Labour. So we need reform. But not the reform we are getting, which will undoubtedly increase fragmentation in the NHS (that is its purpose) and so make integration hard and collaboration impossible.

We do instead need to create a collaborative model. This is possible. Instead of breaking the NHS up we need to re-centralise it.

Markets are the way that human beings collaborate.

So, think about this for a moment. We need someone to be the person who gets weird metals into the lighting industry so that everyone can have those lovely metal halide bulbs with which to adorn their kitchens. Someone who occasionally goes out and finds some terbium to make those compact fluorescents work.

We also need someone to wibble inconsequentially on the internet about taxation: about how everything really should be paid to the taxman and we should be thankful for the pocket money we get back.

Excellent, we\’ve our division of labour and our specialisation. This is, as Adam Smith pointed out (yes, the pin factory again) one of the ways in which we can increase wealth.

Just for funsies we\’ll call our two people Mr. Worstall, who will deal with the weird metals, and Mr. Murphy, who will supply the wibble.

Now, how are we going to organise the collaboration between these two people? We\’ve products being made and they need to be exchanged. Ah, yes, we call that trade. And where does trade take place? Yes, in a market.

Good, excellent, so when Mr. Murphy requires light bulbs to make his wife\’s cooking visible from those little down lighter things he will purchase them. And Mr. Worstall, when he wants a good laugh, will purchase a newspaper or magazine that contains Mr. Murphy\’s dribbles. Or perhaps even, in this modern day and age, receive such for no money down, in what can be called the reputation market of the internet.

But we have collaboration here, cooperation. And the market is the method by which this happens.

Now, we can in fact go further than this and say that at times markets are not the correct method of such collaboration, cooperation. At times we\’d rather not have a web of contracts, at times we\’d rather have the more authoritarian \”do as I tell you\” style of organisation. When and where we would prefer this is dealt with by Ronald Coase in his Theory of the Firm. You know, that thing that gained him the Nobel Prize? There\’s been a number of decades of work done on where these dividing lines are: which is the best method of organisation for what purpose under what circumstances?

Few come up with the answer that 5% of the workforce and 10% of the GDP should be so centrally managed. But then of course Ritchie wouldn\’t be interested in such subtleties, for this is the \”blackboard economics\” which he rejects.

What amuses greatly is that Mr. Coase is the originator of the phrase \”blackboard economics\”, that thing which should be rejected, and his Theory of the Firm is entirely a rejection of the purely theoretical approaches that were taken before he advanced it.

ex africa semper aliquid novi

I have a feeling that Pliny there wasn\’t quite as wise to that continent as some think.

Equatorial Guinea has built a multimillion-pound deluxe \”city\” to host African leaders while the majority of its people live in dire poverty.

Sipopo boasts 52 luxury presidential villas, a conference hall, artificial beach, luxury hotel and the county\’s first 18-hole golf course. It was built over two years to host an African Union (AU) summit that will last just a week.

This has been going on ever since there has actually been an African Union.

Bloke gets to be chairman that means the beanfeast is on his territory. Thus a new village/palace/grand hotel is built for the beanfeast. This has been going on since Kwame Nkrumah in Ghana, when it was still called the Organisation for African Unity.

Corrupt and incompetent twats impoverish their people: this is hardly new in Africa.

What amuses is the problem this sort of thing gives to the likes of Ritchie and Nick Shaxson. If it\’s the governments themselves that are entirely shite, venal, grasping bastards, why campaign to make sure that they get more of everyone else\’s money?

@richardjmurphy, offshore accounts and tax evasion

Two from Ritchie:

There has been some publicity over the last few days about H M Revenue & Customs  having secured the names of 500,000 people in this country who have offshore bank accounts.

Interesting number. OK.

How come HMRC has 500,000 names of tax evaders but there\’s been no action?

Eh?

What is the link between having an offshore bank account and being a tax evader?

For example, it is in fact possible to both have an offshore acount and declare for tax purposes the income received into it.

