Tuesday, 24 April 2012

20% (Or why the Eurozone can't survive).

In the UK, around 20% of the 'Greater South-East's' GDP goes North. Following the American Civil War, about 20% of the North's GDP flowed south. Much of American Growth from then until 1914 was merely the south catching up with the North's industrialisation. After unification, about 20% of West German GDP flowed east.

The moral of the tale is that if a highly invested, competitive area (like Germany & Northern Europe) finds itself in a currency union with an uncompetitive area (Like the Club-Med), funds must flow from the competitive area to the uncompetitive area, so that the capital investments can be made to allow the uncompetitive area to catch up. It may never do so, as East Germany or the American South found. The damage done to the population's competitiveness by socialist idiocy or slave-agrarian economics, is just too great.

What is happening instead, right now in the Eurozone is that capital is fleeing the periphery, rather than flowing to it. This is because savers ask themselves 'Why have a bank account in Italy or Spain and risk holding Pesetas or Lira in a few years, when you can open one in Germany and 'risk' holding Deutchmarks?' The result of this (amongst other effects) is a massive collapse in the money supply in the periphery nations, which central bank action cannot counter, because monetary policy is set for the core. Big falls in money supply lead to depression. Against this backdrop, attempts to stabilise the debt by fiscal contraction in Italy or Spain are like a sticking plaster on an arterial bleed.

Note that the leftist argument that it's fiscal contraction which is causing the lack of growth is complete twaddle. THERE IS NO MONEY because IT'S ALL GOING TO GERMANY, so THE ECONOMIES WILL CONTRACT. Firing a few Spanish or Italian civil servants and building fewer roads is neither here nor there as far as their GDP numbers go.

But the UK is in a slightly different position to Italy and Spain because it's in control of it's money supply. We're not Greece, we're not Italy or Spain because we didn't join the Euro. What the left-wing plan to spend more risks is the Japan's disease where a pig-headed unwillingness to write off bad investments facilitated through expansionary fiscal "stimulus", left them with the highest per capita public debt in the world. And still their economy doesn't grow, despite decades of stimulus.

The evidence appears to suggest that expansionary fiscal policy (running a deficit) loses any stimulus effect on GDP growth when public debt hits around 80% of GDP (France, Germany, The USA), and debt kills growth entirely when it hits about 120% of GDP (Italy, Japan). Thanks to decades of overspend, there is no Keynesian firepower when it's needed. So there's no argument for more "stimulus" here, as the "Iron Chancellor" spent all the 'stimulus' long before the bust. Gordon Brown was a disaster for which I will be paying for the rest of my life. It Could have been worse, had Blair got his way and taken us into the Euro.

So, back to the Eurozone: Spain and Italy need Quantitative easing to ease the monetary pressure caused by the capital flight. Germany is simply unwilling to risk inflation and will sacrifice the economies of southern Europe on the altar of price stability. Meanwhile, the rest of Northern Europe are simply unwilling to make the transfers necessary to sustain currency union, let alone to allow the investment necessary to allow 'the South' to catch up.

What we're witnessing is the simple logic of currency union. Brits are broadly happy to subsidise other Brits farther north. Germans are content to throw money at Germans farther east. Ditto Yankees are happy to subsidise the ex-confederacy to their south. But Brits and Germans are NOT content to see vast sums head south to subsidise people whom their electorates consider feckless because they still enjoy siestas. Without a 'Demos' there is no democracy. And for the same reasons, there can also be no currency union without fiscal union. And fiscal union in the EU is impossible unless we all think of ourselves as 'European'.

And we don't. So the Euro will fail.

There MIGHT be enough political will to hold it together, for now. Indeed I think this is the most likely outcome. But eventually, decades of increasingly grinding poverty to which the Euro will condemn Spaniards and Italians will persuade the Spaniards and Italians vote to leave; or Germans will tire of writing cheques and vote to kick them out. Either way, the Euro's a doomed project.

It's not 'if' but 'when' and 'will there be piles of rotting corpses on the street again as a result?'



