August 26, 2010

The Budget was Progressive

As explained by Andy Cooke @ 168 on Political Betting the Coalition budget is 'progressive' by any reasonable definition, however I guess they needed to please the lefty group that was paying for the report.

I’ve had more of a poke around the IFS report. It’s an impressive example of how to present facts to support whatever case you want to make.
The important data is in Appendix A and Appendix B, as well as note 5 to the main paper.

Appendix A shows the Budget effects without their admittedly uncertain estimates of the effects of renewed DLA testing and the Housing Benefit effects, as well as the Tax Credit changes. Figures A.1 and A.2 (effects to 2012 and 2014) are the key ones.

If you pretend that Osborne had no power to change Darling’s pre-announced changes (that they are binding on him and were the baseline), then the blue bars are what you’ll concentrate on. If you want to see the overall effect of the Budget (assuming that Osborne had the power to implement whatever changes he wanted to, comparing the output of the Budget with what the state was before) then the black line marked “Total” is the overall effect of the Budget. Because that is the effect of the Budget. You’ll note that the poorest deciles are best off (1st 2nd and 3rd deciles are no worse off and in most cases better off), the middle deciles are slightly worse off (gentle downward slope from 4th to 8th deciles), a downward jump for the 9th and a big downward jump for the 10th.

Apparently “progressive” doesn’t mean what I thought it did …

Appendix B contains the details of how they came up with their changes:

Housing Benefit: They use the DWP paper, whose core assumption is “assuming that they would be renting at the same rent level in the same property and with the same household composition. No behavioural changes have been assumed, such as customers moving to a cheaper property or landlords reducing their rents. As a result, when we report ‘losers’ or ‘losing out’, these could be actual losers (seeing their benefit decrease) or notional losers, meaning that they would not see any benefit decrease, but would receive less HB compared to what they would have done under the previous scheme. So, for example, a new LHA customer applying for benefit after measures take effect may ‘notionally lose out’, meaning that they would receive less than under the current arrangements.”

They then (in essence) assign the savings estimated amongst the claimants as if it’s coming out of their pockets.

The other two are done as follows:

Disability Living Allowance
“The Budget policy costings document says that the effect of this reform will be to remove DLA from around 20% of claimants. We randomly remove entitlement to DLA from the appropriate number of claimants in order to match the long run saving from this policy (around £1.4 billion).”

Tax credit reforms
“There is no way to identify those who will be affected by changes to the way in-year awards are calculated so we simply reduce all tax credit awards by the same percentage amount so that the total amount saved from the policy is correct (around £1 billion).”

These aren’t exactly rigorous techniques, so I’d say that the published headlines are not exactly sturdy. Even with all this done, they have to gloss over the fact that the richest decile still bear a far greater share of the impact than the poorer deciles (in table 2.1) and the expenditure tables in Table 3.1 (which they’ve previously argued (when exploraing VAT effects) should be taken as better indicators when indirect taxation is looked at (overcome effects of wealth-rich but income-low students, etc) still have a total effect that’s progressive pretty much throughout.

As has been pointed out elsewhere, the extrapolation to 2014 (on a static rather than dynamic basis, and ignoring the fact that we’ll have four more Budgets by then) is not one on which you’d want to hang your hat.

It’s intriguing how they’ve taken an analysis that shows that the Budget is definitely progressive up until 2012 and managed
to present it as “regressive”.

I’m rather disappointed in the IFS. The comments from those sympathetic to the “regressive” argument are understandable - confirmation bias is present in all of us, but the main news outlets (and the Coalition defence especially) is rather disappointing.

August 20, 2010

Labour financially bankrupt

According to John Prescot the Labour Party are on the verge of bankruptcy. Financial bankruptcy that is, they have been morally bankrupt for a very long time. Labour must have run their own finances as badly as they did the country's while they were in power. Hopefully they will apply the same solutions that they want to apply to their own finances as they want to apply to the country, and simply crank up the borrowing and spending in an unthinking spending splurge. That way Labour can erase itself from the political scene and let the more sensible parties try to sort out the problems that they and their socialism have caused.

August 16, 2010

Homeopathy in the NHS

There are many on the left that claim that anybody proposing any cut to the NHS might as well be throwing babies into the barbeque pits. They claim that the NHS is the envy of the world, unlike the French system which is merely the best in the world, and an organisation of unrivalled in efficiency. However while the NHS is paying £36,807 to £68,638 as a Specialty Doctor in Homeopathy for handing out water and a bit of sympathy that is simply not true. While taxpayer's money is being flushed down the toilet on homeopathy then clearly more cuts are needed in the NHS.

