VATs and Informal Suppliers

The general sales tax (IGV), however, affects both formal and informal activities. Although it appears to be a tax on gross income, it is actually a tax only on added value, which is why it is levied at each stage of production. At the second stage, for instance, one pays a tax on gross income but receives credit for the payments made at the first stage. This is a major handicap for informal suppliers of intermediate goods. The customer pays the gross tax but cannot obtain credit for the intermediate good purchased from the informal supplier. This places in informal supplier at a comparative disadvantage.

Indeed, and it also places an informal supplier at a comparative advantage if he is supplying finished, rather than intermediate, goods.

Which is really one of the problems with the Fair Tax idea, as it places all formal suppliers of final goods at a 30% price disadvantage to informal suppliers of same. That\’s the sort of price difference where even Farmer\’s Markets can compete with WalMart, isn\’t it?

Isn\’t This What You Want?

The closely defined layouts of estates, and their tendency to house the poorest people, lend themselves to inverse snobbery. You have estate-linked gangs, whose members go to estate-linked schools, defining their identity by the name and "reputation" of that estate. Because their lives revolve around those estates, their perspective narrows with each day that passes, until it stops at the bollard-tipped end of the walkway.

Localism, community cohesion, a sense of place and of belonging to it? Or have we stopped banging on about the anomie of modern life, the way in wihch a sense of identity is destroyed by a rampantly consumer society?

Polly Today

The first half of this is very good. Woo Woo medicine shouldn\’t be paid for by the taxpayer, nor should spurious governing councils for charlatans. She then, as is her wont goes slightly off the rails.

Only challenged once to a judicial review, Nice won the case for limiting Aricept to only the moderate stages of Alzheimer\’s – and won it with the strength of solid evidence.

That\’s not in fact how I recall (insert Alzheimer\’s joke here) the matter.

The recommendations issued today state that donepezil (Aricept), galantamine (Reminyl), and rivastigmine (Exelon) should not be used as a treatment of mild to moderate Alzheimer\’s disease.

Aricept should only be used to treat severe Alzheimer\’s on cost benefit grounds. The unfortunate thing about this being that the drug delays the worsening of symptoms: so they won\’t pay for it to stop you losing your mind but will to keep you alive once you have done so.

This week patients are suing their primary care trusts for the right to Avastin for stages of cancer not yet recommended by Nice – or at least, their right to buy the drug privately to top up their NHS care, which if they won, would destroy the NHS.

Ánd that\’s the loopy part. Allowing people to spend their own money on their own treatment will not destroy the NHS: it\’ll destroy a particular vision of it, for sure, but that vision of it is one in which you get only what the Government thinks you should, not what you might actually want.

Nice makes the hardest, most public decisions on NHS rationing – it was designed to draw the flak. If a drug costs more than £20,000-£30,000 for a quality-adjusted life year, a year of reasonably good life – they scrutinise it thoroughly. They tend to judge £50,000 too much for a few months longer in end-stage cancer. Naturally people protest, but no health system – certainly not US private insurance – is ever open-ended.

The survival of the health service depends on people trusting the science of these decisions. If they think they can buy better privately, the NHS will fall into the hands of those who think it should be dismantled – Professor Karol Sikora and the Reform Group, close to the Conservative leadership, who want a two-tier system where some people pay for better extras of their choice.

Quite. Now it\’s worth pointing out what actually happens in the NHS currently. If you decide to go for a top up treatment, paid for out of your own money, then you lose your NHS treatment for that same condition. You don\’t just pay the top up of £20,000 a year for Herceptin (or whatever it is) you also have to go private for the entirety of your treatment for breast cancer. Treatment which, you will note, you have already paid for through your taxes.

Now, the basic idea of rationing by cost, by QUALY, is an obvious and sensible one. But the measurement of that cost is not actually what your life, or a year of it, is worth to you. It is a measurement of what impositions it is right to put upon your countrymen, through taxation, for a year of your life. Which is, I think you\’ll agree, a vastly different question.

Think of what impositions upon the rest of us we think valid for someone who has lost their job (and assume away all the jibes about the workshy etc). It\’s something like £100 isn\’t it? (whether per week or fortnight I\’m not sure….rather out of touch). But we do not then go on to insist that someone who does work hard at a job can only be allowed that same £100, do we? Social housing for those who need it is OK but we\’re not exactly fitting jaccuzis into it: but we don\’t then say that those who want to spend their own money on such cannot, do we?

So it is with health care. What might be the right level of help I am able to call on from my fellow taxpayers (when we\’re talking about cancer and other expensive treatments the NHS does become a social insurance policy, not simply a pre-paid health service via taxation) when in need might be, indeed can be, very different from the amount of my own resources that I am willing to spend on an extra year of life. After all, I\’m rather likely to find my life more valuable to me than my life is to you.

So why shouldn\’t I be allowed, even encouraged, to top up my treatment from my own money?

