Sunday, March 29, 2009

A Day Totally Lost and Won on YouTube

It was just an innocent day reading surfing the BBC news page when criticism of Nick Robinson's light touch blogging directed me the way of the Renegade Economist, Fred Harrison.

For years I've been stating that house prices were getting ridiculously high. This later moved onto the premise that private property ownership was a human ill. Meeting Fred Harrison's view of taxing on land value takes my viewpoints to the next level: developing practical means of dealing with the private property problem.

There is no better time to re-evaluate the way things run in society than when the economy is hitting the seabed*. This runs hand in hand with the other highlight of the day, Dr. Albert A. Bartlett's Arithmetic, Population and Energy clips. It's an hour's worth but I can not tell you how much better off we would be if everyone had this basic level of understanding the nature of growth. I can't recommend higher that you take a look at these engaging videos.

The basic problem is that despite all the talk you hear about wanting to act in the interest of our children and our children's children we pretty much fail to look beyond the comfort of our own lifetime. And even then we struggle. Easy example; I want to be 13st or less. But what happens? Instant gratification (munching, in other words) or not bothering to find an enjoyable means of exercise (or worse still, persevering with an unenjoyable means of exercise) keeps me hovering** above it.

Until confronted with the horrific reality of a situation we like to pretend it isn't really going to happen. Technology will step up or luck the luck of probability leads to its failure to manifest.

We need radical action in order to get to a position where the impact of the sharp end of economic cycles are durable at worst or eradicated at best. The obstacle to change is, of course, that it goes against the immediate vested interest of some of those in power.

Let the fun commence...

*You'll have to forgive that nautical expression. The tail end of a day on YouTube will no doubt lead to silliness. In this case a rap song using the line "Sailing in a sea of melons, dropping my anchor like Magellan". Master of the House anyone?

**The irony is not lost on me here.

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"I will not allow housing prices to get out of control"

It's becoming increasingly clear to me that we don't do enough to make political figures responsible for their promises.

"I will not allow housing prices to get out of control and put at risk the sustainability of the recovery."
Gordon Brown 1997

I'd hate to think what I'd uncover if I was actually researching this.

Failure isn't the worst thing, it's the denying that it has anything to do with you and is completely out of your control that really irks the public.

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hmmm, not the first time Cameron called Brown a phoney

Check this PMQ from 2007:

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Tuesday, March 24, 2009

Don't Fear Deflation

Feel free to ignore the doom sayers at this point as RPI is expected to go negative.

Deflation is dangerous because you expect prices to be cheaper tomorrow than today so you don't buy. However, that's meaningless at the moment because what's dragging the index down is mortgage costs and utility bills. Guess what, you don't get a choice about when to buy them.

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Sunday, March 22, 2009

Spirit of the Law

Tony McNulty, the Employment Minister, is one of those strange political figures. I recall respecting him at some stage but I can't recall why. It may have been the way he protects the party or constructed his arguments but he has long since descended into tit-for-tat with the Tories which only ever tells you that what he is and his party is doing isn't good enough and all they can do is scare us away from voting others in.

Hardly effective government but never mind.

The good news is that he has now hit the headlines for claiming money on his parents' house 11 miles away from central London. Reportedly to the tune of £60k. Same argument as Jacqui Smith, it's within the regulations so no wrong doing.

Doesn't quite work that way. If you perform that kind of claiming then it tells us what you think about the public purse. It reinforces what we are repeatedly told is a wrongly held view; politicians are a bunch of out for themselves, power hungry, money grabbers.

Feel free to prove us wrong anytime. A good start would be not performing the actions that act as clear indicators that you are. Excuse me whilst I roll my eyes.

Also, how about a lot less of slagging matches, and a lot more getting on with the work and telling us about it.

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Thursday, March 19, 2009

The Correction, I mean Downturn, I mean Recession, I mean Depression

Anyone who knows me for my optimism must spend an awful lot of time with me to find it. That said, I think I'm the only person on the planet using the rather more positive term of Correction to describe the current economic circumstances.

Downturn was a horrid term to convey the fact that we are going into recession but we can't use the word yet and depression is the word we're desperately trying to avoid but since we can rely on Gordon Brown to tip his hand every so often there is almost an acceptance of the possibility now.

