Monday, 24 June 2019

Tip-top climate change porn

From The Independent:

Plummeting insect numbers. A sixth mass extinction. Thinning of ice sheets. Sea level rise. Wildfires in California. Thawing Arctic permafrost. The full tragedy of climate change is unravelling before our eyes.

According to the Intergovernmental Panel on Climate Change (IPCC) report, we have 12 years to stop this catastrophe. Climate action has become part of the zeitgeist, yet global emissions keep inching up and reports of Earth’s ecosystems collapsing come thick and fast.

Donald Trump is still in denial.

In 1958 scientists first noticed levels of carbon dioxide creeping up. In the 1980s global temperatures began to rise but warnings were ignored and covered up. For most people, the first nail in the coffin came 40 years later with the 2018 IPCC report, which said we faced major environmental catastrophe within our lifetimes, and potentially as soon as 2040.

So far so blah, here's the fun part:

For many, the news was a bereavement – a calamity we engineered without knowing it. “You’re talking about a mix of confusing feelings, including depression, grief, rage, despair, hopelessness, guilt and shame. All of those feelings come with it,” says Caroline Hickman, a teaching fellow at the University of Bath and member of the Climate Psychology Alliance.

For many, these conflicted feelings are now part of daily life. The American Psychological Association describe this “chronic fear of environmental doom” as eco-anxiety.

Ms Hickman has been a psychotherapist for more than 20 years and before last year she had two or three patients at any one time with eco-anxiety.

“Pretty much everybody is referring to it now. Lots of people are saying they won’t have children. Other people say they don’t want to feel guilty about having a child and bringing it into a world where they know there’ll be lots of problems.

"One woman told me she fantasised about killing her child. In fact I’ve had eight women who have said that to me. These are women desperately thinking about how to protect their children. They’re talking about despair, impotence and powerlessness."

Friday, 21 June 2019

More school statistics...

... which most people would have guessed anyway if they thought about it for a few moments, and which can be used to support any particular point of view/prejudice:

From The Telegraph:

Choosing a nursery could be more important than secondary school when it comes to ultimate academic achievement, a study has found. The contribution of a school to variation in pupil attainment is in fact “relatively small”, according to researchers at University College London's (UCL) Institute of Education. 

I wonder when another university will do the same analysis of whether universities make much difference either, for a given standard of student...

This means that sending children to what they regard as a “good” secondary school - meaning one that fares well in GCSE results and official progress measures - only adds a small amount more value than if they went to a “bad” secondary school.

The report, funded by the Nuffield Foundation, found that once you control for the characteristics of pupils within each school, the difference in attainment linked to school is below ten per cent of the total variance between children.

Professor Alex Bryson, UCL’s Chair of quantitative social science a co-author of the report, added: “Schools do still matter, but they don’t matter as much as people think. What perhaps is slightly surprising is that an awful lot of time and effort goes into trying to improve schools – but over the 13 year period we looked at, the variability accounted for by schools has remained fairly constant.”

Which would happen if all schools were to improve by the same amount, so this does not mean that schools haven't improved.


Researchers found that school competition, measured by the number of schools within 5.5 kilometres of each school, accounts for up to seven per cent of the variation in pupils’ attainment.

That could be 'competition driving up standards' (hooray), or just as possible, slightly cleverer kisd getting into the perceived better schools and vice versa, leading to a widening gap between schools perceived as better or worse.

Meanwhile the pupil-teacher ratio - an indication of how well resourced the school is - only accounts for around one per cent of the variation. A report last year by researchers at King’s College London found that genetics are a bigger determinant of academic success than sending your child to a grammar school.

We could have guess the last bit, it's genetics and parents pushing their kids to do their homework etc.
On the subject of competition between schools and/or competition for better pupils between schools, from the BBC:

Most families do not choose to send their children to their nearest school, shows the biggest ever study of state secondary school choices in England. More than 60% opt for a school that is further away - usually because it is higher achieving.

