Michael Meacher: mendacious git

We welcome another member of the illustrious club of sociopaths: horny-handed son-of-a-son-of-the-soil Michael Meacher. In today's Grauniad he's arguing that you could kick-start the economy simply by taxing the snot out of the 1%.

An interesting proposition, Mr. Meacher, so how do you argue it?

The richest 10% control wealth of about £4tn. To put these figures in perspective, Britain's total GDP is £1.45tn.

Oh look, I think he's comparing wealth (a stock) with GDP (a flow). Perhaps he didn't learn any economics at the LSE. Never mind, surely the rest of his case holds up better?

Britain's thousand richest [...] In 1997 they held assets of £99bn, but they took full advantage of New Labour's being "intensely relaxed about people becoming filthy rich" to nearly quadruple this to £336bn by 2010.

13 years in which the RPI climbed from 160 to 228, so you can discount that second sum by 1.425 to give £235bn; more than a doubling, but certainly nowhere near a quadrupling. It's also worth nothing that house prices (a significant fraction of assets) climbed to 290% of their 1997 value by 2010 according to the Nationwide HPI calculator.

And, having failed to make his case that the rich have received an undeserved rise in wealth, what's his solution? Tax the wealth:

In the short term, the most feasible approach is to impose a capital gains tax charge at the current rate of 28% on the topmost layers of wealth [my emphasis], the £155bn gains amassed by the 0.003% over the last three years. That would yield £43bn, more than enough to generate the public investment to create 1.5 million jobs over the next two years.

Oh, heavens above. Tax the wealth! Of course! Because that's not going to produce any form of legal storm as the taxed fight back against classification, shift around asset ownership or head abroad; and raising money for that tax won't involve a huge sale of property at the upper end of the UK property market just when there's no appetite for purchase (because most other purchasers have a similar tax bill). And he's not done yet:

This could then steadily be extended to the remainder of the top 1%, which would provide the funds to widen and deepen the early recovery.

The politics of envy, Mr. Meacher. You assume that Government can spend money with greater benefit to the economy than its rightful owners, even with a huge destruction of wealth implicit in your taxation plans. You're worse than a fool, because even you don't really believe this works.

Hacking 787s for fun and profit

The Daily Mail asks the question on everyone's mind: "Could a vulnerable computer chip allow hackers to down a Boeing 787?"

No. Thank you for asking.

[You'd need to have a physical connection to the chip's programming pins, since it's almost certainly not intended to be reprogrammed remotely, let alone over any form of wireless connection. There's no information on the purpose of the chips; given the difficulty in arguing high integrity levels for reprogrammable logic, I find it hard to believe that the chip is a single point of failure in a high integrity subsystem. For a more detailed perspective on this report, see Errata Security on the subject.]

If you have that kind of access to a 787, there are far more reliable ways of downing the plane. This may not be reassuring, but it's the world we live in.

Perverse incentives

The irascible Inspector Gadget reports on an unexpected consequence of the Winsor report, whereby response police officers who were intended to benefit from increased anti-social shift salaries are now directly incentivised to not arrest people.

While I'm sure Inspector Gadget talks his own book, the facts laid out are difficult to deny:

The only problem is, if you actually arrest someone, and then have to attend court to give evidence, your night shifts are replaced with day shifts.
[...]
So then we lose our night shifts to attend court and we lose pay along with it! This means that it now costs police officers money if they decide to arrest someone.

This also applies for attending or conducting training: any additional skill which requires annual training will directly impact the officer's pay packet due to the night shifts being missed.

This is what happens when you big-bang changes like this - the perverse incentives which are an inevitable result of any complex systems of rules will appear all over your organisation and make the regulation designers look like arses.

Of course, there is a school of thought that if the arresting officer has to attend court then he or she isn't suffering the hard work and anti-social hours of a night shift. This is true; however, if an officer has organised themselves a run of nights to avoid switching to and from daylight working hours, a court attendance in the middle of this run makes the subsequent night shift significantly harder for their body clock. On the other hand, if you pay night shift officers for daytime court appearances, you give them an incentive to arrest people left, right and centre so that they are attending court for half their shifts, even if the arrestees are subsequently released without a stain on their character. You can't win.

