Monday, 13 December 2010

Resigned or frustrated

I find it hard to write anything these days. It's not that there is nothing to write about, just in the last couple of weeks we've had the EU bullying Ireland at the behest of Germany, a multi-million pound talking shop farce in Mexico, the first guilty plea from a former MP who defrauded the public purse, the strengthening of the food police and people rioting about nothing in London. Yet I haven't been stirred to action. I'm trying to work out why.

When the new government limped into office the mere fact that the risible Gordon Brown and his cohort of contemptible dictators had been ousted caused me to breath a huge sigh of relief. Whatever the new lot did could not possibly have made things worse for the country than the carnage wreaked by their predecessors - carnage of a structural kind which left our society split into bitter factional interests as well as carnage to the economy. They've gone. It cannot get worse. No need to rage about things. Both my regular readers will be aware that the policy programme of the new government is miles away from what I consider in the best interests of he people of this country but at least it is a yard or two closer than poor Gordon could ever have taken us.

That can explain a quiet period while we wait for the coalition's positions to be formed clearly but it cannot explain a lack of complaint once their positions were set so closely to those of the failed Labour government. Perhaps the explanation is dispair. Because so little is different now there is, perhaps, little point in repeating my observations of the last couple of years. With the exception of Eric Pickles I have detected no current Cabinet minister prepared to pop-up above the parapet and challenge the ever-expanding State. Michael Gove did so for a fleeting moment with his proposal for schools to be run free of political involvement, then ruined it by giving detailed guidance on curriculum and examination standards. There was even a tiny hint from Andrew Lansley at the Health Department with his idea of getting rid of layers of bureaucracy only for him then to retain within the remit of the NHS every aspect of nannying that had been added over the previous two decades. Only Mr Pickles has had the guts to say he's only a politician and doesn't know how to run things on the "front line". Faced with only one obvious supporter for my views on how "public services" should be run it's easy to give up commenting on matters at least until another election is in the offing.

Or it might be that I am still in shock that so many people voted for the Labour Party at the General Election in May. More than seven months have passed since then and all the while a thought has been gnawing at what is left of my brain. Could there be a third or so of the population of this country that was both pleased with what the Labour government had done and wanted more of the same? That a fifth of school leavers were either functionally illiterate or functionally innumerate, or both, was not of sufficient concern to them that they would vote against a governing party that had interfered in schools like no government before. That there was still structural unemployment in some areas of the country was not of sufficient concern for them to vote against a governing party that claimed to be concerned for the poor above all others. That the economy was on its knees, as at the end of every period of Labour government, was not of sufficient concern for them to vote against a governing party that directed and regulated all aspects of economic activity in more detail than even Stalin managed in the USSR. Could they really think the state of the country on the 6th of May was despite Labour having been in government for thirteen years and not because of it? Could they really believe the problem was too little State interference rather than too much? Just that thought is enough to drive anyone to distraction and to the conclusion that there is no point being sensible when so many are so utterly devoid of critical faculties.

Part of me has been hoping the coalition will find the courage to join Eric Pickles in saying that government must do less. As each week goes by I see fewer and fewer signs of this happening. They still seem to be stuck in the view that government is the answer to every ill, so much so that problems caused by too much government can only be addressed by more government. Against such a background it is hard to stir the enthusiasm to comment because it feels as though you are just running into a wall. Perhaps I am resigned to the massive State now being a permanent feature, perhaps I am frustrated that the difficulties caused by government are given insufficient recognition or perhaps I am just not prepared to repeat myself too many times. Who knows.

Having said that, a couple of topics have piqued my interest so I hope to be able to add to this year's miserable number of posts a few times before the turkey is carved.

Tuesday, 7 December 2010

Salt, happiness and Jocky Wilson

The magnificent Mr Puddlecote has posted with his usual perspicacity on the latest scare from the health Nazis (here). The topic is salt. It is a topic that has heated my urine for many years so I'd like to chip in. Since I've been quiet for a while it seems sensible to add another current topic, the Happiness Index, although, being the cunning old boy I am, I include it because it is directly relevant to salt.

First things first. Forget any notion that science can tell us a single thing about the consequences on our health of the ingestion of a given amount of salt. There is no universal maximum or minimum daily amount, there is no way of measuring the amount which is either needed or excessive for any individual, there is no accurate way of measuring how much is being ingested, there is no accurate way of measuring how much is being expelled from the body and there is no way of measuring whether a physical condition that might be caused by excessive salt consumption has in fact been caused by that. All they can ever do it seek to evaluate average needs - no doubt this (if done properly) is a difficult exercise and takes considerable knowledge and skill, but once it's been done it is of absolutely no use to anyone because there is no way of measuring whether any given person is average, below average or above average in their need for salt or in their susceptibility to harm from salt.

For decades it has been peddled that excessive salt consumption can cause high blood pressure and other medical nasties. That might or might not be true, I am sure I once came across a blog dedicated to exposing salt scares that challenged the hypothesis but I can't find it now. Let's assume it is true. We have to be very careful about exactly what we are assuming. Because we all need different amounts of salt in our diet for our bodies to perform efficiently, only consumption above the level we require can be excessive. That is not necessarily the same amount of salt all year round because we sweat more in summer (or in the presence of Joanna Lumley) and will secrete more salt than in winter (or in the presence of Harriet Harman), to maintain a working balance we must take more in summer (Lumley) than in winter (Harman) - unless some other factor interferes to require us to take more in winter. Some claim that we simply pass excessive salt when we dispose of used beverages and they might be correct but that doesn't mean that regular consumption of more than we need cannot have adverse consequences because harm could, in principle, result from that excess quantity being in the body prior to joining gallons of second-hand beer on the floor of the gentlemen's facility at the Dog and Duck.

And then, merely physical need tells only part of the story of human life. The human body is a machine. It takes in fuel and gives out waste products, just like a motor car. The difference between the human body and the motor car is that it is far more than a machine. It has feelings, senses and emotions that are essential parts of life and not things to be left to one side while we deal with the machine only. Food and drink are part of the feelings, senses and emotions aspect of life just as much as they are fuel for the machine. If old Auntie Enid likes a whole shaker of salt on her roast potatoes and would have a miserable Sunday lunch without it, how are we to assess the salt content in her diet? Excessive - because her body didn't need that much to function - or just enough because it gave her a happy time when otherwise she would have felt excluded from the family jollity going on around her?

When thinking of this subject my mind often goes to Jocky Wilson's lager. No, I'm not joking, the point is absolutely serious. Jocky Wilson was one of the great darts players from the late 1970s until the early 1990s. In order to play well he needed to be relaxed and, for him, that required lager. Quite a lot of lager. Once he reached a certain level of intoxication he was almost unbeatable, he had the necessary level of relaxation and concentration to allow him to play as well as anyone in the world. It wasn't something that could be measured. Some days it might be just a few pints, on other days it was measured in gallons but however much was required on the day he strove to continue his consumption in order to keep the level just right. As alcohol was burnt off it had to be replaced and failure to replace it would cause him to be unable to continue playing so well. Other players could perform well without a drink or with less drink but that was irrelevant he wasn't them and he wasn't playing for them. He needed a lot of booze in order to ply his trade at the highest imaginable level - did he drink too much? It depends what you mean by "too much". In each tournament he played his consumption was too little, the right amount or too much, depending on how it affected his throwing arm on the day. In the context of his long-term health it could well have been too much but any less and he would not have been World Champion twice and revered as one of the finest exponents the game has ever known. He is now entirely out of the public eye and is reputed to be living in poor circumstances at least in part because of his fondness for the sight of an empty barrel. One could isolate the booze and say he shouldn't have drunk so much, but that would ignore his achievements which would have been unobtainable without a liver quiverring quantity of drink.

When I was at primary school lunch sometimes included mashed swede. I absolutely hated the taste and I hate it still but the addition of enough salt would allow me to shovel it down and avoid the wrath of the scary dinner lady. Was that "excess" salt (and believe me, it took a lot of salt to mask the taste) bad for me or was it good for me because it allowed my little body to enjoy the benefits of mashed swede? Was the benefit of not being harried by a harridan outweighed by the taking of more salt than was good for my young blood pressure? There's no way of knowing, it cannot be measured.

Mr Puddlecote points out that the great Delia recommends using salt in the preparation of a number of ingredients of a Sunday Lunch. She is, of course, absolutely correct. Vegetables other than legumes, particularly root vegetables, boiled in unsalted water do not develop their best flavour because the temperature is not high enough whereas salted water boils at a higher temperature and that little difference in boiling point makes all the difference to flavour. We are all happier to have flavoursome food than bland food. If the trace of salt in vegetables prepared in this way has adverse health conseqeuences, how are they to be compared to the additional pleasure given by eating a tasty dinner rather than a less tasty dinner? It goes without saying that it cannot be measured. Even the amount of salt in vegetables prepared in that way cannot be measured because some will absorb more than others.