"Contrary to a widely-held belief, only a minority of parents choose their local school as their first option," say researchers.

Why would parents not put down a perceived better school as their first choice? Be daft not to; and what are the chances that the perceived best school within reasonable travel distance is not the nearest one? Fairly high, I would have thought. Bear in mind my point above that there is likely to be a wider perceived gap between two nearby schools than between two isolated schools which all children in an area attend, simply because there are is no realistic alternative.

It also debunks the idea that richer families are more engaged with choices... Despite any assumptions about the "sharp elbows" of middle-class families, there was no significant difference in behaviour between wealthier and more disadvantaged parents.

Again, that doesn't really prove anything.

If a school is perceived as good, then higher income families will choose to move near it and will drive out lower income families from the area. This leads to the self-enforcing gap between the areas. Higher income families, having paid over the odds to access the 'free' education they've paid for two or three times over (income tax and higher house prices) will of course send their children to the nearest school - because that one is perceived as best (or else they wouldn't have moved there etc).

The reverse applies to low income families where parents 'just want the best for their children'. They can't afford to live close the perceived best schools, but they can still put them as first choice on their applications.

And so on. All quite fascinating in a Freakonomics kind of way.

Wednesday, 19 June 2019

.. and your name will be mud.

From The Guardian:

Permafrost at outposts in the Canadian Arctic is thawing 70 years earlier than predicted, an expedition has discovered, in the latest sign that the global climate crisis is accelerating even faster than scientists had feared.

A team from the University of Alaska Fairbanks said they were astounded by how quickly a succession of unusually hot summers had destabilised the upper layers of giant subterranean ice blocks that had been frozen solid for millennia...

Scientists are concerned about the stability of permafrost because of the risk that rapid thawing could release vast quantities of heat-trapping gases, unleashing a feedback loop that would in turn fuel even faster temperature rises.

These people have a very one-dimensional view of this and show no interest in what it was like millennia ago.

Ask yourself, "What is permafrost?". To summarise the explanation on Wiki, some areas used to support plant life in earlier, warmer times (which created the soil in which the plants grew, which created more soil etc) but these areas gradually froze over, the vegetation died and rotted away, hence the methane trapped in it.

There's no hard dividing line between 'soil which is still warm enough to support plant life' and 'soil which isn't'. If the latter category warms up a bit, after a couple of years, it will be normal soil with normal vegetation again. We've got to assume that normal soil with normal vegetation isn't some catastrophe-inducing, methane-belching horror, or else there'd be far more methane in the atmosphere than there is (about 2 parts per million).

So sorry, I see nothing to panic about. The methane emitting phase is just the awkward teenage phase while soil moves from being frozen to supporting plant life again.

The Disappearing Homes Conundrum

Using @yppuk, I mocked this wild claim:

Mr Ganatra added: “Dis-incentivising private landlords may end in a serious housing shortage, which will backfire, eventually should a new housing crisis take hold.

Our suggestion of rebating the mortgage interest rate relief tax charge to landlords who offer long-term tenancies would help maintain sufficient supply of properties in the market place and keep rental values in check.”

Various landlords tried to explain the Disappearing Homes Conundrum. So far they have claimed they won't be selling to other landlords (who according to their logic are net sellers) or sitting tenants (who are too poor, or who don't want to buy), but they refuse to answer the simple question - to whom do landlords sell? Ultimately it must be to former tenants, even owner-occupiers who sell and buy an ex-landlord home are former tenants, and to whom do they sell their old homes..?

This was picked up by @landlords_ltd (The Landlords Alliance) who came up with some genius non-logic:

"Yes and our advise [sic] to landlords is to sell up and invest abroad. To those that remain, do not rent to Dss unlss Shelter bond these tenants.

So the homes will go abroad? WTF?

