Monday, 2 May 2011

Ritchie has one person to thank...

So Ritchie is at the top of Wikio's 'Economics' blog rankings for a second month.

Unfortunately, like most other things in the world, Mr. Murphy doesn't understand how the Wikio rankings work.

From the Wikio FAQ:
How are the Top Blog rankings compiled?
The position of a blog in the Wikio ranking depends on the number and weight of the incoming links from other blogs. These links are dynamic, which means that they are backlinks or links found within articles.

Only links found in the RSS feed are included. Blogrolls are not taken into account, and the weight of any given link increases according to how recently it was published. We thus hope to provide a classification that is more representative of the current influence levels of the blogs therein.

Moreover, the weight of a link depends on the linking blog’s position in the Wikio ranking. With our algorithm, the weight of a link from a blog that is more highly ranked is greater than that of a link from a blog that is less well ranked.

The rankings are updated on a monthly basis.

To translate; the Wikio ranking of a particular blog is based on two things:
  1. The number of links to the blog
  2. The Wikio ranking of the blog that links the blog in question
This system is not a measure of how good a blog is, how many readers it has or how popular it is. It is a measure of how much people talk about it. It is a second hand measure, like measuring the ripples in the pond after a stone has been thrown in to understand the stone rather than investigating the stone itself.

So to put this into a real world situation, Tim Worstall writes several posts a week fisking Ritchie. Tim, as second in the Economics ranking, is weighted very highly.

In short, Ritchie has only Tim to thank for being No.1 in the rankings.

Wednesday, 2 February 2011


This induced a laughing fit that lasted for twenty minutes... suffice to say, my colleagues gave me some odd looks.

Neoliberals to the core, all of them, and utterly indifferent to a) reasoning b) rationality c) the reality of the economy d) the needs of real people e) the reality of democratic politics.

I thought that a-e were a bit rich considering the source, I'd consider them most apt descriptions of Mr. Murphy.

It is posts like this one that highlight how partisan Ritchie is and how his 'unbiased recommendations' can't be believed.

Once a shill, always a shill.

Saturday, 29 January 2011

Scottish Independence - the Pros and Cons

Seeing Dark Lochnagar comment on Ben's last post got me thinking about Scottish Independence again and this was compounded by the news that the Scottish Parliament at Holyrood may be given powers to raise its own taxes.

Scotland's devolution from the Union has been 125 years in the making.  Ignoring the whole issue of the signing of the Treaty of Union I am more concerned with Scotland's future.

The West Lothian Question
For how long will English constituencies and English Honourable members tolerate ... at least 119 Honourable Members from Scotland, Wales and Northern Ireland exercising an important, and probably often decisive, effect on English politics while they themselves have no say in the same matters in Scotland, Wales and Northern Ireland?
- Tam Dalyell, November 1977
As things stand, many of the political decisions that affect Scotland are decided in the devolved parliament in Holyrood.  Westminster exercises little executive power over Scotland these days but Scotland is still represented in the House of Commons with 59 seats.  This means that Scottish MPs have the power to influence legislation that does not affect their constituents, this is the West Lothian question, still unanswered 34 years on.

The easiest fix is to make Scotland an independent nation, no Scottish MPs in Westminster, no English influence in Scotland but this has political and economic ramifications  for both Scotland and the rest of the United Kingdom.

Another fix would be to propose legislation preventing Scottish MPs from voting on bills that would not affect Scotland but this suffers from the same political ramifications as full independence.

The third option that everyone but the nationalist parties ignore is the federalisation of the United Kingdom, granting increased powers to the Welsh Assembly, Northern Irish Assembly and Scottish Parliament while creating an equal English Parliament and reducing Westminster's mandate to foreign policy, monetary policy and defence. 

Scottish Income Tax

In the Scotland Bill 2010-11 there may be the potential to allow Holyrood to set Income tax for Scotland.  Most Scots should be excited by this because the could induce a lot of change for the whole of the UK (if they are gutsy enough to try) but it could also cause many economic problems for Scotland.

Since this bill is still in the research gathering phase there are almost no specifics but Scotland's future is dependent upon two specific points:
  • Will Holyrood have to balance its own books?
  • Will there be limitations on how much independence Holyrood will have to set taxes?