It\’s even possible to be a Brit, with an offshore account, and not actually owe any UK tax. As some of the 5.5 million Brits who don\’t live in the UK most definitely are not.

Even, lots of them who have gone abroad to work, come back, but left their money offshore.

What bugs is this immediate insistence that the mere existence of an offshore account must mean tax evasion.

@richardjmurphy just *can\’t* be as stupid as he seems, can he?

Here\’s our man:

And the outcome  of this mantra, often imposed on developing countries as a consequence of IMF loans?  It’s always an economic disaster:  the fact that the developing world has not made little or no progress in the last 30 years is almost entirely the fault of the IMF imposing such absurdly inappropriate policies on  so many poor states.

Here\’s reality:

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And in Africa?

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What part of the greatest reduction in poverty in the history of our species has he missed? Rising wealth and falling global inequality: whatever it is that people have been doing for the past 30 years seems to work prety well, doesn\’t it?

@richardjmurphy really should read a report before he starts frotting over it

Sadly, he doesn\’t.

The truth is that the NHS is actually a stunningly cost-effective supplier of high-quality healthcare,

So let us look at the actual report, from the Commonwealth Fund.

To start, we should note that the Commonwealth Fund is about as independently minded as Compass is. They\’re actively campaigning for \”single payer\” in the US.

So, let\’s look at how they\’re measuring what they\’re measuring.

The first and most obvious measure of how a health care system performs is how well it actually deals with those things that can be dealt with by a health care system. Which they do:

The goal of a well-functioning health care system is to ensure that people lead long, healthy, and productive lives. To measure this dimension, the Commission’s National Scorecard report includes outcome indicators such as mortality amenable to health care—that is, deaths that could have been prevented with timely and effective care;

Excellent, and the NHS\’s position? Second to last. So, at what a health care system is supposed to do, treat those things which are treatable by a health care system, the NHS is crap.

Recall, this report is by people in favour of government health care…….

Let\’s look at cost-efficiency…..which they do.

In the Commission’s first National Scorecard report, efficiency is described in the following way: “An efficient, high-value health care system seeks to maximize the quality of care and outcomes given the resources committed, while ensuring that additional investments yield net value over time.”14 To measure efficiency, this report examines total national expenditures on health as a percent of gross domestic product (GDP), as well as the percent spent on health administration and insurance. An important indicator from the 2007 survey of adults includes whether patients spent any time on paperwork or disputes related to medical bills or health insurance.

Well, lookie at that!

So, we take the amount of GDP that is spent on health care. Then we add the amount spent on insurance. What? But the insurance is what is being spent on health care. This is straight double counting.

It\’s possible that they\’re not actually being that dumb, sure. What they mean is the amount spent on insurance which isn\’t spent directly on health care: the admin, the cost of getting the premiums in etc.

However, if we\’re going to count that then we have to count the costs of getting in the tax money to pay for those not insurance based systems. In the UK this means the costs of collecting national insurance. And if we\’re to include the costs of \”disputes related to health insurance\” then we have to include disputes related to NI. Oh, and the deadweight costs of  system of taxation. At our current marginal rates, figure 35% or so of cash raised.

So, no, it\’s not possible to say that the NHS is cheap, either.

So, err, our NHS is crap and expensive, as we thought.

Ritchie really ought to read these reports before he gets all excited over them.

@richardjmurphy insists he\’s an economist just as much as Adam Smith was.

Foolishly:

Using a strategy used by many on the right, it sought to avoid the economic argument by playing the people who wrote the letter, claiming many were not economists. Apparently, for example, a retired economist is not really an economist. Nor is a historian allowed to comment on the subject. And heaven forbid someone working for a pressure group be given the title ‘economist’: that would never do.

The trouble is that this is a particularly foolish argument, and there’s ample proof of this. In particular, Adam Smith was not, using this definition promulgated by the institute that abuses his good name, an economist. He was, after all, a professor of moral philosophy and that, quite clearly, using the ASI methodology, would not qualify him to comment on economics.