Our Prime Minister believes it wise to spend taxpayers' money on surveys of happiness. It goes without saying that it will be a complete waste of every penny involved for two reasons. Surveys can never measure anything accurately because they only give a snap-shot of opinion on the day the questions are asked. Not only can opinion change the next day but the questions have to be vague to avoid 90% of respondents saying either "not applicable" or "don't know". Secondly, and more importantly, you cannot measure happiness by reference to factors over which politicians have any control.

In relation to salt-consumption scares, try these two questions. "Are you happy that old Auntie Enid enjoyed her day out from her care home, The Coffin Dodgers' Lodge?" Of course the answer is yes. "Are you happy that old Auntie Enid had three times her maximum total daily allowance of salt on her roast potatoes?" The answer might well be "it doesn't matter at her age" but underlying that answer will be acknowledgment of the scare; the full answer would be "yes but she'll probably die before it kicks-in." How does that rate on the happiness meter? Ten out of ten for the first answer and maybe seven for the second. The second question is completely irrelevant to anything other than government statistics. All that matters is the first question because old Auntie Enid only has one life and if that involved an ounce of salt to make a meal just as she likes it she will smile her gummy grin until her final gasp. And the second question need never be asked.

What matters is the quality of life. It is an ephermeral thing, different for everyone at any given time and different for everyone from one moment to the next. Is a longer life more desireable than a second helping of pudding or a good shake of salt on Sunday roasties? That's up to the individual to decide. Time might prove their decision to be right or wrong or it might provide no answer. One thing that is certain is that their happiness will be increased by letting them decide for themselves.

Sunday, 31 October 2010

A thought on the Housing Benefit caps

Sometimes I read a "news" report and wonder whether I'm missing something. It's not uncommon for those who drink vast amounts to suffer forgetfulness and, over time, to lose their analytical powers. Perhaps I have reached that stage, but I don't think I have. I'm talking about the proposal to cap housing benefit and, in particular, about an article peddled by the BBC (here).

For the benefit of anyone who has missed the story or who is reading from beyond these shores I'd better lay the background. One welfare benefit payable in the UK is called Housing Benefit, it provides funds specifically to cover the cost of mortgage interest payments or rent. The proposal under discussion is that the amount payable towards rent should be capped. The cap will have four stages. Those renting a one-bedroomed property will be allowed no more than £250 a week, with up to £290 a week payable for a two-bed house or flat, £340 for three and £400 for four bedrooms (or more, or so I presume). These figures equate to annual rent of £13,000, £15,080, £17,680 and £20,800 respectively.

I am not the first to observe that these are large sums of money. To have £13,000 in your pocket after tax you have to earn something in the region of £18,000. On the assumption that someone renting for £13,000 also wishes to eat, water and clothe themselves at an additional cost of £100 a week, their annual pre-tax earnings would have to be in the region of £24,000. That is not far from annual average earnings. The payment of £20,800 in rent requires pre-tax earnings of around £27,000 before a single morsel of muesli has crossed the tenant's lips.

Housing benefit is paid out of taxes received by the Treasury. It is necessarily and inevitably the case that many employed taxpayers earn less than these sums and could not possibly pay that much in rent. Their taxes will be used to pay for other people to occupy homes they could not afford. It's an easy and, I think, lazy argument to say that the proposed caps are justified merely because many of those paying taxes could not afford even those sums in rent. That rather misses the point.

Someone who has been earning more than enough to pay rent of £13,000 or £20,800 a year might lose their job and be reliant on benefits until he or she finds another position. There is nothing essentially objectionable about them receiving benefits to help them keep their home until they find new work. If that work does not allow the payment of such a high rent they will have to move anyway but if it does they will resume paying the rent. In such a situation Housing Benefit provides a stop-gap relief pending the establishment of a new situation which, I would have thought, is what benefits are intended to do. That others have never been in the position to rent a property at such values is really neither here nor there. In this context Housing Benefit is akin to an insurance payment and those who rented at these figures necessarily earned more and paid more tax than those on lower incomes. Although Housing Benefit could be seen to come partly from those on lower incomes the reality is that those who previously paid their rent out of taxed income and claim the benefit while they are between jobs have already paid for it.

There is, of course, another group - those who have not had, do not have and have no reasonable prospect of ever having enough earned income to pay their rent and are habitually dependent on Housing Benefit. For this group the question "why should people with modest taxed incomes who cannot afford such rents pay so much towards their rent?" is more pertinent. Indeed it is hard to see any justification for such people to be subsidised out of tax to live in expensive areas. Harsh though it might sound in the modern world of holistic touchy-feely wibble, beggars can't be choosers. Or to put it less harshly, if you live on hand-outs you can have no complaint about the payer saying "sorry, we can only hand-out so much".

The BBC article I linked to above (this one) asserts that the majority of two-bedroomed properties in London will be too expensive for Housing Benefit claimants if a cap of £290 a week is introduced. This is where I wonder whether I'm losing my faculties. Landlords want the best return they can get but they know they have to pitch the rents they demand according to the ability of likely tenants to pay. Pitch it too high and there are no takers. More importantly, landlords know that the worst thing possible is what is known as a "void period" - a time when the property is empty and no one is paying rent. Say the desired rent is £300 a week, that is £15,600 a year. Four weeks without a tenant reduces the annual rent received to £14,400. If you have a tenant paying £300 a week through Housing Benefit and are told the benefit payable will be reduced to £290 a week, what would you do? Throw out the existing tenants - possibly incurring legal costs and risking a void period - or reduce the rent to £290 a week? No doubt some would choose the first course but reducing the rent would still bring in £15,080 a year, a tiny reduction accompanied by the certainty of payment.

Say your two-bedroomed property commands a rent of £500 a week rather than £300. It would have to be in a very smart part of town for that to be a true market rent. On being told your existing tenant will only pay £290 because he is on Housing Benefit and that is the limit, the question you have to ask is whether you will find a replacement tenant who will pay substantially more. In areas where £500 a week is a true market rent the answer is almost certainly that you will find a new tenant. It's tough luck on the existing tenant but you cannot avoid the fact that such a property is at the high end of the market and it cannot be justifiable for taxpayers to keep someone else there when they cannot pay the going rate and others could.

And that really is the point I want to make today. The Housing Benefit rent caps will only result in existing tenants having to move if others are willing to occupy the same properties and pay a higher rent out of post-tax income. That situation will prevail in some instances. There is no denying that existing tenants who are required to move will find it upsetting. Regrettable though that is, the caps are at high figures and there is only so much taxpayers should be required to pay towards the housing costs of others.

Lurking behind all of this is a state of affairs that arises whenever government subsidises anything. If the subsidy does not have a limit people will milk it for all they can. How many two-bedroomed flats for which Housing Benefit currently pays £350 a week would actually command that figure in the open market? Landlords of benefit claimants pitch the rent at the highest figure they think will be paid in Housing Benefit. The same rent might not be achieved from renters paying from earned post-tax income. If they thought they could get more from non-benefit claimants they would do so, indeed they would be mad not to do so. In real life they know there is nothing to be gained from pitching benefit claimers' rent below open market rent so it can only be the same or higher. I'll give you one guess which is the more likely.

But there's more. The Chief Executive of the political lobbying group Shelter is reported to have claimed that "tens of thousands of households could be forced from the centre" of London. Shelter started as a genuine charity finding practical solutions for the homeless. The mere fact that it has a Chief Executive means it has outgrown its charitable functon and has become a business. It is in the business of justifying its own existence in order to keep its Chief Executive and such other salaried staff as it might have in their comfortable positions, which means its first function is now lobbying. So let's look at his proposition.

Tens of thousands of households could be forced from central London, he opines. OK, let's assume that happens. How, in the real world, can it happen? The properties they occupied will still exist and the landlords of those properties will still want to have tenants. Chucking out a tenant is only a good idea if you get a replacement. A tenant who pays minimal rent and trashes the furniture but still provides a small overall profit is better than no tenant at all. It is a necessary part of the Chief Executive's argument that tens of thousands of potential tenants are currently prevented from renting because benefit claimants are hogging the properties. On what possible basis can it be right that those tens of thousands should be excluded when they are able and willing to pay but cannot do so because taxpayers (including the prospective tenants) are keeping others in those properties? It is not a one sided coin. Existing tenants will only be ousted if currently frustrated potential tenants are waiting to take their place and pay, from their own post-tax resources, for the privilege. Why is he not lobbying for these excluded unfortunates to realise their dream?

Will "tens of thousands of households" be displaced? Of course not. But even if they were, tens of thousands of other households will take their place and pay for something they desire and can afford but presently cannot attain.

The Labour Party - what is it?

I just went to the BBC's iPlayer thingy to watch Friday's episode of New Tricks. It wasn't listed separately so I clicked on "Drama and Soaps". One of the programmes listed was the Scottish Labour Party Conference.

Drama or soap?

Thursday, 14 October 2010

LVT - a cart and horse inverse juxtaposition?

