andrew's blog

Age Concern

From this week's High Life (the Blackheath High School newsletter):

Last week we went to the Age Exchange Centre in the
Village. There we looked at an old shop. Then we went
to the classroom and we did exercises and we heard
how people kept healthy in the olden days. After that we
went back to the old shop, we bought sweets or a toy or
even a watch! My favourite bit was buying my sweets.

Katie Gambier, 1JE

Raisin d'etre

Due to some twist of fate (I don't want to call it genetics, given the trouble James Watson has got himself into recently), Regan, Katie and I all have birthmarks on our necks. I've got the best one - it's a full-blown mole that sticks out about half a centimetre. Katie and Regan have blotches; Katie's is darker than Regan's. But Buffy has nothing, on her neck at least. [She does have a curious perpetual small sort of bruise on her back, but that's another story.] In order to explain birthmarks to Katie, we have always referred to our birthmarks as our 'raisins', largely in honour of my own, but the name has stuck and Buffy understands it too.

Today Katie committed the cardinal sin of big sisterhood - she mentioned food in front of Buffy. This is bad, because Buffy will always drop whatever she is doing to go get her hands on food. So when Katie said, in a very loud voice, that she would like some raisins, we flinched. But Buffy, for once, didn't run into the kitchen chanting 'raisins! raisins!'; instead she came towards me and started looking for my raisin.

Then I asked her where her raisin is. She looked confused, then started looking under her dress. She then went to look for Mommie's raisin. So Regan asked her again, "where's Buffy's raisin?"

Buffy looked puzzled and then turned around and said in her best, clearest voice - "I don't know!"

A question about house prices

A question which I have been asking for some time, but which nobody seems to be able to answer:

If the UK's current high house prices are really caused by a shortage of housing, how come rental yields are plummeting through the floor?

The BBC reports today that it's now cheaper to rent than buy! Well, welcome to the real world, Auntie, this has been the case for some time now.

If there were really lots of homeless people desperate to live somewhere - anywhere! - this fact would manifest itself in the rental figures. Lots of people would bid up the cost of rents as they pursued the scarce resource of housing.

But this isn't the case. People really want to buy, in order to cash in on perceived future gains, no doubt, but not to satisfy their basic need to live somewhere.

This is bad news for the housing market. It means that house prices are likely to fall like a stone the moment that perceptions about the future direction of the housing market change for the worse.

Anecdotally speaking, on our street we have the following cases:

  • a house that went on the market for £495,000 which finally sold for £410,000.
  • a house that went on the market for £695,000 in the summer and is still on the market.
  • a house that went up for rent at £1,700 a month and is still unlet.

The rental property above provides a yield of 5% if we assume the house is 'really' worth £410,000, like the first house it resembles. That's not much, really, considering the risk you're taking on as a landlord.

Stormy times ahead!

Responding to Murphy on "Tax, democracy, society and equality"

On his blog, Richard Murphy has posted on Tax, democracy, society and equality, and he refers to a particular comment with which he fundamentally disagrees. He then goes into a complete rant on the topic. He's referring, of course, to a comment I made.

In response to his assertion that:

without there being a relationship based upon the payment of tax deomcracy flounders because accountability is lost.

...I said...

So, death to progressive taxes then? I agree. It’s undemocratic to vote for other people to pay tax to supply services that you will consume.

He has responded with a quote from his recently-published Code of Conduct for Taxation:

Taxpayers shall not suffer discrimination for reason of their race, ethnicity, nationality, national origin, gender, sexual orientation, disability, legal structure or taxation residence; and nor shall discrimination occur for reason of income, age, marital or family status unless social policy shall suggest it appropriate.

I'm not surprised that he has done this. Richard is a consummate self-promoter. But unfortunately the quote doesn't help him very much. For the Code to be at all useful, it needs to be normative. But it's not - it's purely descriptive, and is phrased in such bland and meaningless terms that it can be hammered to fit any tax system anywhere in the world.

He also has it back to front. Democracy isn't built upon tax. A fair and just tax system needs, necessarily, a strong democracy. The last bit of the quote above gives the game away - society (in a democracy that means "us") drives tax.

The rest of his rant is a load of sanctimonious drivel. Take for example, this:

They put material well being of the individual first. All other considerations come second, including the well being of others.

But that's what we humans do. We look after ourselves first and then, and only then, do we look after others. People like Mother Teresa are few and far between. The rest of us look after others only after we are ourselves comfortable. And what would caring for others before caring for yourself mean in practice? He doesn't say.

Richard makes his living from his tax policy work and, as Maslow pointed out, "When the only tool you have is a hammer, everything looks like a nail". In fact tax is often a very poor policy tool for many situations. Thanks to our extensive welfare system we encourage many of those who could work to remain idle. Yet, President Clinton's welfare reforms in the US show us that cutting benefits doesn't condemn the poor to starve - it actually leads to better overall economic outcomes for everyone.

I don't happen to think of myself as a greedy person. I pay much more in tax than I consume in state services and I volunteer my time to make the state's services work better. For me, it's infinitely more greedy to refuse to be economically active while voting to force others to pay higher taxes to fund that lifestyle. We don't live in Victorian Britain or 19th Century Ireland. Cutting taxes will help the poor, not condemn them to death.

Richard should open his mind to the benefits of a smaller, simpler taxation system. It would mean less work for him, but it would be significantly better for everyone else.

On creating a market for school run parking

There are few inefficient processes that can't be improved by markets. One particularly inefficient process is the school run. A particular parent generally prefers to drive his/her children to school. The catch is that so do most of the other parents. But there's no incentive for that parent to change his/her behaviour because the benefit of that decision accrues to other parents.

The solution to this problem would be to use markets. Let's say that a typical two form entry school (420 children or so, including reception) has a half-hour dropoff time in the morning. And that each drop-off takes 2 minutes in total and that there are five parking spaces dedicated to parents dropping off their children. The parking space resource can therefore accommodate 75 child drop-offs every day.

You assign each child 17.9% [75/420] of a parking space permit for every school day. You then allow a free trade in parking permits to allow parents to buy permits from those who don't use them. You coordinate the scheme with the local police to ensure that naughty parents don't cheat and try to drop off without a permit, or drop off away from the school.

This would incentivise parents to find alternative routes to school. Problem solved!

Biting the hand that feeds you

One of the great joys of the last week or so has been watching The Picture of Gordon Brown. Two weeks ago, every picture of Gordon Brown emphasised his strength, his vitality, his drive, his power. Now every newspaper picture depicts a haggard dwarf, all hunched over and pitiful. On TV you can see him giggling to himself like a madman while Alastair Darling raises taxes while claiming to reduce them. In short, he looks nasty.

But how did this happen? Isn't New Labour meant to be good at managing the media? Why are they being so beastly to him?

In short, because he double-crossed them. He led them down the garden path with rumours of an imminent election. When the plan backfired spectacularly, he chickened out. And, even worse, he then tried to blame the media for inventing the story themselves! Bad move. They've now all got it in for him.

And it serves him right too, after the ten year easy ride New Labour has had despite its appalling catalogue of mismanagement.

Oh, and you can petition Brown to call an election here!

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