The Ramifications - Economic

On the spending side; for a long time Scotland has been a net beneficiary from UK tax revenues, the tax money spent in Scotland each year is greater than the tax raised from Scotland's residents.  If the Scotland Bill proposes that Scotland has to manage it's own budget then the future for Scotland is either austerity beyond what the Coalition has planned for the rest of the UK or eventual bankruptcy if they continue the generous welfare policy that they currently operate. If the Bill doesn't support a modification of Scotland's budget then it could exacerbate tensions between English and Scottish nationalists.

On the taxation side; if Scotland's tax policy is fully independent from Westminster's approval then Scotland has the potential to start competitive taxation within the UK.  If Scotland sets its income and corporation taxes far below those of England then there will no doubt be a migration of people and businesses north of the Borders which will reduce England's tax revenue leaving the Treasury with three options; raise taxes to plug the gap but make every other country richer, faster by driving people and businesses away (the Laffer Curve again), don't compete and slowly run out of money while Scotland gets rich or lower taxes to Scotland's levels or lower to directly compete (and in doing so refill the coffers).  Alternatively, Scotland could set its tax rates above those of the rest of the UK and see the previous scenario happen in reverse when the wealthy people and businesses that can relocate will move south.

The Ramifications - Political

As I mentioned earlier there are 59 Scottish constituencies represented in Westminster, 52 of those seats are held by two of the 'Big 3' parties.  If Scotland were made fully independent tomorrow then there would be a 9% ((59/650)*100=9.1%) reduction in the number of available seats in Commons,  Labour would lose almost 16% ((41/258)*100=15.9) of its seats in Commons while the Liberal Democrats would lose just over 19% ((11/57)*100=19.3%) of their seats and the Conservatives would have a majority with almost 52% of seats ((306/591)*100=51.8%).  In short, Scottish Independence (or the removal of Scottish MPs powers to vote on English matters) would dramatically alter the dynamic of British politics.

You could see why Labour and the Lib Dems would be reluctant to allow full independence or the limiting of voting powers of Scottish MPs.

There would also be the matter of the British Armed Forces, would they stay unified or would the Scottish Regiments/Squadrons be separated into a new organisation?

The Libertarian Angle

Well its simple really, whatever they choose.  If the Scottish Parliament held a public referendum and it revealed that an overwhelming majority of the Scottish public support independence then I'd support them.

The removal of Scottish MPs power to vote on English laws isn't an ideal solution but is better than the present situation in my mind (not just because it cripples Labour's opposition).  While the federalisation proposal has benefits and flaws, more reflective politics being the benefit but the flaw will be another layer of bureaucracy but it would be worth it if each 'state' were financially independent.

A libertarian - of whatever creed - believes in the reduction of the state, so instead of having to listen both Holyrood and Westminster (at times) and only having to listen to one is a step in the right direction.

It is a step towards localism which is another thing that a libertarian strives for.

I have already raised the potential for competitive taxation which is another plus in my book.

From a selfish point of view independence is the best solution because it would reduce the tax burden meaning either lower taxes or a quicker repayment of the national debt.

Friday, 28 January 2011

How to stop Crow, crowing

In the Telegraph.

EU wants wage equality, so does the RMT Union lead by the Cro-Magnum, Bob Crow.

I have a counter proposal to the EU and Mr. Crow.  How about this "every union employee and representative should get paid the same as the mean wage of the workers that they represent".

It is something that Unions have always supported; closing of the pay gap between those at the top those at the top of an organisation and those at the bottom.

I don't suppose Crow and the other Union bosses would go for that, they want to live in an equal world, they are just more equal than the rest of us.

Wednesday, 19 January 2011

Bigots should be allowed to be bigots

Inspired by that B&B in Cornwall. Both Bobski and I have written about this before, but if twitter and our legal system is any way to gauge opinion, this stuff needs to be reiterated. From the BBC:Link

The owners of a hotel who refused to allow a gay couple a double room acted unlawfully, a judge has ruled.

Peter and Hazelmary Bull, of the Chymorvah Hotel, near Penzance, said as Christians they did not believe unmarried couples should share a room.

Martyn Hall and his civil partner Steven Preddy, from Bristol, said the incident in September 2008 was "direct discrimination" against them.

I'm not particularly bothered by the details of the case - only in the general outline. Two people, the B&B owners, declined service to two other people, a gay couple.

For me that is as far as it goes.

Discrimination and bigotry, of course, are ugly things and ought to be condemned as often as possible. Not only is it just nonsensical, but from a financial point of view, I don't fully understand what anybody is supposed to gain if their business doesn't deal with a certain type of person. Unless this is the business's raison d'etre - y'know, like those lady-only insurance companies and, presumably, gay-only hotels dotted about the country.