Well, except for the point that it is better that we be dead and equal than alive and unequal?


Thanks Tom


The key word for anyone with an investment horizon beyond the next tricky year or so is "scarcity" – too many people chasing too little stuff. Long after the financial excess is washed through the system, population growth and rising incomes mean the world\’s principal economic theme will be the battle between excess demand and finite or limited supply.

Pretty much the definition of economics isn\’t it? The allocation of scarce resources to satisfy unlimited desires?


I\’d not seen this one before:

Equally quick-witted was England\’s Jimmy Ormond, whose arrival at the crease in an Ashes Test met with the usual fusillade of Aussie abuse. "What are you doing here? There\’s no way you\’re good enough to play for England," said Mark Waugh, twin brother of the Australian captain Steve Waugh. "Maybe not," replied Ormond, "but at least I\’m the best player in my family."

And we\’ve all seen this one but it\’s far too good not to repeat again:

The best way to respond to sledging is a dose of the same, as the Zimbabwean tail-end batsman Eddo Brandes once found when facing the great Aussie pace bowler Glenn McGrath. Frustrated that Brandes had somehow managed to keep his wicket intact, McGrath walked up to him and asked: "Hey, how come you\’re so fat?" Brandes instantly replied: "Because every time I make love to your wife, she gives me a biscuit."

Although I\’m reasonably certain that "make love to" was in fact couched in rather more Anglo-Saxon terms.

Changing the Driving Laws

This all seems to have got everyone terribly confused.

Drivers who kill could escape being sent to jail under new sentencing guidelines for the courts.

The new proposals are set to put judges on a collision course with prosecutors because they appear to end a crackdown on dangerous driving, announced last month.

I\’m drawing on something that The Magistrate said and I hope I\’ve got all of it right.

Last month the CPS published guidelines recommending that motorists caught using a hand-held mobile phone while driving could be jailed for two years.

The Crown Prosecution Service does not in fact decide what sentences people get. Judges do that. Further, the CPS does not determine who is found guilty of what crime, juries do that. What the CPS does do is determine who gets charged with what crimes. So the new guidelines were instructions to the CPS\’ own staff as to what they should charge people with given certain circumstances. There was no change in the law whatsoever.

Only those found by the courts to have been "dangerously distracted" by a mobile phone, an iPod or another electronic device, will be routinely jailed, it was reported last night. The Sentencing Guidelines Council is headed by Lord Phillips, the Lord Chief Justice, and lays down rules on sentencing for judges and magistrates.

What the Sentencing Council is discussing is the penalties that should apply given a finding of guilty (by a jury) on specific charges. This has entirely bugger all to do with what the CPS decides to charge someone with. There is no conflict here at all.

Now, given that I, with no legal training, and on the basis of a single blog post from one wih such training, am able to work this out, why can\’t a newspaper?

Oh Dear

The Telegraph has run that story from Oxford Economics about UK living standards surpassing those in the US.

But, and here\’s the crucial part, they\’ve entirely dropped the caveats about market exchange rates and PPP. Simply missed them out.

Shame, Ms. Lucy Cockcroft, shame on you. You\’ve entirely missed the point of the whole story.

Hillary Clinton Breaks Down

Or nearly so:

It was unclear whether the extraordinary moment was a calculated attempt to appear more human after repeated criticism for having a cold, calculating image or whether her emotions genuinely got the better of her.

The thing is, Bill could fake sincerity, Hillary can\’t. That\’s one of the major differences between them.


Comment is free is based at:

Guardian Unlimited
119 Farringdon Road
London EC1R 3ER
United Kingdom

Please contact us whenever possible by email: [email protected]

Well, yes, I mean it\’s possible for me to contact you right now. My computer is on, the email program is running. It\’s just that I\’m not sure I\’ve got anything to say to you right now.

Janet Street Porter

Columns in The Independent are surely the musings of the socially inept, those people you sidle away from at parties after a couple of stabs at conversation. They are the product of the system that has given a "voice" to people who have nothing to say apart from the fact that we\’re all doomed, it\’s capitalism\’s fault and by the way, I met someone famous recently. Thousands of hackneyed opinions about books, politics, the environment and society written by people who can\’t use a logical argument or recognise a fact. Endless reviews of this and that tapped out by idiotarians who\’ve never experienced any culture other than the one within their own heads.

Tee Hee

Naughty boy Willem, naughty boy:

P.S. For those who have noticed, I am indeed trying out \’yo\’ as a replacement for he/she/it, him, her, and \’yo\’s\’ for his/her/its.  It\’s the only hope for George W. Bush to leave a positive legacy in any area of life.

Drug Prices and Protectionism

Dean\’s half right here:

If the NYT ever let a real free trader write a column, they would probably also report on the enormous costs imposed on both the economies of the United States and developing countries through copyright protection and patent protection on prescription drugs. The latter raises drug prices in the United States by close to $200 billion a year (@ $670 per person) over their competitive market price. Free traders would be concerned about such costs.

