Wednesday, October 11, 2017

The burning injustice of discrimination?

Apparently according to Theresa May our country is rife with the burning injustice of discrimination!

The BBC duly did a report, here, which highlights some of the disparities that are unjust.

The key point is, if you read the BBC report, we live in a Chinese supremacist society, where Bangladeshi and black people are discriminated against compared to Pakistani, white and Indian people in home ownership.

I can't quite fathom why this country discriminates against white people on favour of Chinese but the statistics don't lie... unless it's all just dangerous race baiting nonsense that is going to drive us towards the sort of divisive race politics that is prevalent in the USA.

The reality is that there are a whole bunch of reasons for disparities between groups of people and their outcomes. Some are down to educational drive, some down to the way a community operates and others down to how divisive race politics withing communities has led those communities to believe they will be discriminated against which in turn leads to bad choices which then leads to bad outcomes.

A case in point is the Lammy report which found out that black suspects don't take their lawyers advice to plead guilty (why would they, the lawyer is racist so trying to get them treated unfairly) that otherwise similar white suspects take resulting in no discount for a guilty plea for black suspects but a discount for black.

This is important. If you think you are a victim you behave in a way that makes things worse. Stop being a victim.

The Spectator also has this and this both of which are very interesting.

Tuesday, July 11, 2017

Oh dear Paris is coming for all our banking and legal jobs!

You do hear some guff around the UK's departure from the EU.

There is this article here, from the BBC, by Simon Jack.

There are a few points here. JP Morgan's boss, Jamie Diamond, says hundreds of jobs will go to Dublin and Frankfurt, but that many more could go if EU regulators and politicians decide to make it so.

That simply isn't true. The City of London serves the UK and indeed the world. It does business that is EU related, but it isn't the lions share, not by a long chalk. Further more, much of the EU related business is wholesale which benefits massively from the scale of London. You could do it elsewhere but at a large cost. Estimates related to the Euro clearing houses I have seen suggest that if the EU forced its institutions to get their Euro clearing done in the EU it would cost £20 billion in extra capital requirements which would in turn reduce lending ability by around £200 billion.

The thing that surprised me most was this though:

"English law courts conducted in English"

This makes the Ed stone look like a stormingly great idea. Lets unpick it.

Where are you going to get the judges? At the moment high court judges take a pay cut to do the job and do so in part out of a sense of duty. How are you going to attract them to a place where they feel no such sense of duty? I'm sure some will come because they like Paris, but enough? You will probably have to pay them a lot of money to do so.

The next problem is that you will need a sizeable panel of judges to avoid conflicts of interest. If you are already paying over the odds, this is going to add to it.

Who is going to appoint the judges? Seriously. That is an important part of our process. Are they going to ask us? If not will litigants trust the process?

When a party to litigation doesn't like the result, who does they appeal to? If the first court of appeal is in France, see above for all the problems filling the bench, but with knobs on. If it's in England, will the lawyers involved have standing before our courts? Do they need knew representation? What if the knew representation finds major fault with the previous representation? If a litigant doesn't like the result of the appeal here, in certain circumstances they can appeal again to the Supreme Court. What happens in France?

Then we come on to another issue. All these English speaking lawyers, who regulates them? The SRA and Bar association? A French equivalent?  Will they fly in from London offices?

Who is to staff the courts? Are they experienced in the procedures of our courts?

Our legal system is not the result of a revolution, it is a result of an evolution of 1400 years. You can'r build it over night. It's laughable. There are courts systems out there, that started with English judges, built on English law which have plenty of English speakers about. They are in places like the United States of America, Canada, Australia and New Zealand. Companies still prefer London though.

Thursday, April 20, 2017

Revenue is not profit.

I get amazed at the number of people who confuse revenue with profits.

Not too long ago the news reported that Google begin to pay £36.4 million in tax for the last year, on revenue of around a billion pounds. The Usual Suspects and chattering classes were aghast. Why that is a tax rate of only 3.6%. I wish I could pay that little tax...