Tuesday, 18 June 2019

Wealth tax musings

I've probably mentioned some of this before, but to summarise:

1. A traditional argument against Land Value Tax is that it is a "wealth tax". No it's not, it's a user charge for the value of services received/used, which leads to a better overall allocation/use of scarce resources, whatever you do with the proceeds (cutting damaging taxes on output and employment is top of my list). It's the same as fuel duty/road pricing; auctioning landing slots at airports, auctioning exclusive use of certain radio frequencies etc. These taxes are worth imposing even if the government just dishes out the proceeds as a Citizen's Dividend.

This ought to be implicit in the name, LVT is not a tax on paintings, Ferraris, pension funds or shares - it is a tax on land values.

2. The Homeys and hard lefties then make common cause, for opposite reasons, and say that if you have LVT, you might as well/should extend it to all 'wealth'.

The Homeys know that this takes the heat off them, because the revenue maximising rate of a general wealth tax would be very low, much lower than the revenue maximising LVT rate, so they'd be paying a smaller share of a smaller tax. The lefties just like the idea of wealth tax. Or just about any tax on anything, like 'carbon'. The left-wing Homeys point out that the second largest chunk of household wealth is pension funds and pension entitlements; and that this is concentrated in relatively few hands. This is true, but it is a fraction (a fifth or so) of the total value of housing and missing the point.

3. The UK only has one true 'wealth tax', which is Inheritance Tax (unlike most people, I have the dubious honour of having filled out actual wealth tax returns -  in Germany in the early 1990s - so I know more about this than most people), which raises a laughable £5 bn a year, a fraction of what would theoretically be collected if there were no loopholes and no planning. The loopholes and planning benefit the super-wealthy rather than the middle wealthy i.e. winners in the 21st century house price lottery, of course.

Human nature being what it is, there will always be ways round it; if you increase the rate, then there'll just be more planning. I am quite convinced, having seen this first hand, that the pin-striped ponces (lawyers etc) make more money from IHT planning than the government actually collects in IHT, which is probably the whole point. These tossers would all be out of business if the government just scrapped it.

4. Whatever the merits of a general 'wealth tax' are (and there are none), to my mind, the government should either tax something or subsidise something but not both (and preferably neither, with the exception of land values, fuel etc; or a general income tax if they need more money).

Rather than looking at the £5 billion a year collected in IHT/wealth tax (and £4 bn or so in Stamp Duty on shares, another dreadful tax), why not look at the subsidies going directly to the wealthy?

a) Pensions tax breaks, which 'cost' the government between £30 - £50 bn a year (depending how you argue it) in National Insurance and income tax breaks. These don't lead to people saving more and having higher incomes in retirement; half the tax breaks are soaked up by the pensions 'industry' (insurance companies, IFAs, accountants, trustees, fund managers, lawyers etc) and half just go into higher share prices. If you knocked all these tax breaks on the head and expected people just to buy shares off their own bat, we'd return to a proper shareholder culture and shares would be cheaper. So 'wealth' at the top end would fall and if people put aside the same amount of after-tax money every year, their pension income in retirement will end up the same.

b) Housing Benefit paid to private landlords, about £10 billion a year, meaning that about one-fifth of private landlords' gross rental income is pure subsidy. In a sane world, this would just be a government-run, pay-as-you-go insurance scheme, whereby private landlords pay in 20% of the rent they collect and this gets dished out as Housing Benefit where needed. To be fair, private landlords who are willing to self-insure can opt out of this insurance scheme (they would just have to allow tenants to skip rent for X months if they lose their jobs, so a tenant doesn't care whether he gets cash Housing Benefit or the rent-free period). The residual rate of insurance premiums for small investors who don't want to self-insure and slum lords who buy in low employment areas will thus go higher and higher until they either opt out or give in and hand their homes back to the council.

c) Legal Aid is another such scam, while I'm on the topic. While the general principle is sound, why not make the legal profession pay for it with a percentage contribution on their turnover?

d) Subsidies to owners of farm land, the more you own, the more you get, costs the taxpayer another £3 billion a year at least.

e) then there's minor stuff like SEIS, EIS and VCT tax breaks, which superficially benefit higher earners with spare cash, but actually just funnel money into the pockets of intermediaries and doomed businesses.