Perhaps the greatest mystery about Land Value Tax is the absolute certainty with which those who support it voice the benefits that will accrue. Land prices will fall and then be kept stable, the cost to business of employing staff will be reduced thereby leading to greater employment, there will be no speculative expectation pressure on land prices, malaria will be no more and England will win the World Cup until the end of time, and so the list goes on.

In my last missive I asked how LVT will cause or contribute to a fall and then stabilisation of land prices and received some jolly interesting comments, none of which made a case I find in the least bit persuasive. A number of points made deserve a more detailed answer than comments allow, so I'll do my best to explain my continued puzzlement.

The first puzzle is: how does LVT cause prices to fall? One way this question can be addressed is by asking whether LVT would have prevented the house-price bubble engineered by Gordon Brown from about 2000 onwards. My first line of enquiry must be to ask what actually caused the bubble and then to ask whether LVT would have negated that cause. My view, which I have stated before at tedious length, is that the bubble is exclusively (or almost exclusively) the result of lenders advancing unaffordable loans, a state of affairs encouraged by the government despite the knock-on effect it had on the value of the lenders' assets. The entire state of tits-uppedness in which many banks and other lending institutions found themselves a couple of years ago (and still but they don't mention it now) was the result of making bad investments - specifically, making bad loans to prospective house purchasers. Although it is to state the bleeding obvious, if Mr & Mrs Ordinary suddenly find they can borrow £200,000 rather than £150,000 there is more money chasing the same goods and prices rise. Value doesn't rise, but prices do. We saw exactly the same thing happen in the mid and late 1980s (although it didn't cause a banking crisis because securitisation and credit default swaps did not get out of hand). How was the crisis solved in 1989? Simple, by letting the market adjust naturally. Borrowing became more expensive sbecause interest rates were set to a level that was appropriate to risk so that good loans paid for bad loans and, in consequence, prices fell dramatically. LVT didn't cause prices to fall because there was no LVT. What deflated the bubble was to withdraw the very hot air that inflated it in the first place. Would LVT have prevented "liar loans"? Will LVT remove that hot air from the current bubble? I don't see how it could or can unless it is set at such a high level that people can no longer afford to pay both their mortgage and their LVT.

And that is the core difficulty I have with the argument that LVT will cause prices to fall. Because LVT is recycled through the Citizen's Dividend it can only ever increase the cost of housing by less than the additional tax charged, because part is repaid to the taxpayers themselves through the Dividend. What level of LVT is sufficiently high to cause prices to fall below current levels? No one seems able to tell me. To my mind it is a false argument. To reduce a bubble you have to look at how the hot air got into the balloon and address that, seeking to deflate it by reference to something else entirely might work but it can only do so circuitously and will, inevitably, have other consequences that might or might not be beneficial.

It is then said that LVT will keep prices stable. How it will achieve this is the second puzzle. One argument is that it will remove the prospect of speculative profit and that this will mean people won't pay over-the-odds now in order to secure a windfall gain later, but this assumes the very stability it seeks to cause. In other words it is a consequence of stability and a factor that maintains stability but it cannot be a cause of stability, so how does LVT cause that stability in the first place?

There can only be one answer because only one factor can prevent price bubbles, namely the dampening of demand. That can happen in a number of ways. You can increase supply of housing to reduce the price pressure on each individual property, you can limit the amount potential purchasers can borrow or you can reduce the income of purchasers so that they can only afford to service a smaller loan. What is unavoidable is that LVT can affect only the third of these factors and it can only do so by being set at a rate which is more expensive to the landowner than the aggregate of the amount he saves through the abolition of taxes on his income and the amount he receives by way of Citizen's Dividend.

A marginal increase won't have any more effect than increases in other bills, a few quid or even a few hundred quid a year won't necessarily do it, people adjust because they save on matters they consider less important. For existing homeowners it will be an inconvenience like recent rises in prices for food, electricity and gas. They are not suggested by anyone to have had any significant effect on house prices, so why should a tax unless it really bites into their income? And it is not enough that it makes life more expensive for existing homeowners, it must be sufficiently expensive to deter potential purchasers from paying what they otherwise might be prepared to pay. So, how high would it have to be? I have no idea but it is, I think, reasonable to suggest that it would be so much that the whole thing would be politically impossible to implement.

Warning to those of a delicate disposition - the following paragraph appears to be nonsense from beginning to end and has been retained to remind me to read what I write before hitting the "publish post" button.
My puzzlement doesn't end there. The whole exercise assumes a transfer of money from landowners to non-landowners because of the Citizen's Dividend that stands alongside LVT to prevent the government making a windfall gain. The non-landowners receive a double benefit. They no longer pay Income Tax, National Insurance or VAT and they receive the Citizen's Dividend that increases as the take from LVT increases. One would think the natural result of them having so much more in their pockets and of their landlords being hit by LVT is that their rent would go up. Assuming that to be the case the acquisition of houses and flats to rent would appear to be an even more attractive business than it is now. There's no income tax to pay and your customers suddenly have many thousands of pounds a year more in their pockets, it sounds like a wonderful arrangement for landlords; all the more so because Capital Gains Tax is to be abolished too. They only need to raise rents by the difference between existing taxes and LVT and they are quids in, after all their tenants will be in profit by a lot more than that. And the effect on property prices? It hardly sounds like a downward pressure to me.

Much more puzzles me, but that's enough for today.

Tuesday, 12 October 2010

Some observations on LVT

As a dedicated reader of the meanderings of my friend Gerard I have become familiar with some of his views on tax. In particular, I am aware that he believes it desireable to abolish Income Tax, Value Added Tax, National Insurance, Capital Gains Tax, Inheritance Tax and others and replace them with a Land Value Tax. His position is perhaps explained most clearly here.

The central principle seems to be that tax will be levied at so-many percent a year on the value of land (the value being assessed by reference to sale prices actually achieved in the area). Numerous alleged benefits of Land Value Tax (LVT) have been identified in the many posts Mr Wadsworth has made on the subject (collected here), including that LVT will contribute to the prevention of future land price bubbles and that it will not be as damaging to enterprise as the existing tax regime. I have long had reservations about both these claims, so I thought I'd say why.

Take LVT as a contributor to preventing price bubbles. The obvious first question to ask is how it will have this effect. And the obvious answer is that it will make it undesireable for prices to rise because any rise will cost landowners more in tax. To an extent it is hard to dispute this, but I cannot see how it goes very far.

Does it put any pressure on government to adopt policies that encourage stability or even a fall in land values? No, it does exactly the opposite. If land values fall so do LVT receipts and no government has ever seemed keen on reducing its tax revenues. Whereas a rise in land values will boost the Treasury coffers. On the face of it one would expect government to encourage a rise in land values.

Of course there is another side to this. A general rise in prices leads to a rise in LVT which everyone will have to pay either because they are landowners or because they rent from landowners who have to increase rents in order to cover their extra costs. When everyone is being screwed for more tax simply for the privilege of living in the same place they lived in for a lower cost last year, we can reasonably expect more than a few to cough a polite "ahem" and question the fairness of this windfall accruing to the Treasury. Perhaps the most obvious result will be the need for regular reductions in the percentage in order to keep the overall tax-take roughly the same; yet we can be confident that any such reduction will involve an element of drag so that more tax is taken year-by-year but not quite as much as it would be without a reduction in percentage.

Whether or not that is a correct inference to draw, how could LVT cause or contribute to a fall in land prices? The only way, it seems to me, is for LVT to be so expensive that it makes a significant difference to how much people are prepared to pay for any particular property. At the moment I think it reasonable to suggest that the main factor affecting how much people are prepared to spend on housing is the cost of servicing the loan they take out to buy somewhere. If they think ahead they would be well-advised to build-in a margin for the risk of interest rates rising in the future but in any event they will look at their finances and say "we can afford £20,000 a year", or whatever figure is appropriate to their circumstances. The wise ones will also take into account likely running costs including costs of insurance, repairs and utilities, so their thinking might actually be "we can afford £25,000 for housing, comprising £5,000 for running costs and £20,000 for paying for the place". The matter that determines how much they are prepred to pay is how much they can borrow in return for repayments of £20,000 a year. For sake of example, let's assume they can borrow £300,000. They do not approach the issue by saying "this house costs £300,000, how will we pay for it" but by saying "we can pay £300,000, what can we get for that sum?"

For LVT to have any appeciable effect on prices it must affect the amount people can afford to borrow. LVT can affect how much people can afford to borrow in one way only, and that is as a running cost that forms part of the overall household budget. Using the example I have just given, those with £25,000 to pay for housing would alter their analysis to something like: "we can afford £25,000 for housing, £5,000 will be needed for running costs, something for LVT and the balance to pay towards a loan". If the amount left to repay the loan is less than £20,000 that is fair enough, LVT could reduce prices. But, by definition, those very people are no longer paying Income Tax, NI or VAT, so their disposable income has increased. Say they paid £10,000 in IT & NI and £2,000 in VAT. Instead of starting with £25,000 to pay for housing they now have £37,000. So LVT would have to exceed the cost of the taxes it replaces (£12,000 in my example) for it to be able to make any difference at all.