Except that is cobblers. 

The revenue was £1 billion, on which VAT would have been charged and payed, wages paid, rent, heat, light and business rates. All those are fairly fixed costs. They will also have paid a hefty whack in tax, both PAYE, national insurance as well as employers national insurance. Add to that they will charge there customers VAT (though as most of their customers will be VAT registered it will be claimed back). After all these expenses they made a profit of £148 million. Frankly that's very good on a revenue of £1 billion and they should be proud. It's that they paid tax on, specifically £29.8 million, the balance made up of deferred tax from previous years.

Obviously if Google paid no wages, rent business rates etc, then their profit would be higher, and they would pay more corporation tax, but then there would be no tax paid on wages or business rates.

So next time you see someone saying oh look they had a revenue of X but only paid Y in tax, you know they are an utter moron.

Tuesday, November 22, 2016

Brexit: Project fear turns to project fact.... Project Fear 2.0

For all those irresponsible people who voted to leave the EU... Project fear is turning to project fact.

Forecasts show that the government will have to borrow £100 billion more than it would have otherwise...

And this is what the remoaners will be saying tomorrow.

However, it's as rubbish as the project fear was that they are now claiming will be fact.

The reason why is rubbish is this: The borrowing forecasts are just that, and they are based on economic forecasts. These have been downgraded. That isn't a surprise, after all the economists threatened that they would downgrade our growth forecasts and hence downgrade the tax revenue forecasts.

Thing is though... They are just forecasts. What is more, since 2008, economists have (or at least the OBR has) forecast that tax revenue would be higher than it turned out to be. Growth and tax did not meet forecasts. The forecasts for post Brexit were dire and turned out to be wrong. They were wrong. In fact our economy is now growing faster than forecast and so is tax revenue.

So when remoaners say project fear is turning into project fact, it isn't. Project fear has turned into project forecast, or perhaps better known as project fear 2.0.

Friday, May 13, 2016

IMF independently predict disaster if UK leaves EU shocker!

The economic powers that be all predicted catastrophe if we didn’t join the Euro. They all failed to predict the global crash of 2008. Now they are all predicting disaster if we leave the EU. The IMF, OECD and Treasury all predict the economy will be anywhere between 1.5% to 9% smaller in 2030 than if we stayed in the EU. Let’s be clear what that means. We won’t be 1.5% poorer than we are now, but that we will be 1.5% less rich than we would have been if we knuckled under to the EU, and meekly accepted becoming part of a country called Europe.

I’ve comprehensively debunked their figures here and here. But even if the economic establishment have got their sums right for once (please suspend your disbelief), are we really prepared to chuck away all the civil and democratic rights won by our ancestors since Magna Carta for a miserable £1.50 for every £100 we earn?

But where project complete bollox really goes into overdrive, is in the insistence that there will be NO economic upside to leaving the EU. No scenario in which the UK would be better off out. Let’s look how the economic establishment comes up with these fishy figures

1. They all used broadly the same starting point.

2. They all used broadly the same mathematical model.

3. They all make broadly the same assumptions.

Therefore, it’s no surprise they come up with roughly the same result. So how have they done it?

1. The starting point is uncontroversial. We can all agree that we are currently in the EU, have a GDP of approximately £1.8 trillion and have no trade deals of our own.

2. The model. They all use something called the “gravity model”. Some insist this is discredited. It doesn't matter, with the assumptions made the result would not be that different regardless of model.