If this is the best the right can do their intellectual arsenal really is bankrupt.

The only slight, teensy, tiny, problem with this is that the word \”economist\” was first used in this sense in English in 1804:

Word Origin & History

economist

1580s, \”household manager;\” 1804 meaning \”student of political economy\” (see economy).
That\’s err, 14 years after Smith\’s death.
The word largely being coined to describe what Smith was one of the first people to try and do: study the political economy of a country.
And yes it\’s still true that a retired accountant from Wandsworth who boasts of having ignored the economics part of his Accounting and Economics degree at Southampton is not an economist.

Another letter from the \”economists\”

As economists and academics, we know the breakneck deficit-reduction plan, based largely on spending cuts, is self-defeating even on its own terms. It will probably not manage to close the deficit in the planned time frame and the government\’s strategy is likely to result in a lot more pain and a lot less gain.

We believe a more effective strategy for sustainable growth would be achieved:

• through a green new deal and a focus on targeted industrial policy.

• by clamping down on tax avoidance and evasion, as well as by raising taxes on those best able to pay

• through real financial reform, job creation, \”unsqueezing\” the incomes of the majority, the empowerment of workers and a better work-life balance.

Signed by, among others:

lan O\’Shea, emeritus prof of cultural studies, UEL;

Cultural studies, eh?

Andrew Watt, Senior Researcher, European Trade Union Institute

A trade unionist….

Professor Gregor Gall, University of Hertfordshire

An industrial relations professor

James Meadway, Senior economist, new economics foundation

nef said, eh?

Richard Murphy, Director, Tax Research LLP

A retired accountant from Wandsworth

Andrew Simms, nef fellow and Green New Deal Group Member

Creator of the 9 billion tonne hamster

Professor David Marquand, Oxford University

A professor of politics

They\’ve really pulled out all the stops to get the economists on board, haven\’t they?

Which could be why their policy is so hopelessly confused. Raising taxes by attacking avoidance and evasion (or by raising taxes on the rich) is a fiscal contraction just as much as cutting spending is. If they actually believed in this Keynesian stuff they wouldn\’t propose anything so counter-productive.

The rest of it is just \”and a pony\”.

@ richardjmurphy: Infamy! Infamy!

They\’ve all got it in for me!

A Tweet from the Murphmeister.

RichardJMurphy: @amadeus_iom Withdrawn because online poll by IoMToday made any prospect of an objective appraisal in the IoM impossible
The back story.
Presenter bloke on Isle of Man radio made jokeish reference to hoping that the IoM government had a wet works operation team which could take care of troublesome outsiders like Richard Murphy.
Ritchie reported this as an incitement to violence and asked the police to do something about it.
This request has now been withdrawn and that Tweet was Ritchie\’s explanation of the withdrawal.
Yes, quite, newspaper opinion poll makes fair trial impossible.
Carry on Accounting would have to star Kenneth Williams, wouldn\’t it?

@richardjmurphy error of the day

But then he gets really desperate: he says:

Ask yourself what would happen if we raised corporation tax to 50% or 100%. Would that create jobs? So my verdict is “nice try, brothers”.

The answer would be “that’s so stupid a suggestion no one would do it – and no one is saying they should”.

Note: corporation tax at 50% is so stupid a suggestion no one would do it.

Except of course the UK Government between 1973 and 1983.

You know, back when the TUC Ritchie works for had a great deal more power than it does now?

@richardjmurphy new report: wrong on tax again

Ritchie\’s new report goes to great lengths to try and insist that corporation tax rates don\’t have very much effect on growth. Something which is true, no one has ever said otherwise, but then he takes the great leap into nonsense:

Mike’s trouble is I did not say it did not affect growth: read the report and it clearly says there is a link between corporation tax and growth. I did not deny it: I do not deny it.

True…..

In English that means that at most 7% of growth differences can be explained by differences in tax rates.

We\’ll assume he\’s got his numbers right.