August 15, 2010

Different approaches to the Pakistan flood

Today Ban Ki-moon has asked the governments of the world to try and and do more to help with the flood in Pakistan. A fortnight ago Rotary, a voluntary organisation, in had already housed 1000 families through Shelterbox, a charitable organisation based in Helston in Cornwall. Not that you would hear much about that from the national media, hundreds of separate organisations in the voluntary sector simply got down and did their thing as soon as they heard what was happening without any pleading from any centralised organiser.

August 10, 2010

EU regulations can make life more dangerous

Fishing is the most dangerous industy in the UK. Fishermen in Britain have a one in 20 chance of being killed on the job during the course of their working lives, however it used to be a profitable industry that supported 10s of thousands of people. That was before we joined the EU and became involved in the CFP, the EU mysteriously gaining a competence over fishing that it had never held before the UK, with its large fishing grounds, joined. The UK gave away a fishing area equivalent to its entire land surface. This fishing area contains some of the best fishing grounds in Europe, and were far better than what anybody else put in. It used to be teeming with fish, but no longer. The EU's Common Fisheries Policy has transformed it into a wasteland through a text book example of the Tragedy of the Commons.

There are also some other effects on the fishing industry that are less well know. One of them is that the UK is one of the very few countries that actually receives less money from the EU for building boats than for scraping them. Almost every other country in the EU is being paid by the EU to build up its fishing fleet, except the UK. When new boats do get built in the UK people that live near fishing ports will have noticed that a quiet revolution has been happening in the design of fishing boats under 30 feet in length.

Smaller fishing boats used to be mainly scaled down versions of the bigger boats, but their hull plans have radically altered. Instead of being longer than they are broad they are now practically square, and very very tall compared to what went before. If you look at one of these new boats you would think they look less seaworthy than their predecessors, and you would be right: these theings bob around like a cork compared to the old style of design. So why would people in what is already a very dangerous industry spend their own money to have boats built that make it even more dangerous? The answer is simple: the EU regulations on boats under 30 feet in length are different to those above 30 feet so the fishermen have to try and cram as much boat in under that length as they are able in order to try and generate a living, even if it makes their already high chances of injury or death greater.

Gay Marriage and Right Wing judicial activism

August 06, 2010

A good start

ID cards are dead, Contact Point is dead, and Labour's extreme porn laws are starting to be tested in court and found wanting. The Coalition definitely seems to be less bad than Labour.

August 05, 2010

Big State BS

There’s so much wrong with the Paul Sagar's nonsense argument against the “Big Society” it’s hard to know where to begin. But let’s try anyway. His first point was simply to show that he does not understand that there is something called civil society that this is not the same as the state.

His second point is the only point with an actual argument in it. However it is an argument that rapidly falls apart when confronted with evidence rather than ideological assertion. The RNLI provides a very good example of how wrong the argument is.

Voluntary groups are staffed by volunteers, who are by definition amateurs.

This is completely untrue, as the RNLI proves. Last year, the RNLI spent £53 million on staff salaries, including a dozen people who each earned more than £100,000. The crews are volunteers but they are backed up by professionals were they need it, so obviously voluntary groups do not have to be staffed entirely by volunteers. Nor is it true that volunteers are by definition amateurs as most of the RNLI volunteers will be professional seamen.

Take away the centralised finances allowing these volunteers to organise and how will volunteer amateurs be able to provide anything, lacking as they will the finances required for service-provision?

The RNLI receives nothing from government at all. It raises all of its funds itself, and yet it is able to raise all the funds it needs to provide a 24/7 service proving that without centralised funding even very large and expensive organisations can still get the funding they need. If fact it did try taking the state's shilling at one point but this had such a disasterous effect on their regular funding that they stopped.

The fantasy that services provided by trained professionals can be replaced with spontaneous volunteer groups, and without significant falls in quality or reliability

The RNLI crews who perform the actual rescues are made up of volunteer amateurs, and they deliver their service with complete reliability no matter the extreme conditions that they face. Which is rather more than can be said for many professionals in the public sector.

The RNLI is a very large sucessful voluntary organisation but RNLI does not operate everywhere since it does not consider certain places a good use of its resources. Were it does not and the locals disagree other voluntary groups have sprung up to cover their local area: such as the Sidmouth Lifeboat.