3. The assumptions are as follows:

a) We keep all existing EU regulations because we love them. This isn't just controversial, it's inane drivel. One of the main reasons for leaving the EU is daft regulations.

b) We take an age about negotiating a new deal with the EU. This is possible, as we don't know if the common sense merchants or vindictive bureaucrats will win the day. What we do know is that we buy more from them than they do from us, so they would do more actual damage to their own economy than to ours. Just imagine the meeting where Angela Merkel tells the CEO’s of BMW, VWAudi, Mercedes and Porsche. “Hello, I’m going to support punitive economic sanctions on the country which takes 20% of your car exports.” No, I can’t imagine it either.

c) We do no trade deals with anyone else, or at least are very slow at it. EU slow, rather than say Australia quick. This isn't plausible. An EU free trade deal has to please 28 countries. We just have to please ourselves. As well as getting rid of regulation, one of the things the leave camp favour is free trade, whether that be with the Commonwealth, the Anglo-sphere or in fact almost everywhere.

There are many good reasons to leave the EU, for most of us it is the desire not to become part of a country called Europe. We want to revitalize our democracy and return to honest, accountable politics. As Dan Hannan said “We fought a civil war in this country to establish the principle that laws should not be passed nor taxes raised except by our own elected representatives.” Today, that power, that we won in a bloody Civil War, is vested in European Commissioners, most of whom owe their position to having lost elections. Economic isolationism isn’t a reason to leave the EU, it is a reason to stay in. Once out, in Churchill’s words, “we will choose the open sea”, not a stagnating EU which has only just managed to raise its economic growth above that of Antarctica.

Thursday, April 28, 2016

The OECD's creative accounting on Brexit

The OECD published it's report on the upcoming referendum and the consequences of Brexit. We'd all be worse off by £3,200 per household by 2030! The BBC covered it here, and George Osbourne seems desperately pleased.

It's shorter than the treasury report, being a mere 37 pages including the cover. What it lacks in length it makes up for with hyperbole and ridiculous assumptions though, so read it and enjoy!

It comes to some stark “We'd be doomed! Doomed I tell you!” conclusions, though it seems to lack detail on where to check its figures. It also uses the same brand spanking new favourite of remain economists of the GDP per household which no one else actually uses because it's meaningless.

The biggest hole in its numbers is there is no information on what figure it uses for the number of households and indeed what it expects either an in or out GDP to be in 2030. In one way, that's not a bad thing because frankly they don't know, no one does, including me. However if you're going to make a claim that household GDP will fall by £3200 you need to know how much GDP will be, and how many households will be in the country.

Those numbers don't exist in the report so I will run with some of the assumptions from the treasury report but the OECDs changes to GDP.

To recap, from my article here, Remain GDP in 2030 if we stay in will be 36% above what it is now.  GDP in 2015 was £1.808 trillion.

From his number we will deduct the OECD's doom and gloom: a drop in GDP of 2.5% (optimistic) 5% (central) and 7.5% (pessimistic).

Lets run with a 7.5% drop in GDP. I don't want to be accused of being over optimistic.

The OECD suggests  that if we leave, in the worse case scenario, immigration would drop to below 100,000 per year (which is what we were promised), and implies net immigration will remain over 300,00 a year if we stay. It doesn't seem to pin it self to either an in or an out figure for number of households though.

We can only work on what we know which is the household growth figures for Remain from the ONS in the treasury report (31 million) and working off a net migration of less than 100,000 in the event of BREXIT, which I estimated at 28 million.

So, time for a little bit of simple maths.

Current GDP (2015) of £1.808 trillion.

Remain GDP 2030 of £2.45 trillion. (+36%)

Leave GDP 2030 of £2.323 trillion  (+28.5)

Remain households, 31 million.
Remain GDP per household:  £79,384

Leave households, 28 million
Leave GDP per household: £82,964.

That's £3,580 per household better off!

I'm sure they didn't want you to know that.

As a footnote the IMF, OECD and HM Treasury all disagree. They all think we would be much better off remaining in the EU.

The IMF, OECD and HM Treasury also thought we would be mad not to join the ERM (That turned out well… after we crashed out of it in some pain) and also thought we should definitely have joined the Euro which would have been a disaster for both us and the rest of the Euro zone.

Andrew Lillico has this analysis here.

Monday, April 25, 2016

Osborne’s Accountancy is VERY Creative

This post is also available here, and this revision was part written by Ann Sheridan, who has a blog here.