Assume that those figures are correct. Free traders would indeed be concerned about that. Indeed are. And free traders like me look at that and go, well, OK, Americans are paying $200 billion a year more for their drugs than they would in a free market, unencumbered by such copyright and patent protection. Hmm, so, well, who benefits?

The answer is all of those foreigners who get to enjoy the drugs that the Americans have kindly subsidised the development of. For the purpose of the patent monopolies is to enable the pharma companies to recoup their $800 million per drug development costs. And to the joy of everyone else on the planet, it\’s the septics who are actually footing that bill. Everyone else is paying much closer to marginal cost than they are.

And, of course, this appeals to the (modern) liberal mindset too, or at least should do. It is, after all, or at least so we are told, righteous that the rich should subsidise the health care of the poor. The Americans are the richest (large) nation on the planet and they are indeed subsidising the health care of everyone else.

Something of a result then, don\’t you agree?

Climate Change Policy

Want to know why the actual policies put forward to deal with climate change are so crap?

John Hutton, the Business Secretary, would like to see 7,000 wind turbines built off the British coastline by 2020. That’s roughly two a day, if we started construction now, worked flat out, even weekends, had enough engineers for the job (did I mention Network Rail?) and everything went without a hitch.

“It’s crazy,” says Sue Ion, from the Royal Academy of Engineering. “Building wind turbines in a difficult marine environment is not an easy job. This is a serious engineering challenge that hasn’t been thought through properly.”

In September the academy, backed by the large engineering institutions, proposed a feasibility project to see whether Government ambitions to green the nation were technically doable. The project would, according to Dr Ion, provide a kind of engineering roadmap, assessing current technologies and forecasting research still required. Best of all, it would cost a miserly £750,000 and be free of vested industrial interests.

Surprisingly, the Government has yet to respond. Dr Ion admits her frustration: “The science on climate change is clear but people have forgotten that engineers have to apply that science. It’s all very well to say that we’ll have 20 per cent of our energy coming from wind power by 2020, but that’s useless if nobody’s done any studies on how that’s going to be delivered. If people continue to set unrealisable targets, Government policy will begin to lose credibility.”

Because everyone\’s missed a rather important point. Having accepted the "scientific consensus" everyone is now shouting out in their own best interests. If you are indeed going to accept the position of experts, wouldn\’t it be rather useful to listen to all of the experts? The engineers, say, the economists perhaps?

Instead of the political process, which is simply a sorting though of the various special interest groups?

Cretins, Cretins

You knew this was coming of course:

The Chancellor has demanded a meeting with the energy regulator to explain why fuel prices have risen so dramatically,

Having a lawyer as Chancellor is going to cause such things. An ignorance of how markets work (err, you have seen that oil is around the $100 mark Alistair?) isn\’t a great qualification for that office.

This is worse though:

Some experts believe that energy companies can buy reserves in advance and that there is no need for the price rises in raw materials to be fed through to consumers at once.

That companies can make long term contracts is true: but that doesn\’t mean that price rises should not be fed through. It\’s pretty much a basic thought that you should sell your products at their replacement costs, not their actual costs. Indeed, all energy companies do this: it\’s why BP and Shell\’s profits soar when prices rise and fall dramatically when they fall. Because they value the oil in process at what they can sell it for, not what they paid for it.

Most Sad

Piece in The G makes this statement.

Jobs define us

An extraordinarily sad statement. That where we export our labour to is the definition of us?

No, humans are really rather more complex beings than that.

True, But

What is the point of the Mr, Mrs, Lord and Lady? Very few people other than lawyers appreciate these niceties. Nor is there any reason why they should. They are neither logical nor necessary.

If, centuries ago, there was a valid reason for adding these appendages, it has long disappeared.

But just because something is only historical, neither currently logical nor necessary, isn\’t actually a reason to change it. We could call Black Rod the Head of Security for The Commons if we liked, wouldn\’t change all that much except losing us a little part of our rich and varied history. A loss of something for nho very good or great purpose.

Planning, Gorgeous Planning!

As we know, the training of doctors in the UK is a government monopoly. While they control the medical school numbers only indirectly, they control the number of NHS training posts directly. Thye system is thus planned from the centre:

Three applicants will be fighting it out for every post and in some surgical specialities competition ratios will exceed 20 to one.

This centralised planning thing works really well, doesn\’t it?

Random Survey of the Day

Well, it\’s one way to get your name in hte papers. Conduct a survey, make up an interesting factoid and fax it out.

Divorce lawyers are expecting their busiest day of the year today as the pressure of Christmas and the New Year holidays finally blows rocky marriages apart.

The period just ended is probably the one time of the year when the family is indeed all together, at home (rather than abroad on hols).

Just goes to show, eh? Absence makes the heart grow fonder.