Does not compute

This is an odd thing for an economist to say:

If houses could be bought relatively cheaply, it was because local councils once provided \”social housing\”. Council houses were sold off by Margaret Thatcher – leaving housing entirely to the market,

Flogging off council houses increases the supply of houses that can be purchased. Other things being equal (which of course they weren\’t, I\’m looking at this one single point) that would make houses to buy cheaper, not more expensive.

Then again, Irvin is an \”economist\” at SOAS and they do things differently there.

Oh well done Ritchie!

Quite marvellous. So, our favourite retired accountant notes that crime is increasing in the Cayman Islands.


To Ritchie this is clearly to do with the fact that the whole place is simply a bunch of gangsters, Vampire Squids sticking a straw into the bloodstream of the global economy.

Only occasionally, but persistently none the less, have I argued that their business models are also deeply and fundamentally dangerous to the people who live in the small island secrecy jurisdiction.

There are two reasons why I have argued this. First of all, is is obvious in the case of the Crown Dependencies, Cayman and others, the model is incapable of funding the necessary functions of government.

Second, as in Turks & Caicos and Antigua, corruption has destroyed the state already.

This social unrest is spreading. You cannot build a state on the corrupt premise that is inherent in the abusive structures promoted by secrecy jurisdictions – structures that were always and solely designed to facilitate crime and, I will candidly suggest,  for no other purpose – without crime spreading, including in your home jurisidiction.

Cayman is the latest jurisdiction where this is being seen. It is suffering enormous tension in an island of just 55,000 people, an outbreak of violence and murders and has an inability to now police itself – showing how absurd is its claim to be an independent territory.

Cayman is collapsing fiancially.

Cayman is collapsing as a society.

Who knew accountancy could have such effects?

Looking at his actual source document though shows something a little different:

To counter the crime rise, the police commissioner cancelled all rest days and vacation for police officers and put them on 12-hour shifts. Nonessential services were suspended to boost police visibility on the streets.

Drawn from a number of Britain\’s police forces, the reinforcing officers, who will be on four- to six-week assignments, were investigators and detectives with expertise in running murder inquiries and tackling gang-related crime.

\”It is not about bringing in a SWAT team,\” said Baines. \”It\’s about filling in the skill shortfall we have because our existing detectives are stretched.\”

Like most of the local police force, the reinforcements will not carry firearms, but will be backed up by armed officers if the need arises, a police spokesperson said.

Varying factors like the release of violent gang members from prison, a greater prevalence of firearms and leadership battles appeared to be contributing to the violence.

Gangs, which gained a foothold in the Caymans in 1996, have been involved in transhipment of drugs to the United States, as well as in the local drug trade, said Detective Chief Inspector Patrick Beersingh of the Joint Intelligence Unit.

Shipments of marijuana and cocaine from South and Central America are brought into the Cayman Islands via Jamaica, Honduras and Panama and then moved on to the United States. So-called Jamaican canoes also frequently smuggle in guns.

Police say there are some 30 criminal gangs in the Caymans with names like Jamaican Posse, Central Crew, West Bay Mobsters, East End Crew, Fern Circle and Wild Dogz. They each have special hand signs, colours and tattoos.

Ah, the islands are being screwed over by exactly the same thing that is screwing over Northern Mexico (a place which, we might note, doesn\’t have any offshore financial system): the absurd prohibition of drugs in the US and the military nature of the \”War on Drugs\”.


What must be done!

Is believing two contradictory things before breakfast actually a requirement for being a Green?

Ed Matthew, senior economics campaigner at Friends of the Earth

\”Cutting emissions must be at the heart of the pre-budget report – slashing energy waste, developing the UK\’s vast renewable energy potential, ending fuel poverty and creating tens of thousands of new green jobs.\”

Renewable energy costs more than fossil. Thus he\’s calling for energy prices to increase. Fuel poverty is a result of energy prices being high relative to incomes. Thus he is calling for low energy prices.

It\’s pretty good to be calling for both high energy prices and low energy prices in the same sentence, don\’t you think?


