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Polly\’s very strange argument

The arts are very profitable so we should subsidise them.

Eh?

This is far worse:

Instead of investment, the government looks to philanthropy. Last week Vivien Duffield gave an admirable £8.2m to her chosen arts venues. As she did so, she commanded another 20%, or £2m, in tax relief. Charity is a fine thing, but the state – or in this case the Arts Council – is a more trustworthy distributor of taxpayers\’ money than the whims of wealthy donors. The budget offered a further bonus of inheritance tax relief to anyone leaving 10% to charity in their will: Duffield\’s pet arts schemes command our cash too; hardly a democratic distribution.

I\’m pretty sure she\’s got tax law wrong here anyway: the money comes from a charitable foundation and so was never subject to tax in the first place. Thus no Gift Aid is payable (please, as ever, correct me if I\’m wrong).

But what\’s truly appalling is the implicit argument there: that the State spends money better than people do themselves.

Gift Aid isn\’t \”government money\” which then follows the desires of donors. It\’s an admission that we don\’t want to tax people who give away their money to charities. So, when people do give money to charity we put into the pot the tax they\’ve already paid on that dosh.

But Polly is equating this with taxes being raised upon us all being spent upon the desires of those rich folks: which just ain\’t true.

Worse, she\’s then going on to say that having bureaucrats allocate the money is better than people doing it for themselves. Really, a rather foul view of human freedom.

And having had a look, yes, given that the donations come from the Clore Duffield Foundation I\’m near certain that there would be no gift aid added to them. Because there\’s been no tax paid there will be no tax repaid, will there?

Not unless charity law is even more screwed up than even I think it is……

China\’s rise in science

Sensible words:

The Royal Society said that China was now second only to the US in terms of its share of the world\’s scientific research papers written in English. The UK has been pushed into third place, with Germany, Japan, France and Canada following behind.

\”The scientific world is changing and new players are fast appearing. Beyond the emergence of China, we see the rise of South-East Asian, Middle Eastern, North African and other nations,\” said Chris Llewellyn Smith, director of energy research at Oxford University and chair of the Royal Society\’s study.

\”The increase in scientific research and collaboration, which can help us to find solutions to the global challenges we now face, is very welcome.

Absolutely. Science is a public good.

That\’s why we subsidise it of course: because we all benefit whoever does it an whoever does it cannot profit from having done so.

That more people are peering into test tubes in China is simply a good thing for us. Because we get to use what they find out.

This won\’t stop some moron starting to talk about the growing \”science gap\” or some such nonsense but it remains true all the same.

Plutonium in Japan

Not a lot actually:

The plant\’s operator, Tokyo Electric Power [Tepco], said readings of plutoinium-238, 239 and 240 were similar to those recorded in other parts of Japan after nuclear tests conducted overseas.

No, not the amounts of plutonium found after someone exploded a plutonium based bomb over a Japanese city, but the amounts found when someone exploded a plutonium based bomb thousands of miles away.

Trivial, even if noticeable, amounts then.

Complete cretinism from the European Union

Banning cars and flights:

The European Commission on Monday unveiled a \”single European transport area\” aimed at enforcing \”a profound shift in transport patterns for passengers\” by 2050.

\”That means no more conventionally fuelled cars in our city centres,\” he said. \”Action will follow, legislation, real action to change behaviour.\”

The plan also envisages an end to cheap holiday flights from Britain to southern Europe with a target that over 50 per cent of all journeys above 186 miles should be by rail.

Siim Kallas, the EU transport commission, insisted that Brussels directives and new taxation of fuel would be used to force people out of their cars and onto \”alternative\” means of transport.

Top of the EU\’s list to cut climate change emissions is a target of \”zero\” for the number of petrol and diesel-driven cars and lorries in the EU\’s future cities.

No, that isn\’t what you do.

Start from the point that climate change is happening, that it\’s a problem and we\’ve got to do something about it.

Those of you who don\’t accept that, well, sorry: but the point is that even if you do banning certain technologies isn\’t the way to take action.

So, we need to limit emissions. Great, super. In fact, we\’re told that we need to reduce emissions by 80%.

*Shrug*, OK.

That means that we will still be allowed, in 2050, to have 20% of the emissions that we currently make.

So which emissions should we still be making and which will we have consigned to the dustbin of history?

Well, if we\’re to be sensible about it, we will still be making those emissions which we value the most and not making those emissions which we value less. Which leads us on to, how do we determine which are the more valuable emissions and which the less valuable?

