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On Jerusalem

That Jerusalem should be the English (sporting) national anthem.

Whose idea is this? David Cameron\’s. According to the ConservativeHome website, he recently made the suggestion to some young Tories visiting Downing Street. He\’s even willing to overlook Blake\’s anti-enterprise agenda.

Bloody nonsense. Billy Bragg, in the only sensible thing the man has ever said, has been arguing for this for years. Indeed, he\’s been arguing, as I do persuaded by him and others, that it should be the English national anthem full stop.

Naughty naughty HSBC

WASHINGTON – Global banking giant HSBC and its U.S. affiliate exposed the U.S. financial system to a wide array of money laundering, drug trafficking, and terrorist financing risks due to poor anti-money laundering (AML) controls, a Senate Permanent Subcommittee on Investigations probe has found.

Do note that the claim is not that money laundering, drug trafficking and terrorist financing went on.

It is that the bureaucratic system to check that they were not is deemed insufficient.

Still very naughty, of course, for the law is indeed the law. But it is a little different from what the usual suspects will be crowing about.

And Polly fails the G4S test

G4S shares plunged as police were drafted in to guard the Olympics amid warnings more soldiers will be needed. Yet another outsourcing company collects profits when all goes well and the state picks up the pieces if the company fails.
….
Some are – but there is no evidence that siphoning profits into private companies is any panacea. One thing is certain. These contracts create moral hazard on a grand scale, where profits are private but losses are ours.

G4S is, as they should be, coughing up the cash for those soldiers and policemen.

In what manner are the losses \”ours\”?

In praise of sprunting

Some of the words you find in old dialect dictionaries make you want to build a time machine and head straight off. Given the choice, I would emigrate to 19th-century Roxburgh, where they had a single word – sprunt – meaning to run after girls among the haystacks after dark. The idea of a place where that activity was so common that they needed a one-syllable word for it makes me feel that I was born too late.

Quite.

All Hail Churnalism!

Strained families are being forced to bury their dead using so-called \’pauper\’s funerals\’ because the Government is turning down almost half of those who apply for funeral payments.

The Government Funeral Payment system, designed for those who need support with funeral costs, is being inundated with applications, a new report has revealed. Even for those who do get help, the typical sum awarded is £1,217, which is far short of the average £3091 cost of a funeral.

My word!

From whence does this astonishing information come?

The report, from Sun Life Direct and Bath University, said that more people would have to consider alternatives such as a Public Health Funeral, or so-called pauper\’s funerals.

Sun Life Direct eh? You mean from the people who sell funeral insurance? Strictly it should be funeral assurance of course.

Time was when this sort of work would be done by the PR agency. Pity to see universities hiring themselves out to put their imprimatur on such tosh but that\’s the modern age for you.

and this is likely to jump again as the death rate is forecast to rise by 17 per cent each year for the next 15 years.

I may have got my maths wrong on this but that looks unlikely. 100 (current death rate) x 1.17×1.17 (for a total of 15 times) gives something like a 1,200% rise in the death rate. Are we really expecting that?

All Hail the regulators!

Lord Turner, the FSA chairman, told MPs on the Treasury select committee (TSC) that there were three occasions in 2007 and 2008 when the regulator should have been alerted to the scandal, but the issue was overlooked because the messages were relayed to “junior staff”.

I\’ve been saying for some time that while the bad things being done was of course the fault of the people doing bad things the regulators are still at least partially to blame.

\”We were told but we ignored it\” isn\’t a great advertisement in favour of FSA style regulation now, is it?

Almost as good as that advertisement for the SEC, Harry Markupulous\’ (there may be a different arrangement of \”o\”s and \”u\” in that name) written report pointing out that Bernie Madoff was running a Ponzi scheme.

And a note to those calling for greater regulation of the financial markets. Until you sort out who is going to do the regulating and how, why your new system would be better than this failed one, I\’m afraid you\’re going to get short shrift. For the point is not whether regulation but by whom and how.

More power to this shower who failed to spot price rigging when it was obvious to anyone with a Bloomberg screen (indeed, it\’s been a running joke for some time) just ain\’t gonna cut it.

Can\’t we get this straight about service companies even now?

In evidence to the Public Accounts Committee, the BBC admitted that 148 of its 467 “on screen” presenters were paid through “personal service” firms rather than as ordinary employees.

Being paid in this fashion allows the employee to be taxed in part at the corporation tax rate of 21 per cent rather than pay as much as 50 per cent in income tax.

No, it doesn\’t, it really doesn\’t.

The company is taxed at the corporation tax rate: that is true. But if the employee of the company wants to take out a wage then normal income tax and NI is charged. And the profit upon which the company is paying corporation tax reduced, of course.