Not sure we\’re going to take you all that seriously on this farming business old boy.

If, as is possible, the price of oil surges during the next decade, then using nitrogen fertilisers, which are derived from oil, will become less feasible.

They\’re derived from natural gas actually, not oil.

The Happy Planet Index 2.0


The nef have done us proud and given us the Happy Planet Index 2.0.

Whoo hoo!

You\’ll not be surprised to hear that they\’ve changed their measurement techniques. Version 1.0 had Vanauatu as the top place on the planet. Clearly and obviously they couldn\’t allow the likes of me to make cheap shots about penis sheaths and worshipping the Duke of Edinburgh as a Living God as their prescription for the Good Life. So, a change in methods and a change in what is the Good Place.

Costa Rica actually, and I\’m sure it is a nice place to live. But let\’s see what else they say:

Meanwhile, the problems that plagued us before, risk becoming even more acute: more than half the world’s population lives on less than $2.50 a day; inequality continues to rise even in richer countries.
And yet, with crisis comes opportunity. The dogmas of the last 30 years have been discredited. The unwavering pursuit of economic growth – embodied in the overwhelming focus on Gross Domestic Product (GDP) – has left over a billion people in dire poverty, and has not notably improved the well-being of those who were already rich, nor even provided us with economic stability.

What glorious writing! No, seriously, there should be a prize for this sort of stuff. Absolutely no mention at all of the fact that the last few decades have seen the greatest reduction in poverty in the history of the entire species. Hundreds of millions of people have risen up out of that $2.50 a day poverty. Global inequality has fallen, whether you measure Concept II (by country, weighted by population) or Concept III (global population as a whole).

Of this we get not a whisper. Way to be open and transparent, no?

This amuses:

How can one compare the impact of using a gallon of oil with a gallon of water, or a tonne of potatoes with a tonne of potassium?

Well, price is a pretty good indication of the resources being used. Not perfect, but pretty good.

The best available approach is currently the ecological footprint, developed by ecologists Mathis Wackernagel and William Rees, and championed by a range of organisations including the Global Footprint Network and WWF.54 The EU statistical agency Eurostat is considering incorporating the ecological footprint into its sustainable development indicator set,55 whilst the Welsh Assembly Government has already adopted it as one of five headline indicators of sustainability.
The ecological footprint of an individual is a measure of the amount of land required to provide for all their resource requirements plus the amount of vegetated land required to sequester (absorb) all their CO2 emissions and the CO2 emissions embodied in the products they consume. This figure is expressed in units of ‘global hectares’. The advantage of this approach is that it is possible to estimate the total amount of productive hectares available on the planet.

And what you\’re not told there, nor are you by Mathis Whackerdoodle, the CO2 absorbed by the food grown for you to consume is not counted as part of the recylcing of the CO2 of your lifestyle. So there\’s gross double counting.

Oh, yes, nuclear power is ascribed a footprint the same as coal, rather than the around and about hydro or wind power (and much lower than solar PV) that it actually has.

Improving living standards in poorer countries can only be achieved in parallel with declining resource consumption in richer ones.

Jesus Sam (yes, Sam Thompson, sometime reader of this blog, is one of the authors). That\’s ludicrous even by your standards. You\’re the people arguing that consumption of resources doesn\’t lead to higher living standards in the real and meaningful manner: so how on earth can improving living standards require more use of resources?

It doesn\’t even make sense in neo-liberal terms: GDP measures added value, remember, not resource consumption.

This gets even fucking worse:

It only attained its quasi-mystical role when GDP was placed atop the podium of indicators with the development of the United Nations System of National Accounts, in 1947. At that time, focusing on productivity growth made sense.

Productivity is not, as these lentil knitters seem to think, producing more. Nor is it consuming more, nor using more resources. It is, in fact, the opposite of that last. It is producing more from the same resources….or producing the same from fewer resources.

The notion of GDP growth almost seems to have a halo around it. It has reached the status of motherhood and apple pie.