Tuesday, 17 April 2012

Why do cyclists "Hog the road"

Have a look at this video (1-minute, safe for work)



My reward for getting out of the way of the considerate driver of the Merc (the reason he took a while to pass as I moved accross was that he was giving plenty of room behind - thanks) was a near left-hook from the John Lewis lorry following him. The problem is, once you let one car through, everyone else thinks they can pile past, even when there is no room. This is why it's often safer to "hog the lane".

Sorry.

I'd rather annoy you than be killed to death by the arsehole behind. And if I'm annoying you, at least that means you've seen me.

The answer to any question about why cyclists do something which appears irritating or selfish, the answer is usually "because some drivers are arseholes".



Wednesday, 11 April 2012

Too Much Spending, or Not Enough Tax?

The two views, broadly about what's wrong with the UK fiscal position are what I would characterise as the "right-wing" position: The Labour party spent too much in power, believing the tax from the Banks would continue indefinitely. When the wheel came off the economy, tax receipts dried up, and the deficit-financed spending looked insanely unaffordable. I've been saying this since 2005.

The left, on the other hand, cannot see any fault in their beloved state. In their view, if only the wicked rich people would willingly cough up 50 or 60% of their incomes (a "fair share") then all the lovely state spending would be affordable. From this develops a nasty attitude where people are blamed for using absolutely legal tax planning to minimise their bills. The biggest "relief" claimed by "the Rich" accounting for the "tax gap" (defined as the difference between the headline rate and the paid rate) is the ability to carry forward losses.

It's important to see exactly where most of this comes from. Most high-rate tax-payers are not on PAYE. They're company directors, and have a great deal of control over their income: how and when it's paid. Many of these are personally liable for the debts of the firm they run. One of the commonest forms of start-up finance for businesses is an extension on the family Mortgage. The investment in a business often involves spending huge sums, borrowing against future earnings. This, in accounting terms, takes the form of years of losses. These are then carried forward into subsequent, profitable tax years. This is why debt interest is taken out before the profit line. It means that new, growing companies, from which a large portion of job creation comes, face low tax-bills despite high operating profits.

This is not abuse, in any way, shape or form. This is the tax system doing EXACTLY what it is designed to do. Howling down entrepreneurs for apparently low tax bills will result in lower employment growth as people decide at the margin to stay in PAYE employment, rather than take the plunge, extend the mortgage, and start up a company.

The left believe themselves to be moral, seeing state spending as a form of charity. It isn't. The problem is that high state spending doesn't in the long-run lead to better outcomes. It doesn't even seem to be correlated particularly strongly with equality. There are other, much stronger correlations with equality.

There is no doubt that there are too many reliefs, and that a flatter, simpler tax system may well raise more money from "the rich". But it's important to not, for reasons of envy and spite, take a knife to the Golden Goose. The left's obsession with high marginal tax rates is one of these idiocies. Of course the right has idiocies too - the obsession with tax-cuts over fiscal stability is merely the other cheek of the same arse. Likewise the twin obsessions with Tax dodging (left) and benefits cheating (right). Of course, if the benefits system is too complicated (and it is) people will seek to retain benefits while taking casual work. If the marginal tax rate is too high (and it is - over 100% for some low-waged workers) people will avoid paying it.

There's an argument about where the peak of the Laffer curve is, but both sides seem to be sold on the notion that the peak of the Laffer curve is where we should be targeting tax rates, as if the whole purpose of the economy is to generate Government revenues. They are just disagreeing about where the peak is (40-45% right, 60-70% left).

There's an argument about what the correct level of redistribution is. I can be persuaded that because so much of one's earnings can be predicted by where and to whom you were born, redistribution should form a significant part of government spending. These aren't particularly important.

The aim of a tax system is, as Jean Baptiste Colbert remarked “The art of taxation consists in so plucking the goose as to get the most feathers with the least hissing.”. There is a limit to how many feathers can be got from the goose. And we're there. The rich simply won't pay any more than they are. The poor are already over-taxed, but simply have less power to avoid it. The British economy, an abnormally open and international one, is nearly 50% state, and over 40% tax. Everyone must (and broadly do) simply accept the state cannot grow any more.

