Friday, 22 September 2017

"Why a consumption tax may not make any sense at all"

A splendid article, spotted by BenJamin' in the Nigerian Government & Business Journal (but equally applicable to all countries):

The devil in the (accounting) details – and the economic effects: You often hear calls out there — mostly from Right economists but also from some on the Left — for a consumption tax in the U.S. As presented, it’s a super-simple idea: tally your income, subtract your saving, and what’s left is your consumption. You pay taxes on that.

We want to encourage thrifty saving and discourage profligate consumption, so what’s not to like?


Worth a read in full. No point trying to summarise but he points out that the measurement, administration and enforcement will be a nightmare; "the empirics over many decades bear that out: higher saving rates have pretty much nothing to do with investment rates"* and finishes off by explaining why such taxes (for example VAT) are a huge drag on the real economy.

When people promote this idea I always try to make the very same points but they are just brushed aside.

* As I have explained before, household "saving" and business "investment" are two more or less completely different things, one has very little to do with the other.

Daily Mail on top form

Pop star's ex-girlfriend, 34, is held on suspicion of killing 21-year-old French au pair and 'burning her body in garden of £1m Edwardian home'

Thursday, 21 September 2017

We did basic logic at school.

Me, a few days ago:

Rather counter-intuitively, government issued 'money' does not require any asset-backing whatsoever, all the government needs is a system of whereby people HAVE TO hand those notes back to the government which effectively 'unprints' them again. The mistake that the Weimar Republic et al made was not taxing enough.

There followed a lively discussion where people desperately tried to disprove this truism by giving examples of lots of other things that are used as money.

Bayard finished with this supposed killer counter-argument:

For a currency to have value, it simply has to be generally accepted for the payment of debts.


The government doesn't have to be involved.


There are loads of examples of this: cowrie shells, cigarettes, Maria Theresa dollars, LETS, C18th private currencies, the ones previously mentioned, etc etc.

Correct. But so what?

We did basic logic at school, as well as Venn diagrams. I remember the teacher saying things like "Milk is a drink. But not all drinks are milk. And milk isn't always used for drinking."

In other words, you can't disprove that milk is a drink by saying that whiskey is a drink. And just because people drink milk doesn't mean it can't be used for other things (like making other dairy products).

So let's go back to Bayard's argument part 1:

For a currency to have value, it simply has to be generally accepted for the payment of debts.

Government printed money (be it paper or electronic) has value because it can be used for payment of tax debts. This is why it has value, which is exactly what I said. Those other things are also used as money for various reasons entirely irrelevant to the discussion.

Take a Bond Bug, they are truly shit cars, but you have to pay about £8,000 for one in good nick. Or you could buy a brand new one of these for about £8,000.

So we have two "cars", both worth about £8,000. The Bond Bug has scarcity/sentimental/novelty value. The other has four seats, airbags and a decent stereo. Same basic thing, same value/price, but for totally different reasons. You can't disprove that Bond Bugs sell for about £8,000 by comparing them with a brand new Kia Picanto or vice versa.

Wednesday, 20 September 2017

"We didn't waste all our money on mobile 'phones. We rolled up our sleeves and paid off the mortgage."

From the Resolution Foundation report, emailed in by OnTheOtherHand:

Crucially, we show how barriers to entry have increased dramatically, not least from rising house prices: with the average young family today having to save for 19 years to accumulate enough for a typical deposit compared to just 3 years a generation ago, it is small wonder that home ownership rates have tumbled...

On average millennials spend 23 per cent of their income on housing compared to the 17 per cent baby boomers spent at the same age, and the 8 per cent of the silent generation [those born between 1926 and 1945].

The dig about mobile 'phones is stupid anyway. They keep inventing new stuff and making stuff cheaper, and people keep spending money on what's now available/affordable. From our grandparents or great-grandparents' point of view, the generations after them "wasted" their money on televisions, washing machines, fridges, cars, holidays abroad etc.

Tuesday, 19 September 2017

Another one of those "cow attacks dog-walker" incidents

From Cornwall Live:

A mum-of-two said she thought she was going to die as a cow charged at and then repeatedly stamped on her.

Sharyn Partridge is now urging people to be on their guard after she was “battered” by the animal in Clearbrook, near Yelverton, on Saturday afternoon. Sharyn was left with significant bruising and said that a stranger called Dave, who scared the animal away when he pulled up in his van, saved her life..

And what triggered the attack..?

Tesco worker Miss Partridge, from Barne Barton, was returning to her car after taking her 12-year-old Jack Russell Suki for a walk when the drama unfolded...

“On the other side of the road I could see this black and white cow and a baby black cow coming up. They were trailing behind the others. She was making a noise and then a brown cow turned up. She was obviously calling the other cows. I thought I should just stand still with the dog.”