Yes you twats! GDP is \”value added\”! That\’s exactly what we want! whether we use more resources, the same, or fewer, we still want to add the maximum value to them we can!

Is there something about being a vegetarian prodnose that destroys brain cells?

But this feature of the system sets it at odds with a widely noted fact about human nature – that once our basic material needs are comfortably met, more consumption tends to make little difference to our well-being.

And research shows that living in a society without growth makes us unhappy…..

In the same year, Eurostat, the European statistical agency commissioned a consortium of experts, including nef, to consider the feasibility of a well-being indicator for Europe.

Yup, these people are being paid by the European Union to peddle this tripe to….the European Union. As \”experts\” for the Lord\’s sake.

Statistical tests reveal the mean life satisfaction, life expectancy and HPI scores of small islands to be significantly higher than non-islands – whilst their income levels do not diverge in the same way.133 These results should come as no surprise to anyone who has read Karl Polanyi’s increasingly popular, classic work The great transformation. In it he presents various types of social and economic organisation on islands as evidence against some of Adam Smith’s more sweeping assumptions on the central role of markets.134 Complex forms of ‘gift exchange,’ in which people partly meet their needs not through markets mediated with cash, but through the giving and receiving of gifts, operated over vast areas, reveal a system that not only meets people’s needs in a challenging environment but bonds society together by emphasising economic relationships based on cooperation and reciprocity, rather than individualistic competition.

Pathetic. Smith did note the ease of using cash in mediating markets: but he certainly didn\’t try to say that gift exchanges were not markets. This is a fairly desperate grasping at straws by these people.

And their suggestions:

We might, for example, only work three or four days a week (Box 5) and in turn, take advantage of this shift to reduce unemployment by sharing work more equitably.

Lump of labour fallacy. Morons.

With potentially more time on our hands, might we think of a future in which we invest more in civil society – perhaps by volunteering or participating in democratic decision-making? Or maybe we would use the opportunity to achieve greater reciprocity within communities and in the delivery of public services, ensuring public money is able to achieve more with less?

Excellent! Let\’s work less for pay and more for nothing!

Meanwhile, perhaps the priority for technological development will be to cut down on the inefficient use of non-renewable resources?

Anyone remember how to do that? Ain\’t it a capitalist, free market society?

Oh, and their ranking of happy countries? The right places to live upon this earth?

1. Costa Rica

2. Dominican Republic

3. Jamaica

4. Guatemala

5. Vietnam

6. Colombia

7. Cuba

8. El Salvador

9. Brazil

10. Honduras

11. Nicaragua

12. Egypt

13. Saudi Arabia

14. Philippines

15. Argentina

16. Indonesia

17. Bhutan

18. Panama

19. Laos

20. China

You know, the first thing that leaps out of that list is that if you want to use few resources try and live in a tropical country: not much energy needed for heating is there? And a poor one so no one has A/C. The other one is live in a Spanish influenced one.

Siestas, that\’s it, that\’s the secret to a long, happy and non polluting lifestyle.

By Jove, I think we\’ve cracked it there. Nope, really, the nef has found out (and I bet you could indeed construct from their numbers a chart showing a correlation between siestas and a high HPI) that the way to save the planet is that we all have an afternoon nap.

Would have been a rather shorter report if they\’d just told us that in the first place.

Erm, Iain?

Iain Dale worries that State employment is now higher than employment in the manufacturing sector. In both the US and the UK.

Well, yes, but there\’s two entirely different stories here.

Divide the economy into three sectors (hell, why not?). Agriculture, manufacturing and services.

Three-ish centuries ago just about everything was agriculture. Certainly just about all employment was (which is what is actually being talked about here). 80% or more of the population farmed in one manner or another.

OK, fast forward to say the 1920s. Agricultural employment was down to, ohhh, say 20% of the population (depends upon which country to be honest), 60% in manufacturing? The remainder in services?

Look at matters now. Agriculture is 2% or so of the UK workforce, a similarish number in the US. Manufacturing is I think 13% (from memory, not looking at Dale\’s figures) of the UK workforce, meaning that everyone else is in services.