Which is where we meet one of the great misunderstandings of economics. There are still those who insist that there is some true value, some knowable and absolute measure. Sometimes this is the Labour Theory of Value that all too many get hung up upon. You know, the drooling Marxists and the rest. But there\’s many more who offer up other, similarly wrong, ideas. The various prodnoses who insist that booze or fags have no value. Or that, in various Green circles, travel or mobility has no value. Or even meat at times…..those who calculate how we could all live off granola instead of juicy little lambs for example.

What they are all missing is one of the central points of neo-classical economics (yes, it turned up earlier as well but it was neo-classical economics that really encoded it…..and yes, we do nearly all acept that the neo-classicals were, at root, correct on this and several other matters).

Value is subjective. It is in the eye of the beholder. The consumer.

Value is not what some campaigner thinks we should value, not what some bureaucrat will change the law to make us value: it is what we actually do value.

So, we face having to create a restriction on the emissions that can be made. But we also want those emissions that can be made, that scarce resource, to provide the greatest value, the greatest human utility, that we can. And that value, that utility, is not decided by pallid pencil dicks in Brussels, but by us, the people, individually.

Which means that we do not want to go and ban certain technologies at the say so of said pallid pencil dicks. We want to have a free market in our scarce resource. There will be those who value being able to fly to Southern Europe more than they value the pain and grief of insulating their house so that it is a zero emissions one. There will be those who value a juicy steak more than a flight. Those who would take a Model T for a run more than they would other options.

We can go further. A ban on a particular technology is an admission from those doing the banning that some would indeed choose that technology. No point in banning it if no one would use it, is there? Thus the ban is exactly an admission that they would make us all poorer in order to advance their plans.

At which point, of course, we should tell the banners to fuck off.

Cajoling people is just fine, exhorting them, providing them with options, developing new technologies, all just completely dandy. But bans on cars, or flights, booze, fags, meat, mobility, trade: garn\’ matey, sling yer \’ook.

On this Human Rights thing

The politicians have only themselves to blame, as Lord Judge points out:

He said such a view was entitled to be held in a free country, but added: “What, however needs to be examined, is the way in which the criticism of “Human rights” and the judgments made by reference to them, is that the incorporation of the Convention, and the statutory requirement that the decisions of the European Court of Justice must be applied (whether we judges in the United Kingdom agree with them or not), and the decisions of the European Court of Human Rights must be taken into account, represents the law of the United Kingdom as decided in parliament by the ordinary legislative process.

“Judges are obliged to apply the legislation enacted by our sovereign parliament, and the European Communities Act 1972 and the Human Rights Act 1998 are two such Acts. No more and no less.”

It isn\’t that votes for prisoners, or appeals against being on the child sex offenders register, are some alien imposition from outside our political system: as many, including the Prime Minister, seem to think.

It\’s that our politicians have passed laws stating that such will be the laws that judges and the courts will impose.

And if politicians really want to stop these things from happening, the ability to do so is in their own hands. Repeal the 1972 European Communities Act for example, and we\’d be free in one bound.

I commend it to the House.

Andrew Simms: yes, numpty again

Simms seems entirely incapable of understanding basic economics or business:

Using optimistic assumptions, the company nevertheless sees a gap emerging by 2050 between \”business-as-usual-supply\” and \”business-as-usual-demand\”, a gap so large that it is equal to the size of the whole industry in the year 2000.

So oil prices will soar then, yes?

The Shell report spoke of \”volatile transition\”, and of economic outlooks that range from \”severe-yet-sharp\” to \”deeper-and-longer\” and the marvellously catchy, if dated, \”Depression 2.0\”.

With so much insight, it is remarkable then, that Shell, like BP, has reversed at speed out of renewable energy. Shell dropped investment in wind, solar and hydrogen energy in 2009, the same year BP closed the London HQ of BP Alternative Energy, along with its solar plants in the US and Spain.

Why \”remarkable\”? I would have said \”blindingly obvious\” myself.

The oil price is going to soar, the oil companies will be making money hand over fist and they\’ve no need to lose money on things like hydrogen and bloody windmills, have they?

Man\’s a loon.

Old Holborn meets the Tax Justice Network

And the TJN flee in terror:

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Worse, after speaking with this character below (dressed as the hero of the dystopian thriller film V for Vendetta), who told us direct that \”tax is theft\” and he supported Philip Green\’s tax avoidance, at least some of the people present at Oxford Circus were radically opposed to UK Uncut, instead pushing a libertarian position from the right: anti-tax, anti-state, and supportive of tax cheats. The situation was clearly very messy and deteriorating, so we left.

From Frank Richards of The Magnet

Correspondence with George Orwell, via David Friedman.

