Monday, 22 January 2018

When Oxfam talk more sense than the ASI and the IEA..

From Oxfam's actual report (page 10-11 of summary):

The mainstream economic justification of inequality is that it provides incentives for innovation and investment. We are told that billionaires are the ultimate demonstration of the benefits of talent, hard work and innovation, and that this benefits us all.

Yet there is growing evidence that the current levels of extreme inequality far exceed what can be justified by talent, effort and risk-taking. Instead they are more often the product of inheritance, monopoly or crony connections to government.

Approximately a third of billionaire wealth is derived from inheritance. Over the next 20 years, 500 of the world’s richest people will hand over $2.4 trillion to their heirs – a sum larger than the GDP of India, a country of 1.3 billion people. Monopolies fuel excessive returns to owners and shareholders at the expense of the rest of the economy.

The power of monopoly to generate extreme wealth is demonstrated by the fortune of Carlos Slim, the sixth richest man in the world. His fortune derives from an almost complete monopoly he was able to establish over fixed line, mobile and broadband communications services in Mexico. The OECD found that this monopoly has had significant negative effects for consumers and the economy.

Monopoly power is compounded by cronyism, the ability of powerful private interests to manipulate public policy to entrench existing monopolies and create new ones. Privatization deals, natural resources given away below fair value, corrupt public procurement, or tax exemptions and loopholes are all ways in which well-connected private interests can enrich themselves at the expense of the public.

And so on and so forth. That seems like a fair summary to me. Their actual recommendations are a bit wishy-washy and vague, but at least they are on the right lines in identifying the causes of massive concentration of wealth - monopolists who add nothing to the economy and are only rich because other people are poorer. In no way can you construe the report as anti-capitalist or anti-free trade.

I'll mark Oxfam down for confusing "wealth" with "income" though. If interest rates fall and share prices go up, then that doesn't really change anybody's net income. You can't live off share prices, you can only live off the dividends. Similarly, it is the ongoing payments of rent which make tenants poorer and the landlord richer, not how much the house changes in value. Who cares what Carlos Slim's business is worth - what matters is that every Mexican is overcharged by a few $ a month, which all goes into Mr Slim's pockets.

Enter stage right, the Neo-Libs, who clearly couldn't be arsed to even read the summary document and just trot out the usual irrelevant story about capitalism and free trade being A Good Thing. Well of course they bloody well are, and the Oxfam report doesn't say that they aren't.

Mark Littlewood in City AM:

More needs to be done to break down trade barriers and to encourage more countries to replicate the radical free market policies that led countries like South Korea, Japan, and more recently China from grinding poverty to great wealth in a single generation.

This means advancing property rights and ending corruption in countries like Zimbabwe, privatising state monopolies in Venezuela, and working to abolish trade barriers such as the EU’s Common Agricultural Policy.

Charities like Oxfam should be out leading the charge on these issues. But instead of focusing on those who have too little, this report again relentlessly targets those the charity believes have too much.

From The Daily Mail:

Sam Dumitriu of the free market Adam Smith Institute said that every day for the past 25 years, capitalism has lifted 138,000 people have been lifted out of extreme poverty.

He said: 'The report is, as ever, exceptionally misleading and misses the point - we should care about the welfare of the poor, not the wealth of the rich. As China, India and Vietnam embraced neoliberal reforms that enforce property rights, reduce regulations and increase competition, the world's poorest have received a massive pay rise leading to a more equal global income distribution.'

'It's the countries that rejected free markets that have bucked the trend. In Venezuela, the move to socialism under Chavez and Maduro has meant that more than 75 per cent of the population now live in poverty with many unable to afford basic necessities like food and medicine, despite having the world's largest proven oil reserves.'

All of which highlights that these Neo-Libs are being paid to dress up privilege, corruption and monopoly power as free enterprise.

Cow news

From The Daily Mail:

A fleet of supercars owned by Grace Mugabe have [sic] been involved in a pile-up as the disgraced former First Lady attempted to spirit them out of Zimbabwe.

A rare £250,000 Rolls Royce Ghost, a Porsche and a Range Rover were damaged as they were driven at night, in convoy through back roads of Botswana to a safe haven in South Africa.