The other way to reduce the hissing is to make the taxes low, simple, universal and fair. Often, in New Zealand and the UK in the 80's cutting tax rates has released more revenue as the marginal price of avoidance falls. High marginal tax rates are distorting, especially on the lowest paid. And the benefits system must be constructed with an eye to the incentives. Clearly to my mind the British tax and benefits system does none of these things.

Spending must fall, but it must fall gradually, leading to the left's headbanging bleating about cuts, but also upsetting the idiot right with their bleats of "continuity Gordon Brown". Of course, Osborne is cutting spending as fast as he can, raising as much tax as possible to balance the books. He's simplifying the welfare state, flattening taxes. Allied to market reforms in Health and Education, this is a Government which is doing most of the right things.

Where they fail is in giving in to Labour's spiteful anti-rich rhetoric. The Conservatives must unashamedly stand up for the wealth creators, and the elements of the tax system which benefit them, without which there simply would be no point to the enormous risks most business owners face when they start out. Carrying forward losses is NOT abuse, and should not be limited. Osborne missed an opportunity to stand up for the people he needs to employ the vast army of unemployed. This lack of courage, not policy, not the brute business cycle is what will cost the Tories the next election.

The people don't LIKE the Conservatives, they never have. But they do RESPECT the conservatives when AND ONLY WHEN they're doing what Conservatives know (and the people know, in their deep subconscious) to be right. Thatcher's appeal wasn't in being right, though she often was, but in acting with conviction. Balanced books, restrained state spending, and support for the motor of the economy, Business, are conservative values. Doing what's right (but uncomfortable in the short-term) while appeasing the siren calls of class envy merely looks like Janus-faced, lilly-livered lack of moral fibre.



Tuesday, 10 April 2012

Nissan QashQai

One of the benefits of car-free living is that because I hire a car every couple of weeks for the small number of journeys which can't be achieved by rail or bicycle. I drive lots of new, mid-priced saloons. This means A Very British Dude is an excellent place to read a car review, by someone who hates driving, yet has plenty of experience of driving lots of different cars. What's the point of reading a review by a driving enthusiast, if you're not?


LinkI was disapointed when the guy at Luton Airport Hertz handed over the keys to a car advertised like a training shoe, in the "crossover" category. Basically this means it's a Hatchback, designed to look like a 4x4 to give suburban mums a feeling of superiority from an elevated driving position, and the completely misguided feeling of safety and invincibility this brings. In short, exactly the kind of car I loathe, driven by tosspots I detest. A Nissan QashQai. Specifically a 1.6 litre, 5 door ntec+ version. However. For a country road shlepp on a wet bank holiday weekend, with toddlers and a bicycle, the car made sense.

It would take my canoe, if needed. (My standard measure of "big enough"). The seats folded flat very simply. The interior was well thought out, without stupid cubby holes, but instead well thought out stowage. Nowhere to put a mobile phone though which seems odd for a car so well set up. The rear visibility was dreadful with small windows leaving enormous blind-spots. This was only partially offset by a rear reversing camera, a toy I can't see myself trusting.

So, what was my toss-pot wagon like to drive? There was no obvious hostility from other road-users compared to the BMW I hired recently (but don't like to talk about). There were no rattles and shakes, and the whole car had a feeling of being well put together, justifying Sunderland's reputation as an efficient car-plant. The road-holding was excellent, the ride was comfortable, the stereo was easy to use, and gave good quality sound. Radio 3 was playing music written before 1800 (no dischordant modernist nonsense) so when the M1 traffic slowed, I took the next junction and went cross country. Off the motorway, I found myself actually enjoying driving the bloody thing, pootling back across Bedfordshire, I saw the point of built in sat-nav, having never used a car so equipped before. So having already left the motorway, instead of taking the quicker A road route, I took the shorter, but slower twisty route through the villages.