In summary, before we dream up ways of increasing revenues from IHT or imposing a general wealth tax, let's go for the quick wins and scrap IHT, stamp duty on shares and the subsidies mentioned at a) to e) above.

That would boost tax revenues/cut government spending (depending on your point of view) and slash bureaucracy (in government and private sector) with the minimum of administrative or legislative effort, as well as reducing wealth inequality.

What's not to like?

Monday, 17 June 2019

Doc Marten boots - real life confirms blog comment

Barman, in the comments here:

Many years ago my daughter had a thing for Dr. Marten boots, she had about five pairs in various colours (all paid for by herself to be fair)...

I used to take the piss out of her for wasting her money for such a stupid fashion statement but she insisted that she only bought them because they were 'so comfortable'... Her blistered, bandaged and plastered feet told a different story!

On the Northern Line on Saturday, I noticed that the young woman standing next to me was earning a bright orange Doc Marten with a blue lace on one foot and a pale blue Doc Marten with an orange lace on the other.

I asked her whether she bought a pair of each. As a die hard Doc Marten fan, she had her stock speech ready and imparted the following information:

1. She owns seven pairs in different colours and she mixes and matches.

2. They look old and battered (seemed fine to me, but she's the expert), but they've just reached peak comfort levels; and by implication, that they are pretty uncomfortable when new.

She alighted at the next station, so I did not have time to ask her about her system for matching shoe laces with the opposite boot. I did wonder whether this was Barman's daughter or whether there is a whole sub-culture with many adherents.

Sunday, 16 June 2019

Overlapping random cycles

There are lots of people like Piers Corbyn who reckon that the weather/climate is influenced by lots of things that go in cycles (he reckons that the main influence is changes in the sun's output) and repeat themselves if you look hard enough. Corbyn's forecasts are apparently very good, but the Alarmists dismiss him because he's only forecasting weather and not climate.

Some of these cycles are widely accepted, such as solar 11 year cycles, which possibly form double-cycles of 22 years, ocean oscillations, Milanković cycles (which are actually four quite distinct cycles with wildly different periods).

Some of them are more conjecture, such as Zharkova's longer solar cycles and sixty year cycles.

Some of these will turn out to be misunderstandings, and there will be others which we don't know about yet.
If you look at the temperature chart from The Conversation, which purports to show that CO2 levels dictate temperatures, what you see is that:

a) there are clear 100,000-year cycles (Milanković cycles, I believe) and everything else is just noise and apparently random variations,

b) temperatures in the current inter-glacial period are very similar to the previous seven, and

c) if CO2 levels dictated temperatures in the way the chart implies, it would be about 10C hotter than it is, which it clearly isn't. So we can rule out minor changes in CO2 levels (a change  of one per cent  of one per cent of the atmosphere by volume) as being relevant.

The article itself agrees that in pre-industrial times, temperature drove CO2 levels and not the other way round, and goes to some contortions to explain why that relationship has now flipped.

For more contorted explanations, go to the article at Skeptical Science. This site is reliably Alarmist but infuriatingly enjoyable - it's like reading an editorial in The Sun newspaper, you know it's propaganda but it's so expertly done, that on a first read it seems quite convincing and you have to look quite hard to spot the false logical steps.
I imagine it is fiendishly difficult to disaggregate overlapping but independent cycles. So well done Milanković, who did all this by hand and doesn't appear to have got credit until after he died (see also Kondratiev).