Last week the Treasury Report was roundly panned by just about anyone who is anyone in economics, the fact checkers at the BBC and Channel 4, as well as by people like Liam Halligan at the Telegraph. The key claim in George’s rigged report was that each household would be worse off to the tune of £4300 per year by 2030. Now, let’s put to one side the fact that Osborne can’t get his sums right from month to month never mind over 14 years, and look at the claims in a little more detail. Before we do though, I’d like you to consider this nugget, Osborne himself stopped using Treasury forecasters because they were so crap. That’s why today official government economic statistics all come from the Office of Budget Responsibility.

Now, to the substance of the report. One point of contention is that the figures are based on a made up metric of GDP per household which no one uses, or rather no one has used it before, and no one is likely to use again, apart from me, in this article.

The report also assumes that we love all existing EU regulations, would ditch none and make no trade deals apart from those with the EU. This is about as likely as Jim Davidson being asked to be the turn at the Guardian Christmas do, but we’ll run with it for now.

Bear with me here please, this next bit involves sums, but unlike Boy George I can do maths without taking my shoes and socks off. According to Liam Halligan’s article we currently have 27 million households in the UK, and if we remain in the EU the treasury assumes we will have 31 million by 2030. Its £4300 per household figure is based on projected GDP in 2030. It assumes a growth rate of 36% over 15 years in the EU, and 29% out. This is where Osborne attempts to perpetuate his gigantic con on the British public:

First, the figure £4300 is reached by dividing the projected 2030 GDP by the 27 million households we have today, not by the 31 million households the Treasury assume we will have in 2030. So, the GDP per household the Treasury figure represents is the GDP per household of the 27 million households we have now, not the GDP per household of the 31 million households the Treasury expect us to have in 2030. As we all know Boy George is lousy at maths, but even he should know that that will distort the GDP per household upwards, which if you think about it, is exactly what he wants.

Second, if I tell you you’re going to be £4300 worse off you immediately look at your bank statement and credit cards and think “Oh ?$*#”. But this is manifestly not what the Treasury report says. Both in the EU and out of the EU we’ll be better off, but according to the dodgy assumptions from the Treasury, which I referred to above, we will be even more better off if we stay in the EU.

If you accept Osborne’s dubious figures, 36% growth if we stay in, 29% growth if we stay out, and then assume a lower growth in households (one of the main reasons for leaving is regaining control of our borders and reducing migration from the EU), and actually use the Treasury’s own figures for projected households if we stay in, the maths work out very differently.

It’s not unreasonable to assume there would be 3 million less households in the UK. The aim would be to reduce immigration to under 100 000 a year, so that would slow down the rise in the number of households considerably. The only way that that would not happen would be if, after Brexit, we opted to join the European Economic Area. Under those circumstances we would still have to allow free movement of people, but we would still have access to all EU markets, so one imagines our GDP would at the very least be no worse than it would be if we remained in the EU.

Now, back to sums, current UK GDP is £1.808 trillion. So in the EU it will rise to £2.459 trillion by 2030. If we leave, it will rise to £2.333 trillion. If we divide £2.459 trillion by 31 million households we get a GDP per household of £79,349. By contrast if we leave, we divide 2.333 trillion by 28 million households, we get a GDP per household of £83,329 or £3,980 better off out. I’m sure that isn’t the number George Osborne wants you to take from his report.

Unlike Boy George, I’m not saying my figures are accurate. As everyone knows there are no one handed economists because there always has to be another hand; and if all the economists in the world were laid end to end they still wouldn’t reach a conclusion. But these figures are at least as plausible as the Treasury’s. And again, unlike them, I’m not saying bet your country’s future on predictions that have as much basis in reality as Mystic Meg’s horoscopes. Even if we will be better off financially when we come out, the real prize is the revitalization of our democracy, the restoration of the rule of law and being in control of our own destiny once more.