It may just be fairer to create a class of police officers who are normally expected to book on night shifts, pay them an annually fixed bonus for working in that role, and start clawing back the bonus if they don't work more than a certain fraction of night shifts. That's going to screw over officers who only work a small fraction of night shifts (no financial benefit) and officers who work nights most of the time (no additional benefit compared to regular nights officers) but I think it's clear there's no good solution, no matter what the Government, police or population believe.

£110bn a year from taxpayers to borrowers

Two Bank of England academics calculate that UK banks benefited from implicit taxpayer guarantees to the tune of £200bn or so in 2009 and 2010:

The authors said that while it was difficult to quantify the implicit subsidy received by Britain's banks during the crisis, the Bank had estimated it at £100bn in 2009. For 2010 it said estimates varied from £30bn to £120bn, depending on the methodology used.
"All measures point to significant transfers of resources from the government to the banking system," they added.

Government funds the evil bankers! Except - wait - UK banks didn't make anything like that much profit: best guess for 2010 was about £25bn. Instead, those borrowing from the banks could take advantage of the lower rates for funding that the banks could achieve. Additionally, the Government doesn't actually have any money of its own; it all comes from various forms of tax and business rates, so the transfer of wealth came from the source of those taxes.

Let's rewrite that conclusion:

The authors said that while it was difficult to quantify the implicit subsidy received by Britain's mortgage and credit card debtors, the Bank had estimated it at £100bn in 2009. For 2010 it said estimates varied from £30bn to £120bn, depending on the methodology used.
"All measures point to significant transfers of resources from the taxpayer and businesses to the homeowners and irresponsible spenders," they added.

Why not the UN to regulate the Internet?

The US House of Representatives is debating a proposal to give the ITU more control over the Internet. This organisation, the UN agency for information and communication technologies, is so important to the operation of telecomms and the Internet that I'd never heard about it until now.

Apparently, this transfer of control is a good idea: lots of major countries agree.

The proposal is backed by China, Russia, Brazil, India and other UN members, and would give the UN’s International Telecommunication Union (ITU) more control over the governance of the Internet.

Let me repeat, that's China ("Great Firewall of"), Russia ("Spam and Internet Crime Central"), Brazil ("Internet connectivity provided by 2000 miles of wet string") and India ("pre-screen content to stop people saying bad things about anyone who matters"). Well, I don't know about you, but I'm convinced.

I browsed the ITU site, and five minutes of reading the Newsroom articles had me wanting to pound a wooden stake through their skulls. They don't actually do anything that anyone cares about! I'd be the first to admit that ICANN has its problems, but compared to this alternative they're a combination of Bruce Willis and Mahatma Gandhi.

Jonathan Freedland is no economist

Some might call this a compliment, but I intend anything but. Freedland's encomium to Ed Balls in CiF today is significant for the question it fails to ask.

He correctly points out that Balls was questioning the effects of austerity nearly 2 years ago:

In the summer of 2010, when the coalition was young and Labour was gazing inwards to choose a new leader, Ed Balls broke with what was then a near-uniform consensus to declare that a rushed austerity programme made no sense when the economy was so fragile.

and claims that, now the economy is slumping, Balls has been vindicated.

One slight problem, Jonathan my chum. The Chancellor has to make a choice on fiscal policy, and live with it. All you've seen is the results of Osborne's choices in parallel with the fiscal events in the rest of the world. What you (implicitly) claim is that Ed's alternative of a splurge in Government spending for two years would have improved matters. Except... what do you think the odds are that the UK would have retained its AAA rating in such circumstances? Even in 2011 the UK was spending £50bn/year on debt interest, and that is only going up. Where was Balls going to find the money without generating a vicious circle of increasing gilt yields and debt interest?

Another question that is significant for its absence in Freedland's article: what would Balls spend this extra money on? Government is notorious for its ability to sink money into pointless infrastructure or "investment", that at best just breaks even and at worst falls down a black hole of civil service incompetence and private sector sharks. The closest he gets at a hint is:

Doling out money to the unemployed, who would no longer be paying taxes, would only see Britain's debts get bigger, not smaller.

Well whoop-de-doop, Jonathan. What would Balls do instead? Pay them for a full-time minimum wage make-work job? I assure you, they are going to be very little better off, if at all, and the overheads in Government job creation will make this a terrible spending proposition.

Who is this jerk, anyway?

Jonathan Freedland writes a weekly column for the Guardian. He is also a regular contributor to the New York Times and the New York Review of Books, and presents BBC Radio 4's contemporary history series, The Long View.

Ah, clearly a man whose economic expertise towers over my own. That's all right then.