A few seconds later, the cow charged towards the helpless mum...

Monday, 18 September 2017

Daily Mail on top form

From The Daily Mail:

Man, 25, charged with murder after brutally stabbing his MOTHER, 50, to death in supermodel Gemma Ward's Sydney house - as police investigate whether Ice was involved
* Lanell Latta's body was discovered at a home on Sydney's Northern Beaches
* Police were called to the home owned by supermodel Gemma Ward at 10.45am
* Neighbours of the woman recall hearing screams coming from the house
* Ms Latta's son, Joel Woszatka, 25, was arrested by police in a nearby street
* He has been charged with his mother's murder and assault causing bodily harm
* Home was purchased by Ms Ward for $1.6m last year and has been rented out

Fun Online Polls: Man-made climate change & Have you turned on the central heating yet?

The results to last week's Fun Online Poll were as follows:

Are this year's strong hurricanes and Indian monsoon evidence of man-made climate change?

Yes - 10%
No - 90%

Thanks to all 114 who took part and 8 who re-Tweeted. I'm with the majority on this. It'd be bloody embarrassing if it turned out to be true.

Rapscallion in the comments linked to this fine article.
Sticking with the weather, the Daily Mash republished their article on central heating, as it seems to do this time every year*.

So that's this week's Fun Online Poll:

"Have you turned on the central heating yet?"

Vote here or use the widget in the sidebar.

* One recurring article we haven't seen this year is Ryanair switching to its winter schedule and blaming the reduction in the number of flights on high airport taxes. They've got themselves in to a whole different mess this year.

Sunday, 17 September 2017

Hard Cheese

More from Project Fear here: now it's cheese that is threatened by Brexit.

...the British Retail Consortium ... has just issued a report warning that, whatever the settlement, food shortages should be expected, and prices will rise across the board. Little wonder: four fifths of food imported to UK shops comes from Europe. There's good reason to believe that cheese will be a chief casualty during Brexit

Well, it's over a year since the pound plummeted after the Brexit vote, so any cost increases due to that should already have happened. In any case, the weaker pound should help our exports, but no, there can be no advantages to Brexit, when you are part of Project Fear.

But if exports have seen short-term benefits owing to a weaker pound, says buyer Bronwen Percival, this won’t last.

In fact, the true culprit is not Brexit at all. As the strapline points out, "Amid ongoing uncertainty, London’s cheesemongers fear the worst", the problem lies in the increasingly botched implementation of it. However "incompetent politicians make life hard for small businesses" is hardly news, is it?

Friday, 15 September 2017

"A short distance away"

From The Guardian:

The discrepancy was condemned by the Booksellers Association’s Giles Clifton, head of corporate affairs. “The BA has already highlighted the unequal treatment meted out by the business-rates system to British booksellers, the staggering 17 times differential between what the Waterstones on Bedford High Street pays in comparison with the Amazon business unit a short distance away,” said Clifton.

A short distance away?

Waterstone's have got a prime site in the middle of the shopping district in Bedford. The nearest Amazon warehouse I can find is five miles out of town in the middle of some fields, near Junction 13 of the M1 (rather conveniently). In location value terms, those are opposite ends of the spectrum.

On a per square foot basis, we'd expect the ratio to be something like 17 to 1, ergo the Business Rates should be about 17 times as much. (If he means that the total rates for the bookshop is 17 times as much as the total rates for Amazon's huge warehouse, then that is slightly more worrying).

Of course, if Waterstone's in Bedford thought that they could sell more profit by relocating to a large warehouse near Junction 13 of the M1, they'd do it. Fact is they can't, that's why they are where they are. They make more money by simply being where they are, and that extra money is what the Business Rates is a tax on (albeit in a very crude fashion).

This bit is a hoot as well:

CEBR director Oliver Hogan said that bricks-and-mortar bookshops had a range of advantages that Amazon did not offer, from involvement “with more reluctant readers, helping them to find books they might enjoy”, to the events they put on and the “physical interface” that “can trigger different and unpredictable exploration of themes and topics beyond what was intended”.

No disrespect to bookshops and the people who work there, but you stumble across a load more random stuff by mucking about on the internet than by browsing in a bookshop.

Thursday, 14 September 2017

YPP (London) meet-up, tomorrow Friday 15 September

We'll be at The Brewmaster nr Leicester Square tube station from 5.20 or so onwards - if you think you'll turn up later than 6.30, please get in touch or 07954 59 07 44.

Leicester Square Tube Exit 1, turn left and left again into the alleyway (St Martin's Court). We put a yellow YPP leaflet on the table so that you can find us.