Just for fun, I set up and Excel spreadsheet with sine waves cycling between +1 and -1 with periods 2, 3, 5, 7, 11 and 13. A chart of the totals looks pretty random, those occasional outliers of +4 or -4 look like extreme or random events, but they are not, they are entirely predictable if you know the inputs:

Friday, 14 June 2019

Just dig a canal across the UAE, problem solved.

According to the Americans, the Iranians are carrying out sporadic random attacks on oil tankers passing through the Straits of Hormuz. The Iranians are decrying this as a false flag operation etcetera.

As a proper arm chair internet warrior, with zero knowledge about civil engineering, local politics, shipping or the oil industry, my brilliant solution, that can't possibly not work and will definitely defuse the whole situation, is for the UAE to quickly dig a new canal so that oil tankers can bypass the Straits entirely.

They can do short route A (30 miles or so) across the top bit, or the UAE and Oman can co-operate and do longer route B (100 miles or so) from Dubai to Sohar.

I did put some thought into this - my first bright idea was build a pipeline along those routes, but it turns out it would take days to empty an oil tanker at the western end and days to fill another oil tanker at the eastern end, so I shelved that one.

The answer's obvious if you look at the map:

Thursday, 13 June 2019

Killer Arguments Against LVT, Not (461)

Via Labour Land Campaign, an article in Prospect from last year, which, despite the sub-heading, only touches briefly on LVT.

True to form, a drone at Conservative Central Office - who presumably have a member of staff on their online response team tasked with responding to the day's Google search results for 'Land Value Tax' - leaves the following sob story:

I [bought] my house for £100,000. I live in it for 20 years. It is big enough for my family, the transport links are OK for work, schools for the kids are accessible.

Because of things like 'Help To Buy' and ultra low interest rates, house values in my area mean my house is now worth £1m. In the meantime my pay has doubled, but because of inflation I am actually no better off than when I bought the house. A land value tax at say 1% would mean I would have to find an additional £10,000 a year, despite being no richer.

Yes, my house may be 'worth' £1m, but that doesn't mean I actually have £1m, or even an extra £10,000. I would have to sell. I might well not be able to afford anything else local, and have to move jobs, the kids move schools, and all as a distressed seller. This is politically unlikely, and economically crass.

If you want to tax houses on value, start whittling away at the exemption from CGT - but gradually.

A proposal to get rid of the capital gains tax exemption for main residences would meet with the same vitriolic response; and taxing long terms gains rather than imposing an annual service charge is a terrible idea anyway, so let's skip that last bit.

Why do I have zero sympathies with this person? Because that's basically my life story (and typical for millions of Londoners who bought more than 20 years ago, we're nothing special). Just replace '£1 million' with £800,000 (based on recent selling prices of larger and smaller homes on my street). I know how bloody lucky I am.

Both of our kids changed primary schools halfway through because of moving, it was no biggie, at that age, they adjust. They both always went to secondary school using public transport by themselves; if we moved, they wouldn't change schools, they'd just take a different route. Plenty of Londoners spend an hour commuting, you don't change jobs just because you move within London. We moved outwards (white flight) and we took the extra twenty minutes each way each day on the chin.

Like this person, I don't have actually have £800,000, nobody said I did. That is not, and never was, the point.

This person makes clear, that house prices/rental values are a trade-off for convenience (von Thünen's Law of Rent). They don't want to move to a cheaper area, which in London terms means 'further out on the Tube or rail network' because of the extra time/cost spent commuting, sure, why would they? But they claim they don't want to pay the extra £10,000 a year either.

So what will they choose? The inconvenience or paying the £10,000?

We know for a fact that this person is happy to be £10,000 a year worse off as a trade-off for the convenience. How? Because they could sell their 'big enough family home' in Islington (or wherever it is) and buy something that for half that in Barking, or Harlow, or Croydon or somewhere cheaper/less convenient, banking £400,000 tax free cash after SDLT, moving costs and new carpets, which would give them an extra £10,000 a year cash to spend for the rest of their lives.