The exact figures do not matter for this purpose. What does matter is that LVT will have to take more from household incomes than the taxes that are to be abolished for it to be able to have any effect on purchase prices at all. That is why I said it would have to be expensive. In order to have an appreciable effect it would have to be very expensive. In my example it would have to exceed £12,000 a year on a property costing £300,000. That is only 4%, so would 5% be enough, 7%, 10%? Whatever figure is chosen above 4% would provide the Treasury with a phenomenal windfall before any influence on prices fed through.

As to it not being as bad for enterprise as existing taxes, I am, again, unconvinced. The most stifling factor on enterprise is cost. Whether that cost is tax, wages, materials or fuel, the more expensive it is to start a new business or expand an existing business the less likely it is that the start or expansion will happen. VAT, Income Tax and National Insurance Contributions are the most stifling taxes because the first forces a business to make a profit just to break even and the other two increase the cost of hiring staff. Were all three abolished, enterprise would undoubtedly be rewarded ... or would it?

Abolishing Income Tax raises a particular problem because salaries are agreed gross not net. Someone on a headline salary of £30,000 is entitled to £30,000 from his employer whether or not part of that sum is paid to the Treasury as Income Tax. Get rid of Income Tax and employees' NI Contributions (which are also deducted from gross wages) and on the face of it, the employee would still be entitled to £30,000, there would be no saving to the employer. Employers' NI Contributions would be a saving, as would VAT. In their place would come LVT on the employer's premises. Who is to say whether this would be more or less than the saving in VAT and NI? I see no reason why substituting one tax on an employer for another should necessarily reduce his overall costs of doing business.

Maybe it will, maybe it won't, but unless the total tax take is reduced all that can ever happen is that the burden of tax is shifted onto someone else. Perhaps the victims will be landowners generally, both domestic and commercial, but it seems to me to be little more than guesswork (or perhaps nothing more than guesswork) to suggest that LVT will reduce business costs to any significant extent. It cannot be ignored that any sizeable increase in the cost of living of employees accompanied by a reduction in costs of employers will lead to calls for higher wages to return the balance to what it was before. And it is hard to resist the inference that employers would accede to those calls, at least in part, either voluntarily or after facing a revolt from the shop floor.

In this regard there is a difference between employees being hit by higher taxes from the government and employees being taxed more in order to make things cheaper for their bosses. In the former case the boss has an answer: "I've got no extra money, sorry" whereas in the latter it is necessarily the case that that excuse does not arise.

Once LVT has come into effect and the running costs of a household are increased accordingly it is unavoidable that some will not be able to increase their incomes and will find their homes unaffordable out of current income. The only answer given by LVT-ists is that such people will have to trade down to something they can afford, whether it be a cheaper rented place or a cheaper owned place. In itself that raises a serious policy issue. Is it right that taxation policy should force people to move from a home they could previously afford? This is illustrated most acutely by those on modest incomes who own a "high-value" property. The existing tax arrangements allow them to retain their home whereas LVT makes it unaffordable so they are forced to sell and move to something cheaper.

The usual justification given is that these people are not putting the land they occupy to efficient use and the benefit accruing from it being freed for more efficient use outweighs, as a matter of public good, the cost and inconvenience to the displaced individuals. I find this a most unattractive argument. In many parts of London and the South East the supposed justification cannot be assumed to be correct in fact. Even small properties command prices existing occupiers / owners could not afford were they buying a home today. Forcing out existing residents of one or two bedroomed flats and houses will not lead to the properties being used more efficiently, it will result in them being used by pretty much the same number of people but the new occupants will just happen to have higher disposable incomes than their predecessors.

Even where a couple moves out of their three-bedroomed home to something smaller in an area they might or might not know in order to allow one or two additional people to occupy their old house, the more efficient use of their former home hardly justifies the eviction. The occupation of land is not just an economic exercise; sentiment, including family history, are important aspects of life. People have a reasonable expectation, entirely separate from any windfall capital gain that will accrue on sale, that public policy will not render unaffordable the home they own. Of course they could remain in those homes and pay LVT out of capital by allowing their LVT liability to be charged against their home and redeemed when they sell or die. It is arguable that their homes are actually affordable on this basis because LVT simply sucks-up the equity they have acquired (but not earned) while house prices have soared. It is still a most unattractive policy to my mind because it then places these people in debt when they have arranged their affairs specifically to avoid debt. That the debt is to be paid out of a profit they have not earned is no answer except in an accountant's ledger. If you want to divest them of unearned profits wait until they are dead and apply Capital Gains Tax, don't worry them while they are alive.

What, I wonder, will be the position once LVT is in place and all those with homes they cannot afford have been forced to move to something they can afford. It is when we look at that position that we see the essential circularity of reasoning that underlies and undermines LVT. Where will people live? Answer: in homes they can afford. What is affordable? Answer: that which you can pay for out of income or by reducing your capital. What will be the most common form of affordability? Answer: paying out of income. No doubt some would choose to stay put and diminish capital for the privilege of remaining in the home they occupied since long before LVT moved the goal posts, I would suggest it is reasonable to infer that the vast majority will pay for their housing (including LVT) out of income. The inescapable conclusion is that LVT will be linked directly to income in the vast majority of cases. So, a tax brought in to prevent taxes being based on income (because that is potentially damaging to enterprise) will itself be based on income a few years down the line. And at every stage of the adjustment from current taxes to LVT the government will trim things so as to increase the total tax-take - I mean any government of any political hue.

Thursday, 30 September 2010

A word about the Millibands


There, that's a good word for them. Now I can address something almost as absurd as the Millibands (but perhaps not as absurd as the unions appointing Brother Ed to head their political party).

Apparently the BBC has commissioned a survey about how its programmes portray people of a homosexual disposition. My first reaction is "why"? Why should a broadcaster think it necessary to portray people of any sexual tastes in any particular way? The whole concept strikes me as bizarre. Allow me to let them into a secret. Homosexual people are just like heterosexual people except in their choice of bedroom partner. There are happy ones and sad ones, friendly ones and icy ones, sociable ones and loners, placid ones and violent ones, some can sing in tune while others can't, excellent sports players and hopelessly uncoordinated specimens, clever ones and thick ones, loud ones and quiet ones, law abiding ones and mass murderers. Find a human character trait and you will find homosexuals who have it. You see, sexuality is not character it is only one facet of character.

How does the BBC portray heterosexuals? That's easy to answer. It doesn't portray heterosexuals as such, it portrays people of widely different character who happen to be heterosexual. Their sexuality doesn't get a mention because no one cares (or even thinks about) it. No one would think of asking whether heterosexuals are portrayed positively or negatively in BBC dramas because they are not portrayed. People are portrayed. They are portrayed as kind or unkind, intelligent or stupid, fit or unfit; they are portrayed as each drama requires in order to tell the story.

There will always be a problem in dramas portraying minorities of any particular ilk because drama requires exaggeration. Happy couples must be that little bit more happy than they ever would be in real life otherwise they would appear ordinary rather than happy. Misery must be constant or it will risk losing impact with the audience. After all, real life is pretty drab and no one will be entertained by thirty or sixty minnutes of actors being drab. Drama has to catch the attention of the audience and that necessarily requires little foibles to be magnified and specific traits to be dominant features of the character.

It is said that the survey concluded that "lesbian, gay and bisexual people wanted to see more authentic depictions of their lives". What does that mean? More scenes of people doing the washing up, struggling to pair socks after doing the weekly laundry or waiting two minutes for someone to answer the door rather than four seconds? Strictly Come Dancing to be cancelled and replaced by Strictly Come Fisting?

Obviously one would have to know what questions were asked in order to know how that conclusion was formed but it seems to be inevitable that the expressed desire could never be met because of the need to exaggerate for dramatic effect. The conclusion, as expressed in the quote I have just given, suggests that the true conclusion is somewhat different. I would suggest that it would be more accurate to say "lesbian, gay and bisexual people don't like their sexuality being portrayed predominantly by camp and promiscuous stereotypes". That's fair enough and allows the BBC to save a lot of money by not employing hugely expensive artistes like Graham Norton and Dale Winton to mince all over the country's Saturday evenings. But it is nothing but a dream if it is really a desire to avoid exaggeration of a trait that is central to the character being portrayed.

Of course the biggest error the BBC makes is to assume that there is such a thing as a standard opinion held by homosexuals, still less that they can have a shared view of how persons of their sexuality should be portrayed on screen. I might be wrong because I don't have inside knowledge, but my guess is that the vast majority of them just want to be treated as people and will see exaggerated portrayals as necessary dramatic devices rather than insults.