Mrs Mugabe, who is known as ‘Gucci Grace’ and ‘Dis-Grace’ for her violent temper and extravagant spending habits, organised the transfer after fearing she will lose her ill-gotten gains in a crackdown on corruption in the wake of the bloodless coup which ended her husband Robert’s 37-year rule.

The 52-year-old’s attempt to put her supercar collection out of harm’s way backfired spectacularly last week when her son and his drivers were stopped for seven hours as they crossed over Zimbabwe’s border in Botswana...

However, some hours after they were given permission to drive on, the valuable convoy was involved in a freak collision after cows wandered onto their remote route, as they sped through the night.

Eyewitness Orabile Tebegano, who was also on the road at the time, told; ‘There were cows passing and the guys in front of me stopped, but I looked into my rear view mirror and I saw a car spinning in the middle of the road, it was a white Corolla, and he hit the Porsche and the Range Rover.’

Yeah! Go cows!

I do hope that the cattle involved were not seriously hurt.

Sunday, 21 January 2018

UKIP MEPs well on course to hit 2019 target number of resignations

Back in 2014, I ran a Fun Online Poll on the topic of how many UKIP MEPs would have resigned by 2019 (the end of the current term of the current EU Parliament).

During previous terms, on average just over a quarter of their MEPs resigned/were sacked (summary here). Having gained 24 MEPs - the highest number of MEPs of any UK party in the 2014 elections, please note - I would expect at least six of them to have resigned/been sacked by the middle of next year.

The weighted average result in the Poll was six, although the results were pretty evenly spread between "none" and "more than half".

According to the BBC, their sixth MEP resigned yesterday, which the BBC says that brings them down to 18.

The UKIP page still shows 19 (having promptly removed Jonathan Arnott). I suspect that the difference is because one UKIP MEP, Roger Helmer didn't resign or leave UKIP, he did the decent thing and retired, which allowed somebody else to take his seat (as a UKIP MEP). So a bit of misreporting by the BBC there, methinks.
On a personal note, I really liked Jonathan Arnott. He was highly intelligent, approachable and seemed pretty liberal. IMHO he was too good for UKIP, but I couldn't swing him round to a more Georgist point of view.

Friday, 19 January 2018

Killer Arguments Against LVT, not (433)

From the comments at The Guardian:

KLN 1. "What happens when all land owners sell sell their property to the lowest bidder, run for the hills and the economy become non-existent?"

KLN 2. "LVT will allow rich people to live in the best areas and push poorer people out as the town develops. The well to do will live within walking distance of the local amenities - including the best schools..."

Are those two not complete opposites? Both are wrong (KLN 1 being wronger than KLN 2), but they cancel each other out.

So what's it to be, you Homey twats? The rich will sell up and move abroad, or the rich will happily pay to be in nice areas? The poor will live in slums, or poor will snap up the nicer homes which the rich abandoned?

Every now and then, the Daily Mail manufactured outrage is perfectly justified

From The Daily Mail:

A Pakistani paedophile who claimed he didn't realise it was illegal to have sex with 14-year-olds intends to use his conviction for grooming to help him claim asylum in the UK...

He now claims his conviction means he cannot return to his homeland, as anger over a recent child rape case means it is now unsafe for him.

If he gets away with this..? FFS.
What is not quite clear, is how and why it is a crime to ask online vigilantes posing as 14-year olds for sex.

You ask a 14-year old you know to be 14 for sex, you're in trouble. You ask a 14-year old you genuinely believe to be 17 for sex (because she told you and she looks it), surely that's a defence or a plea in mitigation.

Let's assume having sex with a 17-year old you know is 17 is OK. What if you have sex with a 17-year old you genuinely believe to be 14 (because she told you and she looks it)? Would it make a difference if you knew she was lying?

They tried to explain inchoate offences on the criminal law unit, stuff like "attempt".
One of the questions was, is it a crime to (attempt to) do something you believe is a crime, but actually isn't?

Or would be impossible, like sinking a ferry by firing an airgun at the hull? IIRC, they can do you for criminal damage to the paintwork, but not for attempted murder.