What\’s been happening here is that we\’ve actually found it easier, over the centuries, to increase productivity in agriculture than anything else. We thus need, again over time, ever fewer people growing the things we put into pots to eat. This has freed up people to go into manufacturing so that they can make those pots to put the feed into.

We\’ve also found it easier to increase labour productivity in manufacturing than we have in services. Not too strange an idea, for services are almost by definition constructed out of the time of another human. Manufacturing is easier to automate. So again, we\’ve been able to increase manufacturing production (and yes, in the UK, manufacturing production is double, triple, what it was in the 1970s or 1950s, despite there being a small number of people working in it and a smaller proportion of the population working in the sector) while freeing up people to go and offer services.

OK, so that\’s one part. The part about manufacturing being a smaller part of employment, as happened to agriculture before it.

The rise in State employment is something very different. That\’s a political decision that many of these services are supplied by and thus many of the workforce providing services are employed by, the State. This may or may not be a good idea (hey, argue about it amongst yourselves) but it\’s got nothing at all to do with the decline in manufacturing employment. That latter is a good thing, as it\’s a sign of increased productivity, and as Paul Krugman has pointed out, productivity isn\’t everything but in the long run it\’s almost everything. As long as labour productivity keeps rising then so will the earnings of that labour. That is, living standards will continue to rise, our children will be better off than we are now.

That\’s a very different thing from arguing about whether services should be run by or delivered by whichever tosspot lies convincingly enough to get into Parliament.

An interesting question

Asked by Richard Murphy.

The English isn’t great: ignore that. The issue is this: do you believe anything said here? Is redomiciliation really a case of ‘moving up the scale of offshore administrations’? Or could it be something much more pernicious – the opportunity for a company to flee from one jurisdiction to another, lock, stock and barrel,. the moment a hint of any enquiry arises, meaning that those making the enquiry then have to start all over again in another place? In that case is it just a mechanism that facilitates fraud?

No one will be surprised to know that I incline to the latter opinion.

And no one will also be surprised to know that I see this as example of another dangerous development in our world – which is that of the corporation that floats free of responsibility to any place. Once that happens regulating the company becomes virtually impossible because there is no sanction to impose.

But I may be wrong. There are those (I’ve noticed) who like to say I am. So, for those who’d like to persuade me that I am I make these requests:

1) Which countries allow redomiciliation, and when did they begin to do so?

2) How many cases are there, by jurisdiction, a year?

3) Where do the companies move from, and to?

4) What are the costs?

5) Why do companies say they move?

6) What happens to the records in the country from which the company moves – are they simply expunged, or can they still be subject to an enquiry?

7) And why if this is so useful is its use largely restricted to the tax haven world?

I\’ll answer only one and seven.

The answer to 1) is that every EU country now allows this. As does every EFTA and EEA one. It\’s a direct consequence of the founding ideal of the EU itself: The free movement of goods, people and capital. Yes, this has been tested in court. There are two strands to it. Given that companies are legal persons they have the same right to change domicile as natural persons.

The second is the creation of the SE under the "Bolkestein Directive". This is the EU wide equivalent of a PLC (the capital requirements make it more like a PLC than a Ltd). It can, by simply moving its head office, domicile itself in any EEA jurisdiction. Yes, this includes Liechtenstein. No, it does not have to liquidate to do so.

Given that answer to 1) the supposition in 7) is obviously untrue. It isn\’t largely restricted to the tax haven world, it\’s at the heart of corporate structure and taxation in the world\’s largest integrated economy (to the extent, of course, that the EU is indeed the world\’s largest integrated economy).

Tim Worstall is a bigoted hypocrite

Must, be, Richard Murphy tells me so.

Our latest comment call and response:

“. It is impossible to suppose that a man who can argue (as you did in the Guardian, very recently) that “Things in markets are worth what the markets say they are worth” is a true heir of Smith,”

I fear that you have failed to note the next but one sentence. “It’s also true that we often don’t like the values that markets come up with so we intervene to change them.”