As for foreigners being funny I must shock Mr. Orwell by telling him that foreigners are funny. They lack the sense of humour which is the special gift of our own chosen nation: and people without a sense of humour are always unconsciously funny. Take Hitler for example,- with his swastika, his \”good German sword\”, his fortifications named after characters from Wagner, his military coat that he will never take off until he marches home victorious: and the rest of his fripperies out of the property-box. In Germany they lap this up like milk, with the most awful seriousness: in England the play-acting ass would be laughed out of existence. Take Mussolini- can anyone imagine a fat man in London talking the balderdash that Benito talks in Rome to wildly-cheering audiences without evoking, not wild cheers, but inextinguishable laughter? But is il Duce regarded as a mountebank in Italy? Very far from it. I submit to Mr. Orwell that people who take their theatricals seriously are funny. The fact that Adolf Hitler is deadly dangerous does not make him less comic.

That he is echoing God\’s gift to the English language, the man who gave us \”did you ever in your puff see such a perfect perisher\” and the satire of the black footie bags, only just emphasies how much he is right.

Ritchie and the Labour Theory of Value

And your economic analysis is simply wrong…

Wealth is not built on profit. It is built on labour

I\’m subscribed to an old thread which Ritchie has just given that response to.

It\’s quite stunning really. Firstly there\’s the definite whiff of the Labour Theory of Value there, something we know is wrong. Well, at least since the marginal revolution we do, since the creation of neo-classical economics. But then Ritchie does seem to get confused here, he\’s been known to declaim that it\’s precisely neo-classical economics which is wrong. I\’ve always assumed that he in fact means neo-liberal economics, for he says that the alternative is the economics of Keynes. And as Keynes was very much a neo-classical, if not a neo-liberal, I have, as I say, just assumed that he\’s getting confused.

But maybe he really isn\’t? Perhaps he really does believe that goods and services have some fixed, eternal, actual, value, rather than value being whatever it is perceived to be in the eye of the beholder? That value being determined by the labour that went into production? That error that we can trace from St. Thomas Aquinas (and almost certainly earlier, from the Greeks) through Smith to Marx?

But leaving such trivialities behond, note the glaring error in this:

Wealth is not built on profit. It is built on labour

Err, no. Wealth can be built upon many things. Knowledge, labour, land, capital, entrepreneurialism, everything from what is simply lying around in the environment that surrounds us through the sweat of the human brow to simply cleverer ways of doing whatever it is that we\’re trying to do.

Profit is simply the way of measuring whether you are in fact creating wealth. It is, recall, the difference between the value as perceived by the consumers of those goods and services and the value of the alternative uses of the inputs you\’re using to create those goods and services.

If you are making a profit then what you are creating has greater value than those other uses of the same inputs. Creating greater value is the same, the very definition of, creating wealth.

I really do wish that he\’sd paid more attention to the economics part of his degree rather than blowing it off, as he did, as all nonsense.

Peter Preston doesn\’t get it

The answer is that Britain is an astonishingly rich country.

Oh woes is us, horrors, terrors, taxes are up, incomes are down and the entire economy is laid waste.

Yet peeps are still out buying iPads and DS\’s.

How can this be?

Beause Peter, and I know that this will come as something of a surprise, Britain is an extremely rich nation by any current global, or any historical, standard.

Average GDP per capita for the world is currently about £5,000 a year. We\’re at four times that. We\’re at twice average GDP per capita in 1975 for the UK. Ten times what the average was in the UK in 1845. We\’re up 33% just in the years since Maggie let office.

The reason that, even in the current economic \”hard times\”, there are millions who can go out and buy gadgets and gewgaws is that by the general standards of humanity this country and the people in it are howlingly, stinkingly rich.

This capitalism/markets thing. Good, innit?

We find out about UKuncut and Wittington Investments

Finally, what they\’re complaining about:

At 3.30pm we gathered on Oxford Street and moved toward a new tax-dodging target, Fortnum & Mason, to stage an occupation. This foodstore is owned by Whittington Investments, which runs a devious tax avoidance scheme, stuffing money in Luxembourg and avoiding £10m a year in tax. This money could pay for about 500 nurses.

Still entirely missing the point that Wittington itself is 79.2% owned by a charity, the Garfield Weston Foundation, which donates £40 million a year to good causes.