But this is the point. This is a very simple matter of property rights. The only difference between a business and a home is that artificially created by law. Yes, obviously I am aware the law says that if you open a business you have to adhere to certain rules, one of which is anti-discrimination (more on that later), but let's not labour the point here. My point is deeper than simply 'the law was applied wrongly', much more that 'the law is wrong'. More simply put: I can't see a philosophical difference between a person's home and a person's business if they're both that person's property.

Firstly, the decision on whether or not to serve a customer lies entirely with the business. The business owners are the ones whose necks are on the line if the business fails - they are the ones who are responsible for the risk, and they are under no obligation whatsoever to serve anybody. This is very important. Exchanges between seller and buyer are voluntary on both parts, and either can choose not to buy or sell for any reason they like.

Second, I'm curious as to why this gay couple thinks they have been damaged in some way. It isn't as if they lost out by not being allowed to stay at the B&B. As above, the B&B owners are not obliged to serve anybody, just like they were not obliged to set up a B&B, or be in Cornwall, or do anything except lie about reading bibles and muttering all day long. No, they chose to set up a business and, as the property owners, probably expected that they'd be setting the rules. Suppose they had chosen not to set up a business at all. Would the gay couple have been damaged in some way? I suspect not. These damages stem directly from the idea that the reason the B&B owners didn't want them to stay was because they suspected they'd be up all night bonking, and bonking in a very un-Christian way. But surely the reason is irrelevant. Suppose they had lied and turned them away, I dunno, 'because we don't like the look of them'. Why not? Or perhaps they could have a policy of not allowing more than one male to stay in a room at a time. After all, camp sites around the country have similar rules regarding all-male groups. Would there have been any damage then? The outcome would have been the same. Claiming damages to me smacks of crass opportunism.

Not that I give a damn that it was a Christian couple vs a gay couple. For all I care, it could be a couple of druids vs a bloke with big ears. And they don't like big eared people. So they don't let that bloke stay. Boo hoo, they're not obliged to deal with big eared people, and to force them to do so, to me, seems much worse than leaving people to sort their shit out voluntarily.

This, for me, is why anti-discrimination laws don't really achieve what they say on the tin. They aren't there to nudge - or, really, force - people to see past superficial labels like 'homosexual', 'muslim', 'black' or whatever at all. No, they're there to heighten the considerations of specific minority groups. By trying to create a culture of non-discrimination, the law has, in effect, provided us with the inverse of that. Whether it's fair or not, certain minorities (not all) find themselves on the right side of the discrimination law, as this gay couple found out. And others, like the Christian couple, do not. And before somebody says, 'oh but Christians aren't a minority!' well that isn't really the point, is it? Discrimination isn't a case of majority or minority, it really should be a case of individualism. People are individuals. Treat them like individuals. The real fallacy here is trying to mitigate discrimination by empowering certain groups beyond the level enjoyed by others. Which, to me, seems the opposite.

The solution? Let people sort it out on their own terms! The profit motive is a wonderful mitigator of bigotry for one, and secondly I'm pretty sure, nay, certain, that if a B&B were outed, quite legitimately, as being vehemently anti-gay, I personally would at best feel embarassed for staying there and most likely wouldn't stay there at all - and I'm pretty damn sure I'm not alone in that. Of course, being a white, straight male, I wouldn't be able to claim damages for the offence that caused me...not that I'd have been allowed to stay there either if I had a ladyfriend with me!

The real crime here is using the law to force an opinion on somebody. This is a semi-hidden version of thought crime here. Private property is private property, and on that property one may express oneself how one wishes. If that means not allowing homosexuals on said property, so be it. Prosecuting somebody for such an antediluvian rule is in effect criminalising their opinion. And that should never be encouraged.

Tuesday, 18 January 2011

Ground control to Major Murphy

TL;DR Sorry, another Ritchie fisk.

Ground control to Major Ritchie, take your protein pill and put your helmet on...

Yes it is another entry in the logs of Space Cadet Murphy and the S.S. Fantasy Land.

Here is Ritche's original post if you can be bothered to increase his hit count.  I have copied the whole thing here anyway.