But my point is that Devereux’s choice to ‘control’ for those other factors when coming to this recommendation ignores the fact that my findings suggest that those other factors explain 93% of growth and changes in corporation tax in countries comparable to the UK explain just 7%.

So, when making policy, and deciding how to allocate scarce resources would any rational, objective person, use corporation tax to stimulate growth when it is apparent that this has weak links with growth and that its impact is at best highly marginal or would you instead go off and look at and invest in the other factors that encourage growth?

The right choice is very obviously to look to recreate growth using other mechanisms.

Ah, no, that\’s the leap into the dustbin of bad ideas.

Recall what it was that the OECD was saying in the first place.

Different taxes have different effects on the rate of growth. No, not that taxation is the only influence on growth, that would be an absurdity. Just that *for the same revenue raised* you\’ll get more growth with one tax mix than you will with another.

And we can construct a table, as the OECD did do, which tells us which taxes *for the same amount of revenue raised* give us more or less growth. From the most growth *for the same amount of revenue raised* to the least growth *for the same amount of revenue raised* it\’s property taxes, consumption taxes, income taxes and then with the very least growth *for the same amount of revenue raised* we get capital and corporation taxes.

And Ritchie has calculated that this effect might be able to explain 7% of growth at best (for he is indeed looking at only corporation tax rates and growth).

Which gives us that lovely rarity in economics, the free lunch. By changing our tax mix we can have more growth than if we don\’t change our tax mix. If we have lower corporation tax than we do and higher VAT, or higher property taxes than we do, then *for the same amount of revenue raised* we\’ll have more growth. Our children will be richer by our doing this.

So, is this what Ritchie does? Says that, well, of course corporation tax rates are not the whole story but the evidence is clearly that lower corporation tax will boost growth and therefore we should have lower corporation taxes?

No, don\’t be silly, of course he doesn\’t. He says that given that there is a free lunch we shouldn\’t eat it.

He makes the choice ‘do you cut taxes, or not?’. Well if that was the only option then you might cut taxes. What my work shows is that Devereux asks the wrong question, uses statistics badly and as a result comes to the wrong answer, which is inevitable when your political blinkers mean you ask the wrong question, which is what I think he’s doing.

Quite. When Ritchie\’s research shows that cutting corporation taxes and raising other taxes so that we can go and do all of those other things as well, changing the tax mix *for the same amount of revenue raised* makes us better off, Ritchies\’s conclusion should be that we should change the tax mix *for the same amount of revenue raised*and also go off and do all of those other things with that revenue raised.

Which he doesn\’t suggest for when a report:

uses statistics badly and as a result comes to the wrong answer, which is inevitable when your political blinkers mean you ask the wrong question,

you will, as Our Retired Accountant From Wandsworth says, come to the wrong answer.

 

@richardjmurphy: Wrong yet again

Is there no beginning to Ritchie\’s talents?

So, he decides to tell students in the uni magazine all about his clever new plan to finance student fees.

The suggestion I am making is that companies
should pay an additional tax to provide university education for all those
wishing to participate, and that they do so from payment of an additional
corporate tax payable only by large companies in the UK (the UK

corporate tax system is already split
so that large companies – basically
those making profits of more than
£1,500,000 a year). According
to the theory of tax incidence
companies do not actually pay tax
at all, but do only do so as agents for
their shareholders.
Since, however, the shareholders
of large companies are, almost
invariably, amongst the top 10% of
income earners the suggestion I am
making creates a progressive tax
alternative which meets the needs
of society, and which also reflects
the fact that large companies are
the biggest beneficiaries of students
trained by the state because they
employ more of them than anyone
else to enhance their own profits.

OK, someone has at least managed to get him to grok to the existence of tax incidence. That\’s good. but he\’s still getting it howlingly wrong, isn\’t he kiddies?

In a closed economy, yes, capital, meaning the shareholders, will bear the burden of corporation tax. But we don\’t have a closed economy, do we? We have an open economy. One with the free movement of capital. Which means that it isn\’t shareholders that carry the burden of corporation tax: at least most certainly they don\’t exclusively do so.