Another example would be the National Coastwatch Institute. This charity is an example of what Cameron is calling the Big Society in action, something that Paul says it is impossible. The state decided that it nolonger wanted to mount a visual watch of the coast for people in distress as it was not cost effective for it to do so. What happened next was a group of people decided to restore this service and have built or restored watch towers along the coast which are manned on a voluntary basis, all funded by charitable donation. The government withdrew, but because it was still felt needed the service was replaced spontaniously by a voluntary group.

Point three has no argument other than attributing bad motives to those that are not statist in their outlook.

His fourth point is so bad that it needs exposing. Apparently gay people should praise the big state for not being persecuted. This is bollocks. It was the state that was persecuting us. Oscar Wilde was not thrown into Pentonville Prison by the Marquess of Queensberry. He was thrown in jail by the state. Alan Turing wasn't forced to take hormone therapy because of a nagging mother. He was forced to take it because otherwise he would have been thrown in jail by the state. All the bad things that have been done to gay people pale into insignificance when compared to the bad things that prejudiced people backed by the power of the state have done. However if you look at small communities from the same period where gay people could be open such as in the merchant navy you will find remarkable tolerance of them. Once the state stopped actively persecuting gay people we could, and did, reveal ourselves as deeply embedded in every aspect of of civil society and were therefore able to start breaking down people's prejudices; something that is happening with remarkable speed.

August 04, 2010

The Euro's cycle of destruction starts again in France

Spain is in great difficulties at the moment. The reason for this is that it is getting over the bursting of an enormous property bubble. The reason for the enormous property bubble was that for years it was forced into running negitive real interest rates while the economy was growing strongly and so everybody with any sense took out huge loans, with the largest loans most people can get being the ones backed by property. Unwinding this mess is going to take years of austerity that makes the UK's problems look like a walk in the park since we have a floating exchange rate to soften the blow and they don't.

France however has whethered its recession relatively well. The economy is growing again, with lending to households picking up strongly thanks to the Euro forcing them to run negative real interest rates. Oh dear.

The ECB will eventually raise rates. The question is whether it will raise them by enough and soon enough to stop what happened in Spain and Ireland happening again in France, because if the French economy goes down like Spain or Ireland then there is simply not enough money anywhere to bail it out. It probably will, the size of the French economy means that they cannot ignore it. However if they raise rates soon enough and by enough to stablise France it could well lead to a second phase of economic crisis in the current problem countries like Spain, Ireland, and Greece as the number of people unable to service their loans shoot up.

Whatever happens is not going to be pretty because fixed exchange rates simply do not work and always cause problems for those trapped within them. The sooner the Euro collapses the better it will be for everybody.

August 03, 2010

Picking Losers

Just a quick example of how good government is at picking losers. After proping up Northern Rock in an attempt to save a few MPs their jobs at huge expense to the tax payer the government decided to split it in two rather than just sell off the assets to however would buy. It was supposed to be split into a 'good bank' that would be profitable bank and eventually sold off as a going concern, plus a 'bad bank' as a storage zone for all the crap. However it turns out that it is the 'bad bank' which is profitable, and the 'good bank' that makes losses. Score another one for the infalibility of the all knowing state.

The Rosette Code

Wikipedia is an amazing (if not always accurate) resource. It has articles on practically anything, including one that I stumbled upon which poports to be the code that gay men apparently used to discretely communicate the more interesting aspects of their sex lives in a hope of attracting compatible partners using coloured hankies. What struck looking through the codes was how close the colours chosen match the colours chosen for the less discrete method that politicians use to communicate their particular proclivities.

Medium Blue - Uniform fetish - Police uniforms or uniforms worn by other authority figures

Which seems a reasonably accurate veiw of old fashioned Toryism.

Gold (Golden) - Ménage à trois - Two looking for one (left) or one looking for two (right)
Orange - Few limits - When worn on the left, orange indicates that the wearer will top in relatively any fetish, anytime, anywhere. Conversely, when orange is worn on the right, it can indicate either the wearer will bottom in relatively any fetish, anytime, anywhere
Yellow - Watersports - Urinating on (left), or being urinated upon by (right), another person

Which mirrors what the left wing blogosphere has been saying about the Lib-Dems ever since they decided to go into coalition.

Red - Fisting - Left pocket: Insertive partner. Right pocket: Receptive partner.
Dark red - Two-handed Anal fisting

Which is exactly what a wage earner feels like is being done to them during a period of Labour rule.