As I’ve said before, and as just about everyone both acts and believes (and indeed I’ve made this very point here on this very blog), no one thinks that all markets all the time produces the optimal allocation of resources. “Things are worth in markets what markets say things are worth” is a tautology. The value of a freely copyable book (or MP3 in this digital age) is damn near nothing in a market system. So we intervene with copyright to create some value: for we do not like, either for efficiency (ie, if creators earn nothing from creation we’ll get too litte creation, the public goods argument) reasons or for more moral reasons (it is right that creators earn from their creations).

The argument is not over whether markets *always* produce either “just and moral” prices, as opposed to simply market prices, or whether they *always* produce an optimal allocation of resources. It’s over when and where do they and when and where do they not.

As I’ve said here before. And as you seem to be ignoring.

That\’s me. This is Ritchie:

Oscillating again, aren’t we? Have you ever given a straight answer?

The simple reality is this: you’re recognising that markets produce imperfect outcomes except when it suits you to say otherwise – which seems to be when it’s a matter of abolishing the minimum age, for example.

In fact it’s always a matter of markets work when it suits you and your privileged ilk and not when they don’t. And you like to say economics is objective and a science?

Come on Tim, your true colours are now clear. You’re just a bigoted hypocrite hiding behind a market theory as a witch doctor does behind a cauldron, and with both as bogus in their claims to competence.

If markets don’[t work – and that’s what you’re saying – your arguments fall apart at the seams.

Game over Tim. Don’t bother to post again. You’ve been rumbled.

Now I thought I was being very reasonable. Markets work except when they don\’t, at which point we both can and should intervene. As, for example, the late Sir Alan Walters, with the full support of the Adam Smith Institute, used to argue for congestion charges.

This makes me a bigoted hypocrite apparently.

If I could just add that while I seem to have been banned from Richard Murphy\’s comments section, as is his right….it being his private property….Richard is not banned from mine. Up to you Dickie.

Investing with Timmy

Wish I\’d actually gone ahead with some of these suggestions now.

Oil back in April/May was around the $115-$120 mark. It\’s now under $40. And I was looking for a put option at about $70. To put say £1,500 into.

If I\’d actually done it I\’d be able to buy a pub by now I think (although it\’s true that pubs have also fallen in value).

Although, to be more reasonable, I don\’t think I could have actually done such a transaction anyway.


Babies and breast cancer

Scientists who examined research covering more than 600,000 women across the world found that for every pound heavier they were at birth, the risk of developing breast cancer increased by six per cent.


We also know that smoking during pregnancy reduces birth weight (I think it\’s 1 cigarette per day reduces weight by 6 grammes?).

Thus pregnant women should smoke in order to protect their children from breast cancer?

Might there be an agenda here?

Telling us to grow our own food. Hmm, mebbe, if that\’s what you want to do. But there\’s something of a political agenda here, don\’t you think?

Prof Lang, who advises the Government on the crisis, said that people who relied on the large supermarkets for their food did so at their peril.

"Ultimately people have to take more control of their food systems," he said.

"If you depend on Tesco or Sainsbury\’s or Waitrose, you are a consumer. In other words your food supply is under their control. But if you garden and can grow at least some food to eat, however little, then you are injecting a little food democracy into your food supplies and asserting your food citizenship."

He\’s the bloke that invented food miles. You know, that idea that it\’s the transport of food which is bad for the environment? That wsa before anyone actually looked at the question, did the sums, and found that transport from farm to retailer is actually only 11% of emissions from the whole process. It matters a great deal more how the food is grown than whether or not it is transported.

So worth taking him and his agenda with a pinch of salt.

Meddlesome priests

The Archbishop of York, Dr John Sentamu, condemned the financial traders who made millions by driving down the share price of leading banks as "bank robbers and asset strippers".

In a powerful speech to City bankers on the effects of the credit crisis on Wednesday, he denounced the "Alice in Wonderland" world of global finance where short-sellers profited by laying bets that shares in HBOS would fall in price.