If the owner of the company (obviously, usually the same as the employee) takes out money as a dividend then the usual higher rate tax, if the money is sufficient to put them into those bands, is charged.

In terms of income tax there is very little benefit in this services company thing.

The advantage comes from the different national insurance treatment. Dividends are not subject to either employees or employers.

There are others: being able to wind up the company and distribute capital with no taxation. Income splitting, timing of income.

But the one thing that everyone says about service companies, that they provide large savings on income tax, is the one thing that they don\’t really do.

 

Is there intelligent life on Cab Davidson?

Cab Davidson ?@gnomeicide

@worstall Overproduction? Farmers are losing pennies per pint of milk they produce. Normal economics can\’t produce that @paulkingsnorth

I\’m sorry, what?

Overproduction leading to producer losses *is* standard economics.

Too many car producers then car producers make losses. Too many buggy whip manufacturers then buggy whip manufacturers make losses. Too many newspapers then newspapers make losses.

And yes, too many farmers producing milk means farmers producing milk lose money.

I mean you have tried looking at the standard supply and demand curve introduced around page 3 of the GCSE textbook have you?

Does The Independent actually have editors?

Even when Cardinal Keith O’Brien is blessed with a megaphone to express his opinion that gay marriage is morally equivalent to slavery, while representatives of his organisation get automatic seats in parliament,

I assume not. If they did I assume one would point out to Louise McCudden that a Cardinal is, by definition, a Papist. And that it ain\’t the Papists who have automatic seats in Parliament.

Timmy elsewhere

At the DT.

The only way that you can argue that farmers are due a \”fair profit\” on milk is by also arguing that Alan Rusbridger is owed a fair profit for employing Polly Toynbee. That\’s not an argument that\’s going to gain much traction now, is it?

I\’d guess I\’m off the NFU Christmas card list as well now….

Ritchie on neoliberalism

The failure of neoliberal thinking is increasingly seen all around us. That thinking is, of course, intensely simplistic. It says, without having any foundation in reality, that if only everyone profit maximised then the world would be a perfect place.

Err, no. Really, no.

Neoliberalism (to the extent that it isn\’t just a code word for \”things the Murphmeister doesn\’t like\”) does not assume that if everyone profit maximised then the world would be a better place.

It doesn\’t even assume (nor even desire!) that everyone profit maximises.

It does rather assume that individuals maximise, to the best of their ability and knowledge, their utility. But as any fule kno, utility and profit are not the same thing. Utility leaves room for feeling better about contributing to the care of others for example, something that profit doesn\’t.

But do note that neoliberalism only assumes that everyone\’s trying, within their limitations, to do this. It most certainly does not go on to state that the world would be a better place if everyone were able to achieve this.

To take an absurdly extreme example. There are those who enjoy torturing kittens. Torturing kittens increases their utility. Neoliberalism does not go on to say therefore torturing kittens is just fine as utility maximising behaviour.

Indeed, to relax the absurdity, neoliberalism places very strict limits upon such utility maximisation. The utility maximisation of fist swinging very definitely should be stopped in the vicinity of others\’ noses for example.

We can go on: neoliberalism (I can say this because I am indeed that Hoodoo Man, the unrepentant neoliberal) is entirely happy with the idea of action to deal with externalities. Say, road pricing to deal with congestion, carbon taxes to deal with emissions. Even, dare I say it, areas where we really would not like to have competing market suppliers of goods and or services. The Wars of the Roses were an example of how we most certainly do not want to have competing private armies.

I have a very strong feeling that Richard Murphy hates neoliberalism for one very important to him reason. He\’s got a very large case of Kip Esquire\’s Law. The planners always imagine themselves as the planners. One of my definitions of neoliberalism (perhaps better to call it a personal prejudice?) is that I want the system to be built upon the certainty that I\’m not going to be the planner.

That is, instead of a system in which I get to tell people to do what I tell them, what system which still actually works can be built where I don\’t have to do what others tell me to do?

Yes, there must be rules. Yes, there has to be governance. Even, yes, there has to be tax to pay for it. But I want a world in which we set general rules and then observe how people act within them in order to solve those societal and communal problems. Perhaps neoliberalism is the wrong word for this: Worstallism if you like. What I absolutely do not want is planners getting the power to force us all to do as they want. Perhaps that\’s why Ritchie hates neoliberalism/Worstallism so much. The system would provide no space for him to impose his rules upon us.

Ha-Joon Chang is such a wag, isn\’t he?

Fortunately, economic growth has come back to Africa in the new century, making the 2000s the region\’s fastest-growing decade ever.

Excellent, we\’ve got real growth in Africa.

Therefore, according to the Reader in Economics at Cambridge, we must stop using the policies which have produced this growth and go back to the having an industrial development plan of the 50s through 70s which bankrupted the African economies.