So the inflation figures for December came out today. And the analysis from an accounting, tax and economics "expert" is:
...bad. At 3.7% the number is bigger than expected.
Christ, a 5 year old could have come up with that analysis and for a lot less than the TUC plays Tax Research LLP aka Richard Murphy.
But then stand back a minute.  As the Guardian notes (above link)  if you exclude increases in indirect taxation the figure is just 2%.  and if you excluded the impact of the 2.5% VAT increase that has just been introduced for the rest of the coming year, as will be necessary, the figure will probably remain within the target level set for inflation.
 So what we are facing is a situation where inflation has been increased as a result of government policy -  yes, both Labour and Conservative -  and now we are seeing the City bringing pressure to bear upon the Bank of England to push down inflation, even though they also wanted the VAT increase to rebalance the government’s budget.
 So, to translate, Ritchie is saying that if you remove the effect of VAT, duties and the planned increase in VAT (which started in January and should* therefore have no direct impact on CPI figures for December) then inflation is still within the target 2%.

For once Ritchie actually admits that Government policy (past and present) is making the situation worse.
At the same time,  their  chosen policy instrument, an increase in bank base rates, will have no impact whatsoever on this inflation.   When inflation is caused by  a combination of government policy domestically and international raw material price rises ( fuelled by City-based speculation)  downward pressure on consumption  is irrelevant.  That downward pressure already exists because in the current environment of substantial involuntary unemployment,  which can only rise,  there is already real downward pressure on net household income that will already achieve this consumption orientated goal  without further pressure being  brought to bear by increasing interest rates.
 Ritchie obviously missed it last week when the BoE decided that they would keep the base interest rate at 0.5% for another quarter, so the pressure to raise the rates clearly isn't that bad.  Ah, Ritchie's usual scapegoat... speculation.  Ignoring the fact that speculation protects future supply by decreasing present demand (price cycles and so on).  Say for one minute that the City is being detrimental by 'over-speculating', the only reason they can do that is because money is cheap because of low interest rates, they know that the loans they use to fuel trading can be easily repaid when rates rise by selling the stock they have accumulated, the value (i.e. price) of which will have increased over the price they paid.  So when supply starts to pick up again, the price will drop massively because of the stored supplies and the increased production... business cycle theory, wins every time.
The simple truth is that  the knee-jerk reaction of neoliberal economists in the face of inflation to demand that interest rates be increased is on this occasion  wholly inappropriate, as has so often been the case with neo-liberal prescriptions.  What we are actually facing is  a situation where, like it or not, real incomes in the UK may be under pressure because of a fundamental rebalancing of the overall economic equation within the world economy, where income shifts to the far east and the Indian subcontinent and away from Europe.  In overall global economic terms this may be welcome, but if there is a reaction within the UK which sees ordinary consumers penalised for something that is entirely beyond their means to rectify through altering their pattern of consumption the  consequence is that we will, inevitably, see an exacerbation of the fall in household income, and the creation of the environment for a double dip recession, which will inevitably follow.
 Ah... Ben and I have been discussing whether methodological approaches can apply to social sciences like economics.  My answer was that we can be methodological in our approach but we can never say an increase of 'x' in the interest rate will always cause a proportional decrease 'y' in inflation, for example.   Economics, when centrally controlled (true where there is a central bank) is more art than science.  Ritchie doesn't tell the whole truth in the above paragraph; if the base interest rate is increased too much over a short period of time then there is indeed an increased risk of double dip because the economy can't respond to a big change as quickly as a small change.  But the economy and markets mirror one of my favourite chemical principles, Le Chatelier's principle:
If a chemical system at equilibrium experiences a change in concentration, temperature, volume, or partial pressure, then the equilibrium shifts to counteract the imposed change and a new equilibrium is established.
I love it when I can use chemistry to talk economics.

Back to the fisk...
The right reaction  to this situation is to ask what we can do to restore our income, and not what we can do to restore the value of our currency, which is a matter of secondary importance.
 This is fucking rich coming from the man who a few months ago was calling for more stimulus/quantitative easing, i.e. devaluation of currency by printing more money.  One more piece of hypocrisy from Ritchie.
We can of course enhance our income.  We can get people back to work,  in the short  term by government spending, which will pay for itself through increased tax revenues, and in the long term from the stimulus  that this will supply to the private sector which would otherwise not grow.  We can also ensure that  funds invested in pension funds are put to real economic use by demanding that at least 25% of all contributions be used to create investment in new income generating opportunities in the UK economy  as a condition of the grant of tax relief on those contributions. That will put £20 billion a  year into the UK economy. And we can use green quantitative easing to start a programme of investment in the Green New Deal - in itself  capable of generating hundreds of thousands of new jobs in the United Kingdom  and paying for itself through the creation of long-term energy sustainability which supports the value of our currency by reducing our dependence upon imports.
 Ah yes, the great Keynesian multiplier, this argument is invalid when you learn about the "Broken Window Fallacy".  Before proposing increased government spending Ritchie was actually close to a solution.  What Ritchie neglects to tell his readers is that when he says "increased tax revenues", is that the multiplier on government is never above 1, and rarely close to it; so the only way government could actually increase its tax revenue is by increasing said taxes, direct and indirect (don't be mislead here, while the government may appear benevolent by not lowering tax boundaries, with inflation at the level it is and boundaries not increasing in line with inflation they are actually lowering them).  Once taxes start to go up as a result of Ritchie's "plan" then the Laffer Curve will come into play and tax revenues will decrease.

