Corporations should not donate to charity at all

It's amusing to find both a factual misstatement and a logical one in the same piece in The Times:

Britain is a rich nation that does not give away as much of its money as it should. 

The measure of should is of course something of a movable feast. But the fact is that Britain is indeed a rich nation - and it's also one of the most charitable on the planet. We hesitate to state that the forced removal from our wallets of 0.7% of everything to spend upon Ethiopia's Spice Girls is charity but that is how some see it. And the truth is that we have this highest in the world ODA as well as also retaining that older habit of doing it ourselves without government as the intermediary. 

Another way to put this is that forced extraction of foreign aid has not yet crowded out the more personal charitable giving. So unless our definition of "should" here is "vastly more than everyone else" it's not really true that we don't do enough.

We also get the logical error:

The real philanthropic failure, in fact, is corporate. Of the donations of more than £1 million in 2014, less than a quarter came from corporations. Only 23 per cent of FTSE companies donate 1 per cent of their pre-tax profits to charity. The whole of corporate giving, at £2.5 billion per annum, is only just more than the amount given by rich individuals. It is a quarter of the amount raised in tiny increments by the British public. This is a feeble effort.

No, that is £2.5 billion too much. A corporation is an artificial person constituted for one single purpose, to make money for the owners. Once it has done so it is up to those owners what they do with it. And while we might indeed gain an agreement among the hundreds of thousands who have a part of Unilever that selling soap to make a profit is a good idea we are not going to gain similar agreement that donating to the donkeys, the RNLI, or whichever NGO employs the Chairman's idiot niece this year, is deserving.

Thus the money should flow back to said owners, the shareholders, for them to do as they wish with it. Not be allocated in a manner which makes the managers (aka employees) feel good.

Quite apart from anything else corporate charitable donations are the spending of other peoples' money on other people. Which is to truly fail Milton Friedman's test of the four ways in which money can be spent. As PJ O'Rourke almost pointed out this is how we get that spending upon Ethiopia's Spice Girls. 

Globalisation makes us fat apparently

In this slow season over the holidays we have some alarming news. It is globalisation which is making us fat apparently:

Globalisation has been a health disaster, creating a generation of people who expend so little energy each day that they no longer need to eat the same amount of calories as their parents, a new study by the London School of Economics suggests.

An analysis of 30 years of data by the LSE has proven that the obesity crisis is largely driven by modern lifestyles, which have allowed people to become so inter-connected that they barely need to leave their desks or sofas to work, socialise or shop.

It means that traditional meals recommended by parents are now simply too much for a less-active generation.

Trade deals between countries have also caused food prices to tumble, creating virtually unlimited access to unrestricted calories for most people, while on-tap entertainment through television, smartphones and personal computers has replaced many traditional hobbies and activities.

We have been saying much the same thing for some time now. We expend less energy than previous generations and don't eat as much less than previous generations as we perhaps should do. Thus the obesity.

However, blaming this upon globalisation seems a little off. For as the actual paper itself says

However, the effect only becomes significant after we controlled for the reduction in food prices and the increasing percentage of active women in the labor force, which has a consistently positive and significant effect on obesity. When we decompose the globalization index on that of its components, economic components appear to be either not significant or exhibit negligible coefficients, while social globalization effects are robust. Similarly, when we in turn decompose the social globalization in its components, we find that the significant effect is driven by changes in personal contacts, and information flows.

We're all sending cat pictures to each other on Facebook instead of walking around the corner to see our friends.

This is not what we would really refer to as globalisation if we're honest. Technological advance, possibly, but globalisation not really.

In a nutshell, we find that social globalization—and more specifically changes in information flows and personal contact—stands out as a robust explanation for the expansion of the obese and overweight population and the rise of calorie consumption.

That really just is not what we would term globalisation.

 

Perfect piffle on a pogo stick

There are times when nonsense upon stilts is just not a strong enough description of a logical position:

The proliferation of internet-enabled private GP services has made a trip down Harley Street passé. Fast access to a general practitioner only needs a mobile phone. No need to wait weeks for an NHS appointment — these companies promise instant relief. The catch is, of course, that the customer pays: appointments tend to cost between £40 and £60.

This might still seem pleasantly convenient. You can shop around — we get takeaways, clothes, and sexual partners after browsing online, so why not choose the look of your GP? But these companies are hammer blows to the stability of the NHS.

That's right, private supply of a service undermines public supply because, well, because something.