In fact, here in the UK, most estimates are that it\’s the workers who carry the majority of the burden. What\’s even more fun is that in theory (but unlikely to be so in practice currently) the burden upon the workers can be more than the amount raised in tax: yes, incidence can be over 100%.

No, not some neo-liberal: Joe Stiglitz.

So well done Ritchie. Even after someone\’s been shouting to you about tax incidence for years, insisting that you have to take account of it, you still get it wrong.

Another @richardjmurphy entire failure to understand what is being talked about

One of the ways McKinsey has decided it’s possible to save £20 billion in the NHS is to reduce the number of acute admissions made to hospitals.

Acute admissions are, of course, the emergency ones, that go through accident and emergency or straight into a medical assessment unit.

I am now aware that some Primary Care Trusts are asking GPs to reduce the number of these admissions by 20%.  This is a curious target. Only 25% of acute admissions are referred into hospital by GPs. The rest of these admissions, all of whom are by definition GP patients and are therefore logged against their names, turn up in hospitals inthe back of ambulances, or are driven there by their friends or relatives when seriously ill.

To deliver the reduction in acute admissions demanded of GPs they either have to stop their referral of people who front up with heart attacks in their surgeries by 80%, or they have to ignore meningitis in children, or send people home with deep vein thromboses. Alternatively, they have to set up roadblocks that prevent ambulances carrying their patients arriving at accident and emergency units.

No Richard.

You\’re wrong, entirely and completely.

The aim is not to reduce acute admissions in general and most certainly not to either block ambulances or to treat heart attacks or meningitis in the GP surgery. To claim such is grossly irresponsible fear mongering by yourself: whether by design or ignorance I don\’t know.

There\’s an important part of the story you\’ve missed:

Exclusive: GPs are facing demands to deliver unprecedented reductions in hospital activity over the current financial year, with NHS managers setting targets for cuts in admissions of 15% or more by next April, a Pulse investigation reveals.

In November, Pulse revealed Sir John Oldham, DH national clinical lead for quality and productivity, had warned GPs that by the end of 2013/14, they would have to cut unscheduled admissions of patients with long-term conditions by a fifth and help reduce A&E attendance by 10% and length of stay by 25%.

Primary care organisations are going far further than even the Department of Health had planned, and demanding GPs deliver major cuts in hospital activity in less than half the time set out in the national QIPP programme. GPs warned the plans were unachievable and that there was a risk they could damage patient care.

To emphasise what you\’ve missed: reduce acute/unscheduled admissions of patients with long-term conditions.

This is nothing to do with people presenting with new conditions: those heart attacks, that meningitis. It\’s to do with those with chronic conditions. Please stop packing them off to A&E at the drop of a hat and get on with a bit more doctoring yourselves would you, dear GPs?

@richardjmurphy displays his knowledge of economics

One that delivers the promise of a better, more sustainable way of living in the UK that will help people in this country fulfil their potential – which I believe to be the goal of macro economic policy.

Oh Dear Lord.

Macro\’s all about aggregate demand, the short term stuff. It\’s Micro which is about prices, taxes, structures.

Trying to use macro to get to a better, more sustainable way of living instead of micro is like using the hammer to put in the screw.

But then Ritchie doesn\’t like micro because most of its findings are in direct contradiction to his prejudices. And as with the man whose hammer makes everything look like a nail, Mr. Murphy is going to try and change the prices, taxes, structures and incentives of the economy without actually studying anything about the effects of prices, taxes, structures and incentives in the economy.

Both Caroline Lucas and Chuka Umunna use this man as an advisor you know……

@Richardjmurphy on those Spanish protests against neoliberalism

The table that arrived in Madrid\’s Puerta del Sol square was part of the swirl of creative chaos, naive enthusiasm and pent-up frustration that has transformed it into a makeshift camp for thousand of protesters who call themselves los indignados, the indignant ones.