Health £
The Royal Marsden Cancer
Campaign London 1,000,000
Cancer Research UK London 500,000
The Forever Friends Appeal Bath 250,000
Stroke Association London 150,000*
Birmingham Children’s
Hospital NHS Trust Birmingham 100,000
The Liver Group Charity London 100,000
University of Dundee Dundee 100,000
Moonstone Therapy Centre
Appeal Bristol 100,000

Kids Kidney Research London 100,000
Best Beginnings London 100,000
Motor Neurone Disease
Association Northampton 100,000
Thrombosis Research
Institute London 100,000
Bowel & Cancer Research London 56,000
Alzheimer’s Society London 50,000
British Liver Trust Ringwood 50,000
Rainbows Children’s
Hospice, Loughborough Loughborough 50,000
Royal Surrey County Hospital
NHS Trust Guildford 50,000
Changing Faces London 50,000
The National Autistic Society London 50,000
East Anglia’s Children’s
Hospices (EACH) Cambridge 50,000
Melanoma Focus Chalfont St.
Giles 50,000
Treetops Hospice Trust Risley 30,000
Helen Rollason Cancer
Charity Chelsmford 30,000
Foundation for the Study of
Infant Deaths (FSID) London 25,000
Teenage Cancer Trust Cambridge 25,000
Aspire Stanmore 25,000
Tropical Health & Education
Trust (THET) London 25,000
Headway – The Brain Injury
Association Nottingham 25,000
Starlight Children’s
Foundation London 25,000
Jo’s Trust London 25,000
Willow Foundation Hatfield 25,000
Autism Treatment Trust Edinburgh 25,000
Buddy Bear Trust Dungannon 25,000
British Nutrition Foundation London 20,696
Muscular Dystrophy
Campaign London 20,000
St Andrew’s Hospice
(Lanarkshire) Airdrie 20,000
CancerCare North Lancashire
& South Lakeland Lancaster 20,000
Rainbow Trust Children’s
Charity Leatherhead 20,000
Cued Speech Association UK Dartmouth 20,000
Research Autism Bristol 20,000
SANE London 20,000
St Luke’s Hospice Plymouth 20,000
Action Cancer Belfast 20,000
Allergy UK Swanley 20,000

Cretins.

The problem with a mansion tax

Is that it\’s more of a tax on geography than anything else.

The business secretary, Vince Cable, has confirmed the 50p rate on tax will be abolished – and revealed the government would consider bringing in a \’mansions tax\’ to ensure the wealthiest pay their way.

From one website, there are 791 properties over £1 million in central London. Including, as an example, a 2 bed flat.

There are only 23 over that price in Gwynedd, all of which seem to be either mansions or large farms.

This isn\’t, by the way, to argue against an LVT. Rather, it\’s to argue against some arbitrary limit above which such should be imposed. Such would mean that it becomes a distinctly regional tax, given the regional differences in property values.

Perfectly happy with the idea of an x% tax on the underlying land of all property, something which would of course hit London more than Gwynedd. But much less so on one that arbitrarily decides that someone in a two bed in Chelsea is \”rich\” while someone in an 8 bed in Wales is not.

On intellectuals and progressive educators

Jones wrote from experience: her parents were neglectful of her needs, and those of her two younger sisters. The sisters often went hungry, and for years were banished to sleep in an unheated lean-to shed, to make room in case of visitors. Both parents were intellectuals and progressive educators, but were stingy not only with money but also with warmth and attention. The skinflint father bought the children a complete set of Arthur Ransome books as Christmas presents, but doled them out at a rate of one a year.

Remember, those who can\’t, teach.

The Guardian doesn\’t quite understand inflation

So, they\’ve taken the general rate of inflation and then compared it to the rate of inflation for specific goods.

Prices of goods rise and fall over time due to numerous factors, but we wondered if some of our regular purchases have increased in line with inflation over history, or whether we are paying far more than previous generations for our pleasures.

In 1981, the last time a royal wedding obsessed the nation, inflation was 11.9%, and it has never been as high since (the most recent monthly figure is 4.4%). Using the calculations of Phil Gooding, senior statistician at the Office for National Statistics, that inflation based on the retail price index has risen 209% between December 1981 and the end of last month, we looked at how much 10 items would cost today, if inflation was the only factor that changed prices.

It\’s quite fun in its way, manufactured goods are down, services up and goods that are taxed (beer say) are well up. There\’s amusement at the way that The Guardian itself is twice what the general inflation rate would predict (profiteering bastards!).

However, there\’s a small conceptual problem. There is in fact no \”general\” rate of inflation, something which just happens and against which we can compare such specific rates. That general rate is in fact the average rate of all of those specific rates. So what is actually being done is looking at how the various components of that average rate have changed, leading to the calculation of that average or general rate.