The thing that tickled me most in the report of the survey was a quote attributed to the head of a pressure group called Stonewall which claims to have the right to speak on behalf of homosexuals. He is reported as saying this about BBC programmes: "it's right that everyone in modern Britain should be reflected in its output". How refreshing it is to hear the head of a special interest group insisting that those who condemn the activities of his group should be given airtime by the BBC. Religious fundamentalists who believe homosexual activity to be so wicked that it should be outlawed can now expect to be portrayed in a positive light by the BBC and, indeed, by Stonewall. No? Why not? It's what he said. And I would guess that the numbers holding those fundamentalist views aren't much different from the numbers of a homosexual inclination.

That's the problem with picking on a minority interest and treating it as something worthy of special treatment. Whether it is sexual proclivity, pigmentation, physical infirmity or any other of the selected minorities chosen for special treatment by the self-proclaimed "progressive" elite, it is impossible to make a principled stand for special treatment for one minority without extending the same privilege to others. Exclude others and you undermine the case for your own cause. There is an unassailable case for equal treatment but no case for special treatment

Incidentally, this exercise is a classic illustration of how tax-funded spending can be cut without necessarily affecting the delivery of "front-line services". If the BBC is fed less money it can stop wasting cash on commissioning idiotic surveys, it can abandon the backroom teams dedicated to ensuring "diversity" in its programme output and thereby save a packet. I wouldn't mind betting a packet (of pork scratchings) on it also having a department dedicated to reducing its "carbon footprint". That can go too. More on that another day.

Thursday, 9 September 2010

Further apologies for absence

It appears it wasn't a stroke, just an inability to use the old pins properly due to lack of oomph in the old ticker (apparently exacerbated by the most recent bout of cellulitis, which was itself in part the result of lack of cardiac oomph). Quite why that should also cause me to be unable to concentrate for long enough to write my usual drivel will remain a mystery until the trump of doom. But there it is.

Long brisk walks to get the pump working a little harder seem to have had an effect on what I laughably call my brain and next month's appointment with a quack and a balloon on a tube might improve things further.

Recovery is now sufficient to allow for a further piece of twaddle, which will appear shortly.

Tuesday, 10 August 2010

The graduate tax might be rather cunning

There have been renewed mutterings over the last few days that an additional income tax might be levied on university graduates. It's all rather vague at the moment, presumably because it is a novel idea to introduce an income tax surcharge for one group of people so the government is letting out little hints in order to see what reaction they receive. Obviously the usual suspects are against it - trades unions, Labour politicians, quangocrats and university employees. The proposal could be to expand university places by fifty percent and these members of the awkward squad would condemn it for not being sixty percent, so we needn't take much notice of them ... unless they support their objections with sound reasoning.

As I understand the present system students are required to pay tuition fees each year and to provide for their living costs. Indeed I remember having a pupil about twelve to fifteen years ago who had gone through university and the Bar course under that system and left with debts approaching £40,000. It is the spectre of young people being saddled with hefty liabilities that invites examination of alternatives. Now, it shouldn't be thought that all students incur big debts, many go to their local university and live at home, many receive grants, scholarships or bursaries to help defray the costs; nonetheless with the student contribution to annual tuition fees currently set in excess of £3,000 (it's said to be a maximum, ha ha ha) that's still the best part of ten grand for a three year course.

The massive expansion of the university sector over the last fifteen years has provided the benefit of call centre workers having some specialist knowledge of media, fashion and football but it has also meant that the old system of grants for those without the means to pay became unaffordable. When the last government increased the tuition fee contribution they consistently justified their position by arguing that graduates earn more on average than non-graduates. That argument only goes so far because there are only so many jobs for which a university degree is actually necessary (or, at least, of significant advantage). Increasing the number of graduates does not increase the number of graduate jobs. It might allow someone to join a business one rung up the ladder but the difference in lifetime earnings for someone in manufacturing or retail cannot be calculated. I know graduates working in retail who did join a rung or two up the ladder but further promotion depended on experience so by the time they reached the third or fourth rung they were on a par with their non-graduate contemporaries. They had earned a little more for a few years while their colleagues had been earning for the three years they had incurred debts.

Essentially the same argument seems to be being put forward by the current government but in a slightly different way. The clearest hint given of current thinking was by David Willetts last weekend who is reported as having used the phrase "higher contribution to the benefits of the university education they have received". That is deliberately vague but it has been interpreted by some as the graduate tax expounded by Vince Cable a few weeks ago (reported here). Cable's proposal was quite wide-ranging and expressly kick-started a debate rather than being a fully formed policy. There is much to be said for it although it's not without its difficulties.

As with so many problems the current government has to address the first observation is that they really shouldn't have to start from here. This is just one more in the long list of utter failures concreted in place by Labour over the last decade to try to buy votes regardless of the longer-term consequences. However, we are where we are so the first question should be to ask what is wrong with the current system. I have identified the two main problems already - students leaving university with heavy debts and insufficient graduate jobs being available to provide the added earnings required to pay back those debts. These are both consequences of one thing and one thing alone - political interference. In this instance the same type of interference has caused both, namely the desire to buy votes by promising university education (almost) regardless of the suitability of individual students. It started when John Major turned the Polytechnics into Universities and has been a boast of every government since that young people have better educational opportunities than ever before. All that has really been achieved is the opportunity for many to get worthless pieces of paper when previously they would have had to earn a living for three years.

The ideal situation is that each University should be wholly independent and should sink or swim according to its ability to attract students. If the university is able to raise funds from graduates or businesses or elsewhere to provide bursaries it will have more students, apart from that it's pay-as-you-go. How many would offer courses in Football Studies or Feminist Sociology? I've no idea, if they can get the business that's fine if they can't they'll have to offer something useful.

This will require a massive culture-change, one that will take many years of small steps, weaning the universities off the tax teat and leaving them to "struggle" for students just like the University of Buckingham and BPP University College. I see the graduate tax as a step in the right direction albeit for a somewhat quirky reason. It seems to be the case that current students are not put-off university by the threat of debt, perhaps the lie of higher earnings has not been exposed sufficiently or they think they will be among the lucky few who will secure a true graduate job. It's rather different if there is a long-term tax consequence because liability will not (on the face of it) end when the cost of their tuition has been repaid. Perhaps there will be a long-stop but it is, after all, a tax and we all know they rarely go down, indeed once established the possibility for expanding them has been seized by every government in living memory.

Given the choice of having your fees paid by the taxpayer and then facing an unlimited tax or securing private funding, I know which I would find more attractive. Private funding might involve the need to reimburse part or all of the money but you can be as sure as the Stoke-on-Trent College of Art is now Staffordshire University that it will be cheaper than the new tax.

What is the quirk? Here's where I think Mr Cable and Mr Willetts are being rather clever. As the availability of non-tax bursaries for able students expands so incurring debt will be less attractive. It's not attractive now but lots are in the same boat. so they don't see themselves at a disadvantage compared to their peers. The fewer in that boat, the more they will be forced to examine whether incurring debt is right for them. I see this plan as a back-door way to reduce undergraduate numbers and weed-out pointless courses at third rate institutions, and to do so not by having students sign-up to it but by having them follow a different path. The taxpayer will not lose out because the universities will be funded by government only for those students who volunteer for the tax.

As I say it's one step in the right direction, albeit one that comes at a price for the students caught by it. Sufficient lead time will focus universities' attention on raising funds privately to entice quality students and should mean relatively few choose to commit economic suicide in order to get a fancy certificate signed by the Vice Chancellor, Professor M Mouse.

Still alive, just

Apologies for absence. Same as last year, but the other leg.

Wednesday, 28 July 2010

True climate threat - Addendum

In the comments to my last piece Mr Choos suggested that the Himalayas cause no problems to the climate so we shouldn't be concerned about buildings. I'm sorry to have to say this but he displays a desperate ignorance of the modern approach to science. Let me take you back to first principles.

In fact, let me start with an example drawn from different fields of study, zoology and modern anthropology. We all know that when lions need food they kill a nice antelope or zebra then tear off lumps of warm flesh and feast until sated. On occasions they might accidentally take a bit while their prey is still alive, but usually they ensure it is dead and the heart has stopped beating because they don't like to drink a lot of claret with their dinner. All aspects of the conduct of lions are to be applauded because they are natural beasts and do what Mother Nature intended they should do. We know she intended them to do it because they do it out of instinct, no television chefs or recipe books lead them from the path of natural righteousness.

Human beings on the other hand are subject to the wicked and unnatural forces of western commerce, a branch of what is mistakenly known as western "culture". Modern anthropology has established that the natural state for human beings is to live exclusively at ground level and eat only vegetative matter. You might have heard some "nature deniers" dispute this fact by reference to human canine teeth which, they claim, evidence a natural inclination to eat meat. Like so many of the denialist smokescreens applied in a vain attempt to deflect from the true path of modern climate science, this is a deliberate misinterpretation of basic facts in order to promote the interests of Big Oil. The true position is that human beings have canine teeth in order to allow them to make holes in babies earlobes prior to the insertion of raffia earrings as a sign of obeisance to Mother Nature and Her most bounteous crop.