Correction not only has more friendly connotations but is also more accurate as to what's occurring. All the indicators were going crazy and they need to brought into line with reality. It's hard to think of them as this sometimes, but we have a huge number of intelligent people working on getting us back into positive territory and we are sure to get there. These things work in cycles (don't listen to Mr Brown there) so things will sort themselves out soon.

The thing is this happened as Conservatives 'did nothing' as Gordon loves to state and it'll happen as Labour plunge us into an incredible level of debt. The fact is that a collective band of humans can't continue to be less productive than we were the year before for an ongoing period. It's just not us.

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Next Topic: Drinking

This may be somewhat anecdotal but we've got a big problem with alcohol and what a lot of it comes down to is that overdoing it no longer comes with the same amount of shame.

I daresay that shame isn't the potent beast that it used to be. This kept away a number of social conditions that we'd to see the back of.

In some ways this is a good thing; teenage parents need support and not stigmatising in order to raise their children properly. The sacrifice for that is that teenage pregnancy is no longer shameful but something we wish to minimise non-the-less.

Similar deal for pre-marital sex. Marriage isn't necessarily the answer for everyone so it's need that it isn't enforced, as such. However...

There are a few levers we can pull out to solve the alcohol problem. The simple, but least effective solution is price hiking (which is a strange thing for an economist to admit to, I know).
The problem is that alcohol is genuinely cheap and easy to produce and hence they are selling it cheaper than water. Pull that lever and you just end up with the black market smuggling that tobacco now enjoys.

Social stigma coming back would be better. Yes, be merry, but scorn the drunkard who loses entire control of their function and went out with that intent.

Failing that. Some sterner criminal repercussions will help learn some lessons. A night in the cells gives them shelter and security for the night. It is almost a reward considering what could happen to them out in the street. Need to be a bit tougher than that methinks.

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Tessa Jowell Thinks No-one Could See It Coming

You do get a more accurate account of history by reading the documentation in place before, if not as, it happens. That's very true. Hindsight is poisonous to the causes and reasoning behind events. However, to hide behind the idea that we couldn't predict with accuracy what was going to play out does everyone a disservice.

No, we couldn't tell you that securitisation was going to bring us down to our knees the way it has, but we could tell you that the house price spiral was going to come to an abrupt and nasty halt because it was getting stupid.

I just hope there's a post in my archive to prove me right...

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Sunday, March 15, 2009

Tax the Fatties?

This week has been curious in that during a correction (the more common term is recession) you have two distinct consumption items are looking at being taxed: alcohol and chocolate.

BBC's The Big Questions asked: should we tax unhealthy foods? The camp has heavily weighted towards in some way to make fat people pay for their choices. The complaint however was that the system of simple taxing unhealthy foods was, well, too simplistic.

No kidding, Sherlock. Food nutrition just isn't that black and white.
The label reads 'Low Sugar!'. Oh right, better check the fat and salt then. Yep, thought so, loaded with the stuff. The label reads 'Low Fat!'. Check for sugar and salt... bingo.

The argument for such a tax comes from the NHS cost front. Not to mention the cost to the fire services as at least once a day someone is this country has to be pried out of whether they have got stuck by fire-fighters as their weight has left them prone.

One of the guests, tenor Nicky Spence, suggested that fat people should be taxed. The debate was tragic in that it only discussed this view as comedic rather than the real genuine answer that it could be.

Taxing individual food items is wrong, purely because they are only part of a diet, not a representation of everything one eats. The correct system would tax the whole diet on a weekly/monthly basis. The government dispatches the best in medical science to determine the recommended intake for an individual according to sex, height, physical activity and any other relevant factors. Tax is then levied on excesses of that recommended level. Rates of taxation should be based on the particular type of substance that has been exceeded (calories, carbohydrates, fat, salt, etc) and the cost to treat the particular conditions they cause.

Easy if you can get the data...

So, if you want a fair tax, prepare to have your privacy invaded. If you want a simple tax, slap it on chocolate, fast food vendors and whoever else needs picking on.

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