IMHO, it would be impossible to have under-age sex with online vigilantes posing as a 14-year old, so attempting to do so can't be a crime either. Or perhaps it is. I never understood that bit.

But hey, in the instant case, deportation would seem like a reasonable punishment.

Thursday, 18 January 2018

Indian Bicycle Marketing: Big businesses v small businesses

Bayard left a throwaway comment on a thread about Carillion a couple of days ago:

"But the govt (and the EU) ignores small businesses because we don't so as we're told, can't lobby for bungs, oops contracts, and push back against their regulationism."

Not only do they ignore small businesses, they pretend that they don't exist. "Businesses" to the government, are only large ones run by the likes of Richard Branson or Philip Green. The left wing happily go along with this myth, as the image of silk-hatted millionaire boss profiting from his low-paid cloth-capped workers suits their rhetoric so much better than the owner-operator working long hours on slender margins and even thinner profits.

Then I noticed similar comments by people I follow on Twitter:


It's interesting that right leaning libertarians I follow are saying little about Carillion. I've noticed that most of them are much more interested in topics like multiculturalism and the EU than they are about corporatism.

Capitalism needs as level a playing field as possible. The Carillion mess shows so many ways in which markets are horrendously distorted. Market Libertarians have to call out this stuff as vigorously as lefty folks do.

In fact, pro market libertarians need to be more vigorous than lefties in exposing corporatism. This is because if lefties are the only ones doing it, then people will assume that the only alternative to corporatism is socialism.

@Land_Liberty, regarding an article in the fairly hard-left Jacobin mag, headed Small Businesses Are Overrated*:

Left and right on the same hymn sheet here. “Current state of small biz poor, ergo anti-monopoly movement bad.” Nope.
This is actually another fine example of nominally left and right, for example the UK Labour and Conservative parties, both subscribing to the same basic lie, each to serve their own nefarious ends.

The Conservatives promote the Protestant Work Ethic myth, if only you work hard enough, you too could be Richard Branson, a billionaire merchant banker or the next Duke of Westminster. Labour, under Corbyn in particular, seem to throw all employers in one pot; the little bosses are as guilty as the big ones - so let's regulate them all to death.

As ever, the key is to distinguish between:
a) rent-seeking, corporatism or outright corruption and
b) proper wealth-generating businesses.

The actual size of a business is irrelevant. There is some correlation - large businesses can hold out for bail-outs and subsidies; similarly businesses which collect rent find it easier to grow - but that is not correct way of looking at it, there are plenty of gigantic corporations who do a decent job, and plenty of small businesses who live off bungs.
* The article includes a chart showing that average wages are higher in larger businesses. Which is why "small businesses are overrated".

Well duh.

It's clear that entry-level, bottom rung wages must be pretty much the same in small and large businesses. So you earn much the same in the local corner shop as at the checkout in Tesco. A car mechanic in the local garage earns the same as somebody on the production line at Ford.

Small, local businesses only have one or two levels in the heirarchy, there are the workers and the boss, the boss earns a bit more than the workers, but not much more. The larger the business, the more levels there are, and people in each level earn a bit more than in the level below, so in massive corporations, the top dogs earn (or pay themselves) a hundred or a thousand times as much as the bottom level.

Therefore, average wages in large corporations are higher than in small businesses. That's neither a good thing nor a bad thing in itself, it is just is the way it is.

Large corporations can only exist to exploit economies of scale, and those economies go into higher wages at higher levels of the hierarchy. The higher paid workers are exploiting the business' owners, rather than the other way round.

Wednesday, 17 January 2018

Schrödinger's missing beats

I haven't spotted any wonky timing in ages, but there is something wonderfully weird in a song from Keith Richard's last solo album.

Listen to the chorus at about 25 seconds in, the first "Trouble..." is on the last two beats of the bar (third and fourth), but the next "Trouble..." appears to be slightly too soon, on the first two beats (until the next bit makes it clear that they weren't, they were on the last two beats).