We know that this is so because it was tested on computers. To be precise, in 1985 three Commodore 64s were used at the same time in different rooms at the Polytechnic of Mid Sussex and each produced an identical printout saying "yes" when asked "are human canine teeth designed for use in piercing babies' ears (glory be to Gaia)?" They had each been programmed by the Polytechnic's foremost expert in modern anthropology, Miss Camomile Tea, to provide the truth as disclosed in her seminal work Mother Nature's Labia. Of course we could just look the answer up in the book, canine appears in the index between camping and clitoris; but that would only provide partial proof. Those who wish to adopt old-fashioned methodology would assert that it is just Miss Tea's theory (although on this particular point her sister, Rich, helped with the basic analysis). To support her theory it was necessary that computers said the same thing, so she got some computers, set them up to test the hypothesis and they agreed with it. And there you have it, conclusive proof, computers have settled the science.

Having established this fundamental difference between human beings and lions it is necessary to identify the significance and what it tells us about human behaviour. On the one hand we have lions killing with aplomb in order to satisfy their natural instinct for food. On the other hand we have human beings murdering chickens, pigs, sheep, horses and cows in pursuit of an unnatural urge to consume the flesh of other creatures. The difference is that the former is natural and the latter is unnatural. They might seems like the same activities at heart - ending the life of another animal and eating it's flesh - but in fact they are completely different. One complements Gaia's great plan and the other does violence to it. One maintains the natural pattern of things, the other disturbs that pattern and necessarily causes other consequential damage in the process.

So it is also with the natural Himalayas and unnatural human-created buildings. When the Himalayas were developed Mother Nature took rock as only she can and turned it into a perfect form. In doing so she enhanced the balance of nature that, after all, is her job - she is incapable of doing anything else. It cannot be that the Himalayas interrupt the flow of air or cause Earth to rotate otherwise than perfectly because they are natural. The truth is that they steer air to where Mother Nature wants it and they stabilise the rotation of the planet. By definition, because they are natural they help create a perfect system. Human-caused protuberances above ground level, however, are a different kettle of ballgame. They are unnatural because they are the result of conscious decisions of human beings under the influence of Big Oil in comparison to the instinctive reactions of lions under the influence of Mother Nature.

The great Miss Tea has long since passed to the recycling centre in the sky but her book is still available. As far as I know there is now only one source (here).

Monday, 26 July 2010

The true climate threat from industrialisation

Concern has occasionally been expressed in the comments to some of my scribblings about the ability of our planet to sustain many more human beings than are in existence today. Can enough food be grown? Where will they be housed? How will sufficient electricity be generated? Will we run out of plastic for all the additional roll-on deodorants? The questions never end. There is even a body supported by one of the Attenboroughs calling for huge reductions in world population and citing alarming guesses about the dire consequences of allowing lesser beings to have children. Although these modern day eugenicists overstate their case quite pathetically there is a smidgen of truth behind what they say.

Resources are finite and occasionally we run of stuff. At my local fish and chip shop it is usually fish at about ten o'clock on a Friday night. On a larger scale the world has run out of mammoth skins for coats, dodo eggs for omelettes and any number of reptile skins for shoes. So far ingenious humans have found alternatives and we have been able to sustain more and more people in more and more comfort as the years have passed. But it seems to me that along the way we have done far more damage to the earth than has yet been reported. No doubt it is just too frightening a prospect for the powers-that-be to allow it to be known. A recent paper has quantified the damage but it's very technical. Hours of work have resulted in my humble self being able to distill the gist of the problem. Please bear with me while I explain.

Calculations that are central to our understanding of the physical world make certain assumptions - sometimes broad and sometimes narrow. It is, for example, assumed that the planet orbits the sun once a year (or so), that it turns on its axis once a day (or so) and that there are small wobbles in its movement. These assumptions lie behind our calculations of time but, more importantly, they underpin all assessments of how our climate will change.

The problem, recently explained at length in the paper I mentioned, is that human beings have affected each of these assumptions. They have done so by disturbing the weight-balance of Earth and by interrupting natural air flows so as to change both the rate of rotation of the planet and many other things beside. One thing and one thing only that has done this damage - building.

As weight is transferred from on or under the planet's surface in the form of clay, rock, stone, slaked lime, slate and pozzolans into above-ground structures in the form of buildings, the natural balance between that which is at or below ground-level and that which is above ground level is altered.

Artificial height blocks the air that would otherwise flow freely above the ground, pushes it higher and causes it to increase its speed in order to reach its destination at the originally planned time. The buildings themselves act as buffers, slowing the rotation of the planet just as a parachute fired from the back of a fighter jet slows its progress after landing.

In addition removing natural products from the surface thins the crust of the planet and creates man-made hollows that attract water not intended for that place. As time progresses these artificial lakes will erode the surface further because a hollow created anthropogenically is a very different thing from a natural crater. Being a forced tear in the surface of the planet it cannot heal as a natural crater heals and will not retain water because it will not have the natural seal that forms on the surface, of nature's craters. Instead the surface will be weak and flaky and will be eroded quickly by water that settles in it, especially if that water is agitated by human activity such as boating, fishing and ducks-and-drakes.

If that is not already enough, the news gets worse. Where these materials, ripped from the very womb of Gaia, are piled high into monstrous icons to the wickedness that is industrialisation they add weight to the surface, weight for which it was never designed. Albeit it very slowly, ground level at the edges of our largest cities is rising as the weight of the city presses down; but that is a minor problem. Of far greater concern is the effect it has on the balance of Earth's rotation.

It is not by coincidence that we measure rotation by examining what happens to the Greenwich Meridian. When such matters were first thought about it was clear to all that London led the way. Just as a dancer executes a spin by moving the lead shoulder first (the right shoulder for an anti-clockwise spin and the left if turning clockwise) so our planet spins by moving London first. The more weight we add to London, the more difficult it is for the turn to start and the more difficult it is for it to stop at the expected time. Even a minor delay or overshoot can upset the balance of the climate throughout the planet.

Unless we spread weight more evenly and, in particular, reduce the weight of London, we can expect ever more floods, hurricanes, droughts and pestilence because the natural balance will remain disturbed and Mother Nature will take her revenge.

This might seem somewhat far-fetched to those who have not studied the source materials in detail. But if you think this is silly, you should read what people say about carbon dioxide. I urge you to read the detailed paper to which I refer, I think you will be persuaded, you will find it here.

Sunday, 25 July 2010

What's wrong with prostitution?

I've met a lot of prostitutes in my time. The first encounter was as a student looking around Leicester Square. It was one of those places I'd seen on the Monopoly board, so I thought I should take a look. I couldn't see what all the fuss was about, a shabby square full of tramps and litter with a big cinema at one side and nothing else of note. As I wandered back towards the tube station, safe in the knowledge I never need go there again, a woman aged about thirty walked towards me, stopped and said "Hello, nice to see you again, how are you?" Unlike today, at the tender age of twenty my brain was not addled by decades of booze. I was able to discern that I'd never seen her before in my life. I was also able to discern a bra strap hanging from the corner of the bag she was carrying. She must have been pretty desperate to think a fat slovenly twenty year-old would have enough cash to make the exercise worthwhile, but there it is, each to their own.

A few years later my encounters were almost daily as I plied my trade in the Magistrates' Courts of central London learning the rudiments of advocacy. As I waited for my tiny case to be called I would witness the old Toms being dragged up from the cells to face the Stipendiary Magistrate they had faced so many times before. The charge of soliciting as a common prostitute would be read out and met by a guilty plea, all the prosecution advocate had to say was "last appearance three days ago, £30 fine" or "three days in a row, £50 fine yesterday".

Stipendiary Magistrates still exist although they are now called "District Judge (Magistrates' Courts)" - actually the apostrophe might be omitted, but it should be there so I'll keep it. It was so much better when they were "Stipes", there's no handy abbreviation for their new title.

They know about prostitution. They know there are women working the streets who will always do it because they can't find anything better. They are at the bottom end of the trade and the fines are a business overhead. Some of them are funding cripplingly expensive drug habits but far more are funding children. It's their job. The Stipes know it's their job and they know they will go out again to earn the money to pay the fine, so they are realistic. For so long as soliciting is a crime they have to enforce the law but they try to do it realistically. London's cheapest and mankiest tarts might charge £20 for a sight of their boobs and a few moments in which their calloused hand is in contact with the punters excited member, then a wipe with a Kleenex and they're off looking for another customer. Five such deals will be required to pay today's standard fine and some nights won't earn them even that.

There's a better class of business to be seen in so-called "massage parlours". The girls have to look appealing or they won't be selected - unlike the street girls who encounter the punters with very little cash those who own the parlours know their customers will have rather more to spare so they must be offered a better quality of product.

More lucrative still are private arrangements which have been made much easier since the advent of the interwebnet. It is more risky for the girls than the massage parlours because they won't even see the punter until he turns up or she gets to his front door. But the money is better so they can turn way from a deal that doesn't feel right and still earn a living. And, of course, there is a top end as in any service industry, expensive girls for rich clients.