Talk about ideology over the real world……

This is why \”social enterprises\” might not work

The government\’s controversial welfare to work initiative has suffered another blow after it emerged that a social enterprise firm hired to get the long-term jobless into employment has gone into liquidation, claiming banks refused to lend it money to stay afloat because they considered the work programme to be too financially risky.

Eco Actif, a community interest company based in Sutton, Surrey, closed suddenly on Friday morning. It provided employment support for around 500 people in the south-east of London, operating as a subcontractor in a regional supply chain headed by the welfare to work company A4e.

Its chief executive, Amanda Palmer-Roye, said Eco-Actif had performed well in getting people into work and had a £1m order book but had been unable to raise the capital to sustain itself under the government\’s payment by results system, under which firms must wait 18 months between delivery and payment.

You need capital to be able to run an organisation. Doesn\’t matter whether you are a for profit or a not for profit. You still need capital, working capital at the very least, to cover the gap between expenditure and income.

And the problem with a not for profit is that, well, how do you pay for the capital? With a \”social enterprise\” (I think this means no nasty outside shareholders, right?) where\’s it going to come from?

This is a problem that all mutuals, worker owned companies etc face. You need capital. Where\’s it coming from?

Sure, one condition

French city of Angers that was home of Plantagenets demands return of Crown Jewels
A French city that was the home of the Plantagenet line of English kings is demanding the Crown Jewels as compensation from the Queen for the execution of its last pretender to the throne.

Happily stick the Crown Jewels in Angers.

Immediately after the union of the Angevin Empire with the United Kingdom.

We\’ll have the Duchy of Normandy back too if you don\’t mind. And Brittany (they are Bretons after all).

Francois Hollande can keep the Ile de France, the bit we didn\’t have back then.

This time around let\’s do European integration properly eh?

After all, there\’s nothing wrong with France except for the French. And a couple of generations of droit de seigneur by the new British landlords will sort that out.

Interesting welfare state fact

The Department for Work and Pensions estimated this year that up to 12,000 of the highest-claiming households on welfare were receiving more than £34,000 a year in benefits, equal to the take-home pay of an employee with a £47,000 salary.

You can get more post tax income on welfare than if you were in the top 10% of earners in the country?

Private Conservative polling suggests that the plan is one of the Coalition’s most popular ideas, and ministers are keen to highlight the policy and its impact.

Yes, yes, I can understand that.

This is going to bring the woo merchants out of the woodwork

Motorists may have been paying too much for their petrol because banks and other traders are likely to have tried to manipulate oil prices in the same way they rigged interest rates, an official report has warned.

Two different issues here.

1) Was the petrol price manipulated.

2) Petrol and oil are different things.

As to the first, the allegation, umm, it\’s not even that at present, supposition perhaps, is that because the wholesale petrol price is reported by Platts then perhaps it was open to manipulation in the same way as Libor. It could have been, certainly. Whether it was or not is something that will have to be proven.

I don\’t know the details of Platt\’s pricing mechanism but it is along the lines of Libor: collect as much information as you can from market participants, throw out the obviously dud prices and try to pin down what the actual price in the market is. If traders report prices that suit their books well, yes, that \”market\” price might well be influenced.

This is akin to the first set of Barclays Libor manipulation. Traders within the bank trying to get Libor up or down by 1 bps or 2 in order to suit what they have on their trading books. Given that these are futures markets (as well as physical) there\’s no reason at all to think that the manipulation will be all one way or another. In fact, we would expect, if manipulation there was/is, it to be down as often as up.

As to the second, you can see it in that headline which I\’ve quoted. Petrol and oil are different things. Platts petrol is where the refined petrol price is. The oil price is the crude oil price: the price before it goes into refineries.

OK, trivial distinction you might think. But there\’s long been a particular form of woo shouting that all this financialisation has pushed up the price of oil (note, not petrol, but the crude oil price) as more people speculate in it. As hundreds of billions flow into commodity funds then they drive the price of oil up. Therefore we must regulate commodity funds.

These two things will inevitably get confused. If there has been manipulation of the crude price it will be as with Platts petrol: down is as likely as up for it will be individual traders trying to manipulate to suit their own positions. Those positions being as likely to be long as short. This is absolutely not the same as more commodity trading leading to higher prices in general.

Although there will inevitably be some who insist that it is the same. Worth looking out for: I personally expect such nonsense to come from idiots like the World Development Movement. I really don\’t expect it to take long for them to claim that a supposition of manipulation means that they were right, increased speculation means higher prices.

They\’re just different things though, with different effects. Indeed, increased speculation makes manipulation much harder, doesn\’t it? It\’s benchmarks on thin markets that are easy to move, not prices on large and liquid markets.