The car cruises down a motorway or along an A-road pretty smoothly, but in the country, the engine was strangely gutless, and the gear-box was sloppy. But despite this, I liked the car. If you gave it enough revs, it was nippy enough. The elevated driving postition had surprisingly little effect on handling in the corners and I found myself chucking it into the bends with a bit of abandon. I may even have turned the traction control off.

I averaged 36.8 miles per Gallon, without driving like a pensioner. Funnily enough, this was absolutely identical to the milage I got for the same journey with a Fiat Stilo 1.2, which makes a mockery of the Government's CO2 emissions banding for VED. £16 Grand will buy you a bottom of the range model QashQai, however I would go for a 2-litre engine and leather seats of the Tenka Trim, which will take the price well over £22,000.

This is a lot of money for a car which makes you look like a tosspot whose husband can't afford the BMW X5 you really wanted, for which you're having an affair with the Golf-pro. Which is a shame, because it's actually a pretty decent little car.

Would I buy one? Probably not. But if you want one, you can spec it here but if I was in the market for a £22,000 skate shoe Nissan would have lost a sale for their shitty flash, which twice crashed my computer.



Thursday, 5 April 2012

Samantha Brick & the Sisterhood.

The Daily Mail showed why it's a successful paper, and the most visited newspaper site on the net. They got a moderately attractive but catastrophically un-self-aware 41 year-old woman to say

While I’m no Elle Macpherson, I’m tall, slim, blonde and, so I’m often told, a good-looking woman. I know how lucky I am. But there are downsides to being pretty — the main one being that other women hate me for no other reason than my lovely looks.

If you’re a woman reading this, I’d hazard that you’ve already formed your own opinion about me — and it won’t be very flattering. For while many doors have been opened (literally) as a result of my looks, just as many have been metaphorically slammed in my face — and usually by my own sex.

I’m not smug and I’m no flirt, yet over the years I’ve been dropped by countless friends who felt threatened if I was merely in the presence of their other halves. If their partners dared to actually talk to me, a sudden chill would descend on the room
Queue outrage - she's a dog, screamed Twitter, the worst abuse coming from women. She's arrogant. Blah Blah... Ms Brick may be guilty of hilarious hyperbole, but she's right. Women are vile to other women. The main reason for the glass ceiling is other women in the office, and I've lost count of the women I know who say they'd "never work for a woman again". Attractive female bosses are usually described by men and women as "bitches". I've had some excellent female bosses - no problem at all with ladies in charge (except of the thermostat, but that's my ONLY sexist view. I even let my other half control the TV remote).

I'm not saying we men are perfect equal opportunities players. In the workplace, female bosses work best when they're a bit mumsy - nonthreatening, even comforting to their male charges. However I've seen how those mumsy bosses treat a pretty young woman who joins the team. Such girls rarely last long.

Women are happy to have a pretty secretary, but cannot bear having someone pretty and of equal status around the office. And what is the most female-dominated department of every firm? The HR department. Who decides who gets an interview...? So, what Samantha Brick said is bang on.

The Mail Online knows it's onto a good thing, and got Samantha Brick to feed the trolls some more.
I have just this to say: my detractors have simply proved my point. Their level of anger only underlines that no one in this world is more reviled than a pretty woman.
Of course, to other women, if you're a woman, being right is no defense.

Women. It's you who buy the magazines pointing out and sneering skinny/fat celebrities. It's you who buy the Daily Mail, which constantly lambasts the moral choices of other women. Women it's you who savagely do down the sisterhood in the work place. It's you who discriminate against women. It's you who belittle women for their looks. It's at you the size zero models are aimed (well you and Gay men). Equality starts at home. Amongst the girls, a pat on the back is just a recce for a knife.



Tuesday, 3 April 2012

Internet Privacy.