The street girls are arrested frequently and given small fines that reflect their circumstances. The massage parlour girls are in trouble only when the place is raided. It happens, but not often. Private arrangements hardly ever trouble the courts unless the girl steals something or the punter gets violent, and even then the matter is only reported if the punter doesn't mind people knowing he uses prostitutes or the girl doesn't fear loss of her future livelihood.

I raise this topic today because last night I went to my favourite Thai restaurant and found that two of the usual waiting staff were not present, one male one female. They are both students and had been working there for over a year. Being a polite sort of fellow I asked the manager about them and was told they had left in order to do other work. I asked him to pass on my good wishes if he heard from them again, but there was something in the way he said it that set my mind whirring.

Later I collared one of the supervisors and requested further details. He divulged that both were finding it difficult to make ends meet on what they earned from the restaurant so they had started advertising more intimate services on websites a few months ago. Both found it sufficiently lucrative that they could give up their old job. It wasn't surprising to hear that. A couple of years ago the Brazilian chap who made deliveries for the Chinese takeaway close to FatBigot Towers did the same thing. Once he was established it was a choice between six-midnight for £50 or one punter for a hour and £80 the tax man would never know about.

The cheap street girls and boys are often pitiful creatures. They scrape small fees from the lowliest punters because they can't attract a better class of custom. Most are simply unfit or unqualified for any better paid job, so it suits them to work as prostitutes whether or not they are on crack cocaine. The rest are doing very much the same thing albeit without the additional risks associated with working from the streets and having to sell to dubious customers.

Most importantly, each of them is providing a service for which there is a demand. They don't create the demand, they satisfy a demand that is already there. What's wrong with that? We usually think of prostitution involving men hiring women for sex, but women also hire men, men hire men and (I suppose, although I've never heard of it) women hire women. In each case there is a willing customer who is prepared to pay a certain fee for a certain service. He/she is prepared to pay that fee because they want the service.

Say it costs £100. A person has £100 available and is prepared to pay that sum for nookie. They are not prepared to pay it for a curry because it is not their curry money, it is their nookie money. It has been set aside to spend on satisfying a need that can only be met by someone offering nookie. The punter's desire for nookie is not going to subside if prostitution is outlawed. Nor is it going to be satisfied without payment - if it could be he/she wouldn't be throwing a ton at it. So, it's going to happen anyway either within or outside the law. In any situation like that prohibition is absurd. America saw it with booze and every country that outlaws prostitution and/or homosexual activity sees it also. It's going to happen anyway.

I then ask the question that is the title of this piece: "What's wrong with prostitution?" Today's Puritans - you know the sort, they bleat about smoking, drinking and eating meat - claim it's rape in disguise. If it is rape then it's rape and not prostitution, if it's not rape it's consensual conduct between two adults and none of anyone's business.

Others claim is contravenes their god's law. Fine, if your god doesn't like it don't do it, but do mind your own business because your god probably has something to say about those who interfere in things that are none of their business.

My money's on the girl from the restaurant making more money than the boy. He has sticky-out ears. Then again, you never know. What I do know is that I can't think of a single thing wrong with prostitution.

Tuesday, 20 July 2010

Schneider's "double ethical bind"

Over at Mr Watts' place I read that someone called Stephen Schneider died last weekend. Professor Schneider's name was familiar to me as the man who promoted telling lies in order to get across the message of the Warmists. At least, that's what I had always understood him to have said. On hearing of his death it seemed appropriate to see whether he really had said it.

What he is often reported to have said is this: "... we need to get some broad based support, to capture the public imagination ... we have to offer up scary scenarios, make simplified, dramatic statements, and make little mention of any doubts we might have ... Each of us has to decide what the right balance is between being effective and being honest."

On the face of it this is a blatant call for overstating problems, understating doubts and engaging in dishonesty if that is necessary to get the message across. It was surprisingly easy to find out whether he really did say it, all I had to do was go to his own website. There is a section called "Mediarology" (here) in which he addresses this very point (under "The 'Double Ethical Bind' Pitfall" in the left-hand column). He makes clear that he felt the substance of what he was saying was turned on its head by the above words being isolated from a longer paragraph thereby giving them a meaning they did not have. I have read the whole paragraph and struggle to see any substance in his point. Here is the whole thing:

"On the one hand, as scientists we are ethically bound to the scientific method, in effect, promising to tell the truth, the whole truth, and nothing but - which means that we must include all doubts, the caveats, the ifs, ands and buts. On the other hand, we are not just scientists but human beings as well. And like most people we'd like to see the world a better place, which in this context translates into our working to reduce the risk of potentially disastrous climate change. To do that we need to get some broad based support, to capture the public's imagination. That, of course, means getting loads of media coverage. So we have to offer up scary scenarios, make simplified, dramatic statements, and make little mention of any doubts we might have. This 'double ethical bind' we frequently find ourselves in cannot be solved by any formula. Each of us has to decide what the right balance is between being effective and being honest. I hope that means being both."

Professor Scheider complained in particular about the omission of the final sentence in reports of his remarks and claimed that it qualified what went before. Specifically he argued that the final sentence changed the meaning of the more limited quotation I gave earlier.

One difficulty I have stems from his claim to be in a "double ethical bind". That supposes one strand of ethics pulls in one direction and another pulls in another direction on the same issue. While I can have no complaint about his description of the scientific method being a matter of ethics, stepping into the spotlight to further one's chosen political policy is not a matter of ethics. It is a matter of personal choice but it is not a matter of ethics.

One can test this by asking why the scientific method is a matter of ethics. Just so I make myself clear, my understanding of the scientific method is that scientific investigation should be accompanied by a freely available comprehensive record of what was done and what results came from that work. If a hypothesis is being tested, the hypothesis should be stated, the tests described and all results recorded whether they support or fail to support the hypothesis. If, on the other hand, the investigation has no hypothesis but is just an experiment to see what happens when various factors are combined, the record must state exactly what was done and what results were identified (again, all results). That is a matter of ethics because others might act in reliance on the conclusions of a scientific investigation, and they must have the opportunity to satisfy themselves that the investigation justifies them doing so. They must have the chance to replicate the work and see whether they reach the same conclusion.

It is not the fact that it is science that makes it a matter of ethics, it is the fact that it can affect other people. Medical practitioners are not obliged to maintain patient confidentiality for the sake of themselves, but for the sake of their patients. Similarly, lawyers are barred from competing against their clients or acting for clients with conflicting interests because the client(s) might suffer, not because the lawyers might either benefit or suffer. People working with money must keep their fingers out of the till because failure to do so is of detriment to their employers not because it is beneficial to them.

The second ethical question Professor Schneider raises is, by his own words, not one of ethics at all. It stems from his words: "we are not just scientists but human beings as well ... we'd like to see the world a better place, which in this context translates into working to reduce the risk of potentially disastrous climate change". This pre-supposes that he concluded there is a sufficient "risk of potentially disastrous climate change" that he should abandon the leafy groves of academe and (no doubt with huge reluctance) rake in fees from speaking and writing on the subject and dine with Presidents. It was most kind of him to make that sacrifice, but it was not a matter of ethics. Either his belief in impending Armageddon was based on science - in which case it was only as strong as the science and should always have been qualified by any doubts he had about the science, or it was based on something else. If it was based on something else there is only one possibility - his personal political values.

If it was based on the science there would be no ethical bind, his belief would be as strong as the science and he should always put it forward in that context. That doesn't mean answering every question with recitation of an academic paper and the provision of a sheet of footnotes, but it does mean explaining briefly the doubts and uncertainties where it is necessary to do so in order not to be misleading.

It is only when you go one stage further and decide to put forward a case that is more certain than the science allows that you enter the realm of allowing your views as a human being to conflict with the ethics of your work as a scientist. Or do the two really conflict? I don't believe they do provided one is honest. Where you are putting forward an argument that it not wholly supported by the science you have to make clear that you are offering your personal opinion rather than a scientific opinion. By all means also say you believe the science is incomplete, that you believe your conclusion is correct and the doubts and uncertainties are likely to be resolved in favour of the position you take; but that is all you can do unless you are prepared to act dishonestly. Argue a position not supported by science and there is no conflict with your position as a scientist because you are not acting as a scientist, you are acting as an advocate of a policy.

In fact there is a potential ethical problem, but it has nothing to do with the absurd notion that policy advocates are subject to some (as yet unspecified) ethical code. The problem arises where a scientist seeks to use his scientific qualifications and experience to give his policy argument authority that science does not give it. In the same way that a lawyer acts unethically if he uses his position as a lawyer to secure a personal advantage, so it is, arguably, unethical for a scientist to use his position to gain leverage for his personal choice of policy.

Professor Schneider's self-justification falls for this reason alone - he sets up a conflict of ethical codes when there is none. It reaches the realms of absurdity when he argues that he was quoted out of context by reason of the final sentence of his piece being omitted.