Meanwhile the Archbishop of Canterbury, Dr Rowan Williams, warned in a magazine article that modern devotion to the free market is a form of idolatry and that Karl Marx was right in his analysis of the power of "unbridled capitalism".


There\’s plenty out there that can be blamed for all sorts of things but short sellers just aren\’t one of them. Further, capitalism and markets, whether free or not, are just not the same thing at all. Criticising a method of ownership is one thing. Critiquing the only efficient method of working out what people want that we have is very different.

But then while I would hesitate to argue with a noted theologian such as Dr. Williams on the difference between consubstantiation and transubstantiation he seems not to fear discussing matters he knows little of.

Why is it that economics is always fair game for those with so little knowledge of it?

Varying annuities

Something of a shouting match going on here. The annuities that are often bought with pension pots (in fact, it\’s still law that by age 75 you must have spent the pot on such isn\’t it?) are to be varied by likely lifespan.

Seems entirely fair: annuities already vary by sex and it\’s possible to get better rates by revealing that one is a smoker. Both sex and smoking makle a difference to expected lifespan so it\’s actuarially sensible. What is getting some people here is that the variance will also be determined by postcode. But as we know that those in wealthier areas live, on average, longer than those in poorer, this also seems sensible.

It is, if you look at it with the right squint, a reduction in inequality.

Shadow Secretary of State for Work and Pensions Chris Grayling said: “I’m worried that people will be penalised for looking after their health. The whole principle of the pension industry is that risks are pooled.

Dear Lord, no ondwer were so screwed up is the Minister responsible thinks that. The pensions industry is about savings and the possible earnings from them. It\’s the insurance industry which is about pooled risks. Sheesh.



Argle Argle Argle!!

Gaaah! Why is that these Greens simply cannot understand the most basic points?

This massive under-utilisation of our green resources is also reflected in job figures. According to government-sponsored research, the UK has, at very best, 26,000 jobs in renewable energy. By contrast, Germany has 250,000 jobs.

With the right investment, the UK has the wind resources to be a European green industry leader. As well as reducing carbon emissions and increasing energy security, wind power also creates a large number of jobs per TWh unit.

While nuclear produces 75 jobs per TWh per year, oil and gas around 250 jobs, wind produces up to 2,400 jobs.

The government\’s own research shows that investing in wind could generate 43,000 new green jobs. This depends on developing turbine manufacturing in the UK. Without a major focus on developing that industry, these projections shrink to less than 7,000 jobs.

Creating jobs is a cost of your schemes you ignorant fool!

The more jobs you create the more it costs!

Fortunately the comments section seems to be well switched on to this point.

Which leads me to wonder a little….this whole CiF thing. Is it going to lead to the readers being brainwashed into leftiedom, as obviously the creators hope, or is it going to work the other way. Writers being exposed to cogent critiques of their world view (well, OK, sometimes) and thus abandoning their more crazed ideas?

Related in only the most tenuous manner….keep an eye open for Polly thinking that LVT might be a good idea. A little birdie tells me that someone has been dropping her ideas and clarifying the odd point or two.

Govt borrowing up


The Treasury borrowed a record £10.4 billion last month – far exceeding previous forecasts. In total, borrowing has risen by 70 per cent during the past five months.

The figures come amid growing fears over the health of public finances as the fallout from the credit crisis and stock market turmoil continues.

The Chancellor is now expected to break the Government\’s rules on how much it is supposed to borrow this year.

He previously predicted that total public borrowing would be £43 billion this financial year – but the Government has already borrowed £28.2 billion in five months.

The increase in borrowing has occurred after a fall in the amount of money expected to be raised from taxes as a result of the economic slowdown. The Government has also had to borrow money to fund a number of emergency measures, including the payment of compensation to those who lost money from the loss of the 10p income tax band.

I think we all rather knew this was going to happen? By not socking money away in the good times (even if it wasn\’t socked away, at least the structural deficit could have been reduced) now the bad times are here we\’re going to see borrowing soar.

Wouldn\’t be at all surprised to see it go over £100 billion in the next year or two.