Like the rest of the paragraph, Ritchie's "Green New Deal" is more fantasy tinted with ecofascism.  Internal long-term energy supplies can only be met by meeting the ever increasing base load which no renewable source can meet.
But all this requires a government with foresight  and a willingness to commit our economy to a long-term vision of prosperity based upon the work  people in this country can do for themselves.  Instead we have a government that worries about the value of  rate of return on short-term cash savings.  It is that impoverishment of thought that cripples us.
 Now Ritchie is being an utter retard.  He supports Big Gov (tm), which actively prevents people from doing the work that they can do themselves and forces them into either working for government supporting corporations or the government itself.

As for people's savings, savings in the present are investments in the future.  Present day cash savings are also the capital that banks lend out for people to start businesses, buy houses, etc.
I was in discussion with a shadow minister this morning.  As he said to me,  whether or not Labour gets back into office is not dependent on detailed plans for micromanagement of particular issues.  It is dependent upon it having a meta-narrative that explains why a different economy is possible. That is the policy goal. And he is right on this occassion.
 One Union stooge talking to another, shock.  A Labour front-bencher not wanting to micro-manage private affairs of the people, I'll believe it when I see it.

Now that I have taken Ritchie's post to pieces I'll reassemble them into a better plan.

The biggest cause of inflation is government and its central bank.  Low interest rates and high taxes is the perfect recipe for stagflation so the solution I propose is quite simple:
  1. Cut back government spending, cut the foreign aid budget, stop money going to the EU, kill the quangos.  At the moment it is just money that could be used to lower the tax burden and therefore increase disposable incomes.  We are aiming for small government here.
  2. Raise the tax free allowance to at least £12,500,  then you aren't kicking the lowest earners while they are down.
  3. Scrap the minimum wage, businesses that want and need to hire people now can't afford to because the NMW and NI make employees make expensive.  Ritchie dreams of 100% employment, this is the only way to get it.
  4. Follow Europe's lead and cut VAT (I'll accept a VAT rate of 10% or less), we are the only country that is currently running full VAT at the minute and the only one who has increased it.  Cut all duties, especially fuel duties, watch how businesses boom when they aren't paying so much for transport.
  5. Scrap the marginal 50% rate, these are the people you want to encourage to invest not punish for being successful.
  6. Make income tax easier to administer by lowering it and making it a flat tax rather than a progressive one, no allowances, no time consuming tax returns.
  7. Increase the BoE base rate slowly and steadily until you reach 4-6% to increase personal savings.

* The trend is that inflation is higher in December because it is the main retail month of the year so unsurprisingly shops put their prices up for Christmas.  It wouldn't surprise me if they went up that little bit higher this year so that shops could cover the expected short falls in sales that the VAT increase would bring.  Look here if you don't believe me and see that December is normally higher, 2007+2008 being the exceptions in the last 10 years because of the Credit Crunch.

UPDATE:  The ASI have a short piece that runs parallel to what I have said here.

Monday, 17 January 2011

Under-age drinking: Part 2 - Weed

This is the follow up to part one.

While writing part one I same to the conclusion that there was another reason that I wasn't an excessive drinker while under the legal age, cannabis.

I would enjoy being high at the end of a night and that was hard to do if you were too drunk to enjoy it so my friend and I would be steady on the drink.  If I did have too much to drink then the spliff would just make me want to sleep.

Getting stoned is far better from a social stand point, a stoner will never get into a fight or smash something up because it is too much hassle, they would rather sit somewhere comfortable with some music or television for entertainment. 

My argument is that all drugs are legalised (I'll accept with some controls and constraints at first), the 'problem' of under-age drinkers would decrease if they have access to other drugs.

Same old argument that Ben and I have made before really.


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