Tents and mattresses, armchairs and sofas, a canteen, portable toilets and solar panels have sprung up in a remarkable display of organisational prowess. And the mass of people jostling around, each pursuing their own dream or demand, or just watching others doing the same, seemed more like something transported from the Arab spring in north Africa than from Europe.

At least that\’s what Our Ritchie calls it all:

RichardJMurphy: Spain reveals pain over cuts and unemployment | guardian.co.uk http://ht.ly/5059E Simply explained: neoliberalism does not work
So, err, what is it that we call \”creative chaos\”, \”people jostling around, each pursuing their own dream or demand\”?
Umm, neoliberalism isn\’t it? Everyone gets to do their own thing rather than what they\’re told to do?
So Our Favourite Retired Accountant is using the success of neoliberal action to prove that it does not work.
Well done indeed.

@richardjmurphy is quite gorgeous this morning

No, really, fabulous:

They could – as I have suggested – require that pension funds invest 25% of their contributions in new employment creating activity.

They could promote a Green New Deal.

It’s  utter nonsense that the cuts won’t impact people. It’s utter nonsense that we just sit back and take the crap that might flow our way.

The state has a role.

A powerful role.

And if Cable doesn;t know it (and he clearly doesn’t) then he needs to retire soon and let those who believe that the state is an essential component in getting us out of this mess get on and do the job.

In short, Cabinet Minister who doesn\’t implement Ritchie\’s policies should resign.

A tad of hubris there perhaps?

@richardjmurphy misses the difference between global and local

It\’s not like he doesn\’t miss other important differences, is it?

The FT says twice as many business leaders say that the world economy is going to improve in the next six months than think it is going to get worse, according to the FT/Economist global business barometer.

Well, I presume the survey does say that but I find that distinctly weird, or yet further evidence that these people are utterly out of touch.

He then goes on to point out that we\’re not doing very well etc.

But he\’s missed the really important point. The FT survey is about the global economy. China\’s still going at 10% (for how long who knows) India at 8%…..that\’s a third of humanity right there. Sub Saharan Africa is growing (yippee! and who thought they\’d be able to say that?) which is another sixth of the species.

The IMF, World Bank, OECD, G7, G20, Uncle Tom Cobbleigh and everyones\’ grandmother all think that the global economy is going to continue growing rather strongly.

There might be local difficulties, sure, no one\’s prediciting imminent growth in either the Greek or Portuguese economies, but if you\’re commenting upon a survey about global growth it\’s worth remembering that it is about global growth.

It\’s not about whatever some twat in Whitehall is doing, it\’s about the triumph of neoliberalism in putting absolute poverty into the dustbin of history, where it belongs.

@RichardJMurphy and the Isle of Man\’s wet ops department

Ritchie\’s reported a man to the police for a passing joke:

A PRESENTER on Manx Radio has been reported to police after making inflammatory comments on air during a live broadcast on Monday.

UK tax expert Richard Murphy told the Examiner he has reported the matter to police after presenter Stu Peters appeared to call for his assassination on Mr Peters’s Monday afternoon programme last week.

During the broadcast, Mr Peters said: ‘In the Isle of Man we are like a family and we can squabble amongst ourselves but we don’t like it when other people throw rocks at us and there’s this bloke from this Tax Justice Network, Richard Murphy, who is constantly having pops at the Isle of Man and the tax regime here to the point where we are all really rather bored of it to the point where we wish there was a wet ops department in the government that could go and take him out.’

Mr Murphy, who is director of Tax Research LLP, said he was contacting police in Douglas and the UK about the matter.

‘We have a situation where a football manager [Celtic’s Neil Lennon] is receiving bombs through the post so if passions can run high about that, passions can run high about tax as well,’ he said, adding: ‘I take this pretty seriously.’

Mr Murphy, who has been the focus of criticism from some quarters in the Isle of Man for his criticism of the taxation system here, said he had cancelled a planned visit to the island.

‘My address could easily be found and some idiot could act on this,’ he said.

YVMV but it does seem a tad over the top.