So the chances are, they'd pay the additional £10,000 (even assuming there weren't corresponding reductions in other taxes which would make most working couples better off). I know that I would, because the alternative is me and Mrs W and both of our kids spending more on travel and wasting an extra X minutes a day each sitting on public transport. We might pay our £8,000 a year through gritted teeth, but we'd pay it.
Seriously though, what planet are these people on? There are plenty of people outside London/south east who bought homes for £50,000 - £100,000 twenty years ago which only have kept pace with inflation or less.

How much sympathy are they supposed to feel for those with an unearned windfall gain - made at the taxpayers' expense, as the drone admits - equivalent to an average lifetime's earnings who are asked to pay a little bit of extra tax?

Wednesday, 12 June 2019

Value Added Tax is quite literally a tax on "value added". Why do people not think about what "value added" means?

The Tory wannabes are trotting out their tax plans, and a couple have mentioned looking at VAT (Michael Gove, article by Sam Dumitriu, and Rory Stewart, via @Sam_Dumitriu).

(Wow, Rory Stewart has "land value tax, at least for business and agricultural land" in his 'good' column and "business rates and no land value tax" in his 'current taxes' column. That's his leadership chances flushed down the toilet).

Gove and Stewart are politicians and don't know or care about economics. Dimutriu ought to know better and is the bigger fool for it. He goes along with the Big Fat Lie that VAT is some sort of harmless tax on 'consumption' or 'indirect tax' which does not affect production.

Let's take a step back and agree that income tax/NIC are taxes on wages or earnings and corporation tax is a tax on corporate profits. Their effect is pretty much the same, the percentage rates and administration is just different.

I trust we can also agree that workers and businesses 'add value', and the more value they add, the more tax they pay. So income tax, NIC and corporation tax are literally taxes on added value.

Value Added Tax  is just more of the same!

We reach an equilibrium point between gross selling prices, net wages after tax and net profits after tax, that point is fixed by the overall tax wedge. Shuffling between these four taxes makes no difference to VAT-registered businesses.

It would make no difference to gross selling prices, output, net wages or net profits (of VAT registered businesses) if we:

a) went to one extreme and scrapped VAT and increased taxes on wages and profits; or

b) went to the other extreme and scrapped income tax, NIC and corporation tax and increased VAT to a very high rate.

Here's a worked example for a typical sort of VAT registered company, which sells output for £120 gross; pays £36 to VAT registered suppliers, pays gross wages (incl. employer's NIC) of £50; employees receive net wages of £30; and has profits before corporation tax of £20.

Current system, with VAT

Gross sales.......................£120
Paid to HMRC as VAT.....(£14)
Net sales............................£106
Paid to suppliers, net.....(£30)
VAT paid to suppliers
and passed on to HMRC...(£6)
Gross wages......................(£50)
Net profit before tax..........£20
Corporation tax @ 19%.....(£4)
Profit after tax.....................£16

No VAT, 17% extra Employer's NIC and 38% corporation tax

Gross sales.........................£120
Paid to suppliers...............(£36)
Gross wages.......................(£50)
Extra Employer's NIC
£50 @ 17%...........................(£8).
Net profit before tax.........£26
Corporation tax @ 38%...(£10)
Profit after tax....................£16

No income tax, NIC or corporation tax, VAT at 46%

For the non-mathematically minded, net sales £82 x 46% = £38; £82 + £38 = £120, so gross sales £120 as before.

Gross sales........................£120
Paid to HMRC as VAT......(£38)
Net sales..............................£82
Paid to suppliers..............(£36)
Tax-free wages.................(£30)
Tax-free profit....................£16
The idiots out there think that because sellers can split the total selling price up into 'net' and 'VAT' that magically, consumers pay it.

If that were true, businesses could simply split the selling price into 'net', 'corporation tax' and 'VAT'. Would the idiots then believe that businesses don't pay corporation tax?