Spain must not win the Eurovision

Pastora Soler, the Spanish entry in the Eurovision Song Contest, has been instructed not to win the competition because Spain can't afford to host it.

It gives me great national pride to know that the UK entry has no need to be told this.

Dutch DoubleThink

A fascinating review by Canada's favourite neocon writer Mark Steyn who writes the forward to Geert Wilders' new book "Marked for Death". I thought, and I still think now, that some of what Wilders says is distasteful and not entirely justified by the available facts. Nevertheless, you can't deny that the man has the courage of his convictions. The horrible end of Theo van Gogh, fellow Dutchman and critic of Islam was evidence enough that a small but violent section of Holland's Muslim population were not going to bear quietly criticism of their religion.

Steyn accurately and painfully pillories the Dutch attitude to the evident problem with some of their immigrant population:

The geniuses at the University of Amsterdam concluded that the attackers [of a gay USA newspaper editor in Amsterdam] felt "stigmatized by society" and "may be struggling with their own sexual identity."
Bingo! Telling Moroccan youths they're closeted gays seems just the ticket to reduce tensions in the city! While you’re at it, a lot of those Turks seem a bit light on their loafers, don’t you think?

Before we start getting too smug about the Dutch problems, it's also worth noting that the UK isn't that hot on Wilders' free speech:

The British Home Office banned Mr. Wilders as a threat to "public security" — not because he was threatening any member of the public, but because prominent Muslims were threatening him: The Labour-party peer Lord Ahmed pledged to bring a 10,000-strong mob to lay siege to the House of Lords if Wilders went ahead with his speaking engagement there.

I can see why the Home Secretary wasn't keen to have riots in London because of the turbulent speech of a visiting foreigner, but I can't help feeling that political calculation in this case played into the hands of Lord Ahmed and his chums who will now feel emboldened in their ability to shut down free speech with which they don't agree.

Steyn puts his cards on the table:

It’s not "ironic" that the most liberal country in western Europe should be the most advanced in its descent into a profoundly illiberal hell. It was entirely foreseeable, and all Geert Wilders is doing is stating the obvious: A society that becomes more Muslim will have less of everything else, including individual liberty.

And, in common with most of what Steyn says, you may dispute the detail of his conclusions, but it's darn hard to argue with the facts he has clearly laid out to this point.

I'm still not sure whether I'll order Wilders' book. However, given the list of unsavory characters who would threaten me if they knew I was thinking of such a purchase, the Imp of the Perverse on my shoulder is making me want to click the Amazon link, and let them be damned.

There is a word for people like Elizabeth Moon, and it's not just "idiot"

She thinks that everyone should be given a unique barcode at birth because that would make it easier to identify anyone. She's correct in that assertion, but really struggles to connect this to "and therefore this is a good idea":

Having such a unique barcode would have many advantages. In war soldiers could easily differentiate legitimate targets in a population from non combatants.
This could prevent mistakes in identity, mistakes that result in the deaths of innocent bystanders.

Yes. Um. So you take the population database and run a filter to set the "innocent" Boolean field appropriately, distribute that database to all weapons in the field, and everyone's happy.

For someone who's a science fiction author and History BA, Elizabeth Moon sure didn't pay much attention in the important history classes.

IMF hates pensioners, wants them to die in poverty

Well, that's the natural conclusion to draw from Christine Lagarde's recommendation that the BoE cut interest rates another 50 basis points to a big fat 0. After all, what could go wrong? You'll note the sterling (badoom tish) success that zero interest rates have been in Japan and the USA -- well, the Fed funds target is 0-0.25 but that's close enough for Government work.

Why should we do this?

Christine Lagarde has said that the move will be good for UK homeowners and businesses

Well, great! Of course, everyone else in the country will get it in the shorts. But hey, more fool them for not sinking themselves deep into debt in a housing market bubble. It's at times like this I'm tempted to believe the esteemed Mr. Wadsworth's position that the economy is run for the near-exclusive benefit of home owners.

Her intervention raises the prospect of the first zero per cent interest rate since the Bank of England was founded in 1694. Japan cut rates to zero in the 1990s when it suffered a decade-long depression.

...which it is still in. Well, that sounds good to me!

Dear Christine, my reply is in three parts:

1. No.
2. Hell, no.
3. Please explain why we want our economy to function with the same dynamism as Japan's. Really. I'm curious.