What actually happens is that the next bar (after the first "Trouble...") containing the line "... is your middle name" is actually six beats long, so the "Trouble..." still comes on the last two beats (in 6/4 time) but appears to come on the first two beats, if you have been tricked into splitting it into 4/4 and assume that the left over 2/4 bit is the first two beats of the next 4/4).

So are there two extra beats, or two missing beats? I'll leave greater minds than mine to debate that one.

"... because they didn't teach us about it at school." is the short answer to that.

From The Daily Telegraph, April 2015:

Why has everyone forgotten about male suffrage?

... Before 1918, the vote was restricted not simply by sex but also by property qualifications. Roughly 60pc of adult men were then entitled to vote. At the 1910 general election, 7,709,981 men were registered to vote. By the time of the 1918 general election there were 12,913,166 registered male electors in the United Kingdom.

The 1918 Act is, rightly, most famous for having brought more than eight million women into the electorate; but, for the first time, it also enfranchised more than five million men over the age of 21 without regard to property or class.

I knew that the number of men allowed to vote crept up gradually over the centuries, as the "property owning" condition became less and less onerous, but I didn't realise that universal (male) suffrage was as recent as that.

Which makes the outcomes of the 1906 election and the second 1910 election, when the Liberal Party won on a platform of Land Value Tax, all the more surprising.

Economic Myths: Local taxes

Let's refer back to the handy cut-out-and-keep guide on what makes a good tax:

I've been prompted to think about this a bit more from the various KLNs that were advanced in response to a tweet by @tomcopley.

There is this brainwashing that taxes on land and buildings are only appropriate for paying for "local" services (this is actually embedded in the German constitution, at the suggestion of the Americans).

The Homeys always start flailing about and saying that LVT is the worst way to pay for "local" services, and either a Poll Tax or Local Income Tax is better (despite those two being diametric bloody opposites, with LVT being the Goldilocks middle. Sales taxes go round the clock and start behaving more like a Poll Tax, "on closer inspection, everything becomes something else", as Steve S and I like to say).

That's actually a minor issue.

I compiled that handy cut-out-and-keep-guide on the assumption that we are looking at national taxes. National taxes which serve to reduce regional discrepancies, so the wealthier regions subsidise the poorer ones (in return for leeching off them in the first place), are surely inherently better than "local" taxes?

Think about it, Council Tax operates like both LVT and Poll Tax at a hyper-local level. Me, the wife and two kids live in a detached house in Band G, so we pay about twice as much as a two-person household in a one-bed flat across the road in Band B. So we could express this as a modest LVT (our house is worth about twice as much as a one-bed flat across the road) or a Poll Tax of £700 per person.

Whichever way I look at it, that seems fine to me if I am just comparing what we pay with what the people across the road pay.

What is not OK, is when an arbitrarily defined amount of arbitrarily defined "local" spending is to be funded out of a "local" tax.

They could replace Council Tax (which pays for a tiny fraction of "local" spending) with a "local" income tax. To get £700 per person where I live, the appropriate income tax rate would be something like 3% of local incomes (assuming no personal allowance), no biggie and I'd be happy to pay it instead of Council Tax, it's a few hundred quid either way.

To raise £700 per person from the most depressed areas of the UK, the income tax rate would have to be more like 15%.

Does that outcome not seem like madness? That higher earners in high income areas pay 23% basic rate income tax and people in depressed areas pay 35% basic rate income tax?

Try this again with Poll Tax, local LVT or local Sales Tax and you get the same answer. They are all inherently regressive.

Which is why, if you really want LVT to come into its own, it has to be a national tax.

Here endeth.

Tuesday, 16 January 2018

Some people are a bit confused

From The Daily Mail:

Last April, federal prosecutors filed charges against two men suspected of spying on the opposition People's Mujahedin of Iran (MEK) on behalf of Iranian intelligence, Deutsche Welle reported.

The Paris-based MEK is an Islamist-Marxist-feminist militant group seeking to overthrow Iran's theocratic government. Iran has blamed the group for stirring up protests earlier this month in Iran.

I know what each of those four adjectives means, and I am sure there are plenty of groups which tick two of those boxes; if you drop "Islamist" then a group which ticks the other three is plausible; going for all four is a comedy sketch.