And yes, we\’d expect manufactures to have a lower inflation rate than services (Baumol\’s Cost Disease yet again) and of ourse, given that tax grabbing bastards that rule us, those things were there are discretionary taxes.

Beer\’s 150% or so of that average rate: put\’s that \”alcohol has become more affordable\” into context, doesn\’t it?

Weirdness about the death penalty

Amendments to the criminal code may also remove it as a punishment for those over 75.

Eh?

Is this on the assumption that you don\’t do nasty things to oldsters? Or because there\’s so little life left that it\’s not much of a punishment?

Leaving aside the rest of the death penalty thing altogether, what could be the justification for this?

Also, somewhat strange that China will remove the death penalty for the over 75\’s just as there are many Europeans campaigning to instate it for them: this euthanasia thing.

The travails of minor European Royalty

When Monaco had required an heir to prevent the principality being swallowed up by Italy, Prince Louis II, Antoinette’s grandfather, recalled that he had an illegitimate daughter — Charlotte — by Juliette Louvet, a washerwoman with whom he had had an affair while serving with a French regiment in Algiers.

In 1919 Charlotte was legitimised, becoming Hereditary Princess of Monaco. The following year she married Comte Pierre de Polignac, a problematic union that was not helped by his being homosexual.

It appears that Caroline and Stephanie are not the only members of the family to have interesting love lives.

In the mid-1940s she embarked on a relationship with Alexandre-Athenase (Aleco) Noghès, a Monégasque-born lawyer and international tennis champion of Spanish descent. Three children were born out of wedlock: Elizabeth-Ann in 1947, Christian in 1949 and Christine in 1951 . Antoinette married Noghès in December 1951, but they divorced three years later .

All rather feminist actually: perhaps the only European royal family where the women carry on just as the men of so many of the others do.

Why we need more markets and less government

William Baumol, that\’s why.

Tyler\’s got the abstract to a paper which shows why middle incomes have been stagnating (well, not rising very fast) and here\’s, to me, the money \’graph:

On the nontradable side, government and health care are the largest employers and provided the largest increments (an additional 10.4 million jobs) over the past two decades…..(…)….A related set of challenges concerns the income distribution; almost all incremental employment has occurred in the nontradable sector, which has experienced much slower growth in value added per employee. Because that number is highly correlated with income, it goes a long way to explain the stagnation of wages across large segments of the workforce.

So, that last sentence is really only a restatement of something Paul Krugman says in Ricardo\’s Difficult Idea (I mention this just to show that this is not a right wing, neoliberal or even libertarian idea), that average wages in an economy are determined by average productivity in that economy.

Akin to his comment that productivity isn\’t everything, but in the long term, it\’s almost everything.

So, what\’s all this got to do with William Baumol? Well, one part of his research has been into \”Baumol\’s Cost Disease\”. One way of putting which is that increasing labour productivity in services is more difficult than improving it in manufacturing. Canonically, we cannot get a symphony orchestra to be more productive by playing at twice the speed. So, ally this with wages being determined by average productivity, we\’ll see the amount we need to spend on labour to get services to rise against the amount we need to spend on labour to get manufactures. Services will become more expensive relative to manufactures over time.

However, this is not certain. A tendency, yes, but not a certainty. For it is possible, through innovation, to turn a service into, if not a manufacture, at least an automated operation. Think replacing bank clerks with ATMs. Skilled typists with dictation software. We can record the symphony once and play it many times on a gramophone/Walkman/iPod.

Which leads us to another part of Baumol\’s work. What system, what structure, boosts innovation?

Note that \”innovation\” here is not taken to mean the invention of new stuff. Rather, the dispersion of such new inventions through society, enabling people to think up ways of using it in new and interesting ways: boosting labour productivity as they do so.

One point he makes is that the Soviets invented some pretty spiffy stuff but as anyone who was there either during those times or in the rubble following 1991 will know, almost none of it ever got used by anyone.

No, it\’s a market system that encourages the use, experimentation with and thus improvements in productivity, that new inventions allow. Planning doesn\’t, the State doesn\’t, markets do.

Which brings us to our conclusion.

Let us agree that middle incomes in the US have been stagnating (they haven\’t, just not growing very fast but….). Let us also agree that we\’d rather like to get them rising again.

It\’s that nontradeable sector, healthcare especially, which we need to worry about, the one where innovation, which determines labour productivity and which in turn determines general wage levels, is more difficult. And the way we know how to increase innovation is through having a market based economic system.

So Obamacare is moving in the wrong direction, isn\’t it? We want more, not less market, less not more government.

This point is discussed at greater length in my favourite book.