As a dog returns to its vomit, so a fool repeats his folly. (proverbs 26:11)

I notice with alarm a return of proposals to allow the state to monitor Internet packet data, which represents a vast intrusion into people’s daily lives. The “terrorism” argument won’t wash. Network analysis can be already be achieved on suspects with a judge’s say so, and there have been almost no successful terrorist outrages outside Northern Ireland for a good few years. Clearly then, no further powers are needed as the security services have successfully thwarted several plots. I have no problem with the police or GCHQ monitoring e-mails if there is a reasonable suspicion that someone’s up to no good, but this proposal leaves open the option of trawling operations which will capture jokes (I’m going to blow this airport sky high), metaphor (put a bomb under…), simile (as popular as a terrorist…), exaggeration for comic effect (I’m going to f*****g kill you!) and end up putting everyone with a moderately colourful turn of phrase into terrorist networks that don’t exist.

The concept of “packet data”: where, to and from whom, etc is one from the early days of digital telephony. In the Internet, it is not separated in any meaningful way from “content”. With e-mails for example, the ISPs will be forced to capture everything (content included) then throw away that which they don’t need. This will, of course be recoverable. Packet data IS content with Internet browsing history. If you have access to a browsing history, you have a pretty good window onto a man’s soul, one I certainly don’t wish the state to have.

With too much data from too many non-suspects, the temptation for the authorities to trawl rather than search for information and turn it into intelligence, will be great. False positives will mean real terrorists will find it easier, not harder to evade capture. These measures will be easily circumvented by web-literate bad guys with a modicum of trade-craft. They will use public WiFi hotspots and an anonymised browser like TOR for example.

These proposals were dropped as too unworkable and illiberal even by the last Government. Which civil servant thought he’d have another go at turning this emetic proposal into law and what can you do to ensure he gets the message the second time?

This is the text of a letter I wrote to my MP. Feel free to copy and paste, if you want to send one to yours. E-mail addresses can be found here.



Monday, 2 April 2012

Honesty & Ineptitude

If George Osborne had said

"Pensioners, especially wealthy ones have enjoyed privileged tax treatment for a long time, and I'm levelling it out a bit, "intergenerational fairness" and all that..."
or...
"VAT harmonisation of Ambient food is necessary to comply with an EU directive"
The budget would be about the big cut in taxes for the low-paid, not "granny taxes" and pasties.. Notice how when Cameron said.
"Yes, of course I meet party donors, you morons. Here's the list"
the story died? If Francis Maude had said,
"look there's going to be a strike. Me saying this is going to cause Short-term Chaos, but we will be more resilient if we've all got full tanks and it will be worth it when "Red Len" takes his boys out on strike".
No-one would have minded - how do you prepare for a fuel tanker strike but by increasing the storage level, and the biggest store of fuel in the country by far is the tanks on everyone's drive. It's just this was very badly done, and catastrophically poorly prepared for. The whole thing appeared accidental. A bit of planning would have seen a warning sent to the fuel companies to increase stocks, maybe a week before. This would have leaked, leading to a steadier run on fuel, perhaps one our supply chain could cope with, before the final announcement that you should all fill up (when most people already had), and maybe have a bit of fuel in the Garage. The panic would be smaller, fewer pumps would have run dry and the Government would appear to have been in control of the situation. Red Len would have been able to cause much less pain.

The Government should have no need to announce that you don't "decant" fuel next to an open flame. If they had used the word "decant" they would have been accused of being "out of touch".

Tories are not MEANT to be liked. But they are meant to be trusted and respected for competence. And if you try to pull the wool over people's eyes, they don't like it. People DO notice if you lie to them. And it means they don't notice the good you're doing.

I broadly agree with much of this Government's agenda. I think the fiscal policy is about right. I think the NHS reforms make a great deal of sense. The welfare & education reforms especially could transform the country over the next 20 years into something far, far better. Those two policies are reason alone to support the Government. Big picture, this Government could well leave the country very, very much better than it found it.

But the media management, the day-to-day dirty business of politics, the message management of this Government is simply catastrophically inept. And that's a job for the Party Chairman. They need a top-flight politician for the Job. Warsi has to go.



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