Having said it is for each scientist speaking on matters of policy to decide on a balance between being an effective advocate and being honest, the damage was already done. One cannot reach a balance between effectiveness and honesty without sacrificing honesty. If you cannot make your point effectively and still remain honest to the science, you should not be arguing the matter at all and should leave it to those (if any) who can. It's not difficult to do, there are plenty of people who argue policies without having any formal qualifications or recognised expertise in the subject, some even write blogs.

The suggestion that his weasel words: "I hope that means being both" changes the meaning of the previous sentence is ludicrous, it does the exact opposite, it reinforces it. By merely hoping for both effectiveness and honesty he acknowledged that honesty might be compromised. It should be of no concern to anyone that effective advocacy of policy is hindered by the advocate being honest, the only people concerned about honesty hindering effectiveness are those interested in promoting a policy that cannot be defended by honest assessment. That was clearly his concern otherwise he would not have set-up a dichotomy between the two and then argued for individual advocates to form their own view of how honest they had to be.

He did not say whether he believed effectiveness or honesty was more important but I think I can guess. The whole passage I have quoted has no point unless it is a call for effective advocacy in preference to honesty and, indeed, a call for effective advocacy of a position that is not supported by science. It seems to me that his attempt to worm his way out of the hole resulted in it being deeper and more shady than it was before.

Monday, 12 July 2010

Think before you do your bit

We all like to do our bit in a good cause. The local primary school needs a new swimming pool, so people chip in a few quid here and there until the requisite amount has been found. As Remembrance Day looms lapels are adorned by little red poppies for which a little bit of loose change was dropped into a collecting tin. An earthquake demolishes the homes of little brown people, so we phone the number on the screen and use our flexible friend to add to the relief effort.

These might all seem like examples of doing our bit by pooling lots of small donations to produce a sufficient sum to help with a problem, probably because they are examples of exactly that, but they are each different things. In each there is an identified current problem which requires money and the solution is to have the little people reach into their pockets, but the difference is in both the scale of each activity and the extent to which the money given will be used for the stated purpose.

The school project is entirely local. It could be advertised further afield but is unlikely to reap much reward because few living in other towns and villages will feel any obligation to contribute. Unless old Iris the bookkeeper is having one of her creative moments, all the money raised will be used to provide a new pool, there will be no administrative costs.

Poppy day is organised by the Royal British Legion which is noted for having very low overheads because it relies substantially on voluntary assistance. It does have employees because it is such a large organisation that it could not operate effectively without some permanent staff. Necessarily this means that not all money donated goes to the care of ex-servicemen and women.

Providing food and shelter for trembling brown people is an international activity because the sums required are substantial and the organisations who get involved know they can tap into goodwill around the world. However, by their very nature, such organisations have large overheads. Some engage in widespread political lobbying and campaigning that eats into the value of donations they receive. And when it comes to delivering aid the results are variable, in part because of the need to pay bribes to national and local officials in order to be able to get any help through at all in some countries.

When we are doing our bit in these three examples, our bit delivers less bang per buck the further removed the beneficiary is from us physically and the larger and more corporate the body to whom we give our money. Yet in each case we give because we are satisfied that enough of our cash will get through to make a difference. Debatable though that might be in some specific instances of international disaster relief, failings are not widely advertised and the anguish of the next natural disaster always seems great enough to persuade many people to donate.

More than that, in each case it is absolutely true that whatever does get through makes a difference. The school might not raise enough for a pool in one year but it gets there eventually. Whatever is raised by the sale of poppies and the plea to help earthquake victims goes through the system and produces a result.

To my mind that is what "doing our bit" is all about. Our individual bit might be very small but it is pooled with other bits and even if the total remains modest it still achieves something because it causes something to happen.

Imagine what the reaction would be if the Royal British Legion promoted its Poppy appeal along the following lines: "Unless we raise £100million we cannot do anything. Once we raise £100million we can provide nursing care for one injured soldier for one day. Every further £1million will allow us to provide nursing care for one soldier for one day. We can only get to £100million if rich and poor alike give 20% of their income." Nobody would give a penny because the whole exercise would be futile. Giving £10 would not be "doing our bit" because it would achieve nothing other than making the donors poorer by £10.

True though it is that they will never get to £100million unless they start by raising £1 and then add to it, no good works will be possible unless everyone joins in and makes a substantial contribution and that will never happen because the cost of the of contribution required (on the hypothesis I gave) is out of all proportion to the benefit delivered.

I write, of course, not about the Poppy appeal (or indeed about swimming pools or quaking brown people) but about cutting emissions of carbon dioxide. On my last excursion I tried to explain why I consider it utterly futile for the UK to make any sacrifice at the bidding of the CO2 fetishists, but some were not persuaded. My resident Warmist, Mr Andrew, fought bravely and suggested that the little players such as the UK should do the decent thing and then seek to persuade (perhaps he meant shame) China and India into following suit.

It will never happen. The very reason they are industrialising is so that they can enjoy some of the physical comforts we have taken for granted for generations. We can only meet our absurd "emissions targets" by making those very comforts more expensive, thereby hitting the poorest members of our society hardest. To suggest that an industrialising country might slow or halt that process because we have made electricity and gas very expensive for our population and have chosen to get a small fraction of our electricity from windmills is pure fancy.

They can only reduce their emissions by reversing the process of industrialisation. Even the direst predictions of what might happen in China and India as a result of man-made global warming are insignificant compared to the benefits they will reap from industrialisation. They are not going to stop nationwide industrialisation because it might (on the worst-case prognostications of NASA's computer games) have a damaging effect on very small parts of their countries. Still less are they going to do so in order to prevent even more of the Netherlands being below sea level than is currently the case (particularly after the dirty Dutch performance in the World Cup final).

It's not like passing round a collection plate in the knowledge that some good will be done no matter how small the donations. The Warmists present an all-or-nothing case. Reduce CO2 emissions below a certain figure and the world is saved, fail to reduce them below that figure and the world is doomed. Anything short of the magic number is of no consequence. When reaching the magic number requires poor countries to remain poor despite them having set out on a path to riches it is obvious what chance there is of that happening.

None of this is about whether the Warmists' so-called science is accurate, nor does it question the validity of the absurd and Apocalyptic pronouncements about the consequences of not making Saint Al of Gore even richer than he is now. I am assuming for present purposes that all that nonsense can be accepted at face value. The proposed cure can never happen.

It is, I believe, obvious and unanswerable that nothing the UK does can make any difference. Nor can the USA and India between them make a difference for so long as China do not also play. China and India can achieve nothing without the US on board. The US and China can do nothing without India. And lurking in the background are Russia, Brazil, Mexico and a clutch of African countries who see what India in particular has achieved and, at long last, have realised they can do the same. None of them can be shamed into playing the de-industrialising game. There is not enough money to bribe them into playing. It simply cannot happen.

Somebody needs to point this out to our new Secretary of State for Energy Shortages and Climate Change Claptrap.

Tuesday, 6 July 2010

The reason I asked about carbon dioxide

My last missive asked what effect a doubling of the UK's production of carbon dioxide would have. It wasn't a frivolous question, nor was it one to which I expected a precise answer. Nor, indeed, was it asked in the belief that human activity producing carbon dioxide is likely to have any appreciable effect on the climate.

It was asked in the hope that a passing Warmist might undertake a calculation using the same methods they use to estimate the effect on temperatures of world-wide industrial activity continuing uninterrupted by greenie initiatives. Only a fool would suggest they pin their colours to one calculation and one figure of anticipated "global" temperature rises, but they conclude there will be a significant increase according to every one of their methods of estimating these things. So, what is the range of figures for the effect the UK has now and the effect it would have if it doubled its output?

Of course none of the great and good would descend to the grubby depths of this blog, but some of their supporters have chipped in from time to time when I have ventured to question something about the Catastrophic Man-Made Global Warming theory (see, for example, the comments here and here). This time no one bothered at all. Maybe they have all given up with me, or perhaps they knew that any figure they might propose would be so pathetically small that it would illustrate the point I want to make.

It is at the heart of the whole exercise that things are measured globally save in the case of countries that produce absolutely bucket loads of CO2. They will be used to illustrate the evil of industrialisation to mother earth, whereas other countries (such as the UK) which produce tiny amounts compared to the whole will be lumped in with the sinners to produce stupendously high global figures for which all bear collective responsibility. This masks a truth that is spoken too rarely (unless you happen to be keen on some of my previous offerings such as this and this), namely that there is absolutely no point the UK taking any step to reduce its CO2 emissions unless all other countries do the same. And even then there is no point unless the big players do far more than us.

There's also no point bleating "but we must do our bit". We don't have a bit to do if the bit we do has no effect. After all, this is a game of cause and effect. If the effect predicted by the doom-mongers will occur regardless of anything done in the UK (which certainly seems to be the case for as long as China and India continue on the wicked path of lifting their people out of abject poverty by providing them with electricity for their homes and industries), we really shouldn't waste a penny on the exercise. Still less should we engage in self-flagellation.