As with baking bread for private sale undermines the Soviet Bread Service.

Apparently the solution is that all should pay more tax in order to pay more to GPs so that none would want to work for such a private service. Err, yes, and there were were thinking that medical students were generally drawn from the brightest among the population.

One more thing we'd just like to add. Dr. McCartney is aware that GP services in the UK generally are private sector businesses? The NHS contracts with said private businesses-thus the complaint about private business arrangements is more than a little odd, no?

Isn't this just wonderful news for the coming years?

Nations that were poorer than us are going to be richer than us soon enough:

Britain’s place among the world’s largest economies will have slipped significantly within two decades as developing nations jump ahead, long-term forecasts have suggested.

Booming populations, huge levels of state investment, growing consumption and increased trade in India, Brazil and South Korea mean that all three will overtake Britain’s economy by 2030, according to the Centre for Economics and Business Research.

We'd argue more than a little about the effect of those huge levels of state investment. Brazil did have some little worries with such into a car wash, didn't it?

The report itself is here.

It isn't, of course, quite what it is being made out to be. They're looking at the aggregate economic output of each country and there's really no reason at all to think that's all that important. How much is going on inside arbitrarily drawn lines on the map isn't important.   

What is important is the GDP per capita, because that's the measure of the consumption opportunities of the populace. And on that measure we'll continue to be at the leading edge of the pack for some time yet.

But then even that's not all that important. Sure, we'd like to be as rich as we can be. But why should or would it worry us if others became as wealthy, or more, than we are?

It's always the bit after the but that's the problem

A reminder that the word "but" is one of the more dangerous in the language:

South Yorkshire’s police and crime commissioner, Alan Billings, said a case could be made for banning certain groups from demonstrating because of the community tensions they caused and the cost to the public purse.

“It’s very difficult to call for the banning of assemblies because, for all of us in politics, there will be times when we want to protest and be on the streets saying our piece,” he said. “It’s very hard for us to say that’s fine for us but not for somebody else but, with the far-right groups in Rotherham, I’d say a case could be made because they’re not just coming and saying their piece and going away.

It does not matter who and why nor even what. Free speech is one of these things which is indivisible. Either it extends to the ideas and people we don't like or we'll rapidly find that it is extended to those that we do.

There is a further point here, which is that the complaint stems from how much it costs to police such gatherings and demonstrations. Which brings us to the freedom of association, something just as important as that freedom of speech.

It is not for the police, nor the government, to stop us from assembling on the grounds of cost or, in fact, anything other than the danger of riot. Their job is to enable us in exercising our rights. And there's absolutely nothing at all more valuable that government does than the protections of our freedoms and liberties. Yes, even those of people we don't like.

It is, possibly, just about permissible to think of the state insisting we do not do these things on the grounds of cost. But that would have to be long after said state has dismantled all of the other things it spends money upon. For our reason for calling that state into being is that protection of our freedoms.

How have we ended up with this idiocy?

Well, actually, the reason we've ended up with this idiocy is simple enough. The politicians just didn't take note of what the economists were saying. Another example of how the more the economists are united in a view upon a subject the less influence economists have over it:

Most of the wood fueling converted coal plants in England, Denmark and other European countries is coming from North American forests. Each month, about 1 million tons of tree trunks and branches from southern U.S. pine plantations and natural forests is being turned into pellets and shipped to European power plants, mostly to Drax power station in the United Kingdom.

The growing transatlantic trade is being financed with billions of dollars in European climate subsidies because of a regulatory loophole that allows wood energy to count as if it’s as clean as solar or wind energy, when in reality it’s often worse for the climate than burning coal. Only the pollution released when wood pellets are produced and transported is counted on climate ledgers. Actual pollution from the smokestack — by far the greatest source of carbon pollution from wood energy — is overlooked.

That's a rather large mistake of course. 

And how we ended up here is as simple as we've said above. From William Nordhaus through to Lord Stern the economic analysis said that, if (and obviously only if, whether is not an economic subject) something needs to be done about climate change then the method is to make the one intervention into the price system. Doesn't, on this point, particularly matter whether it is cap and trade or a carbon tax.

But just make that one intervention - do not, whatever else, try to address it piecemeal with detailed regulation of this and that. Because that will be both less effective and also more expensive.

What did the politicians do? Try to plan it all with a series of detailed interventions and regulations into this and that. And that's why dealing with climate change is so expensive, simply because the wrong method of dealing with it is being used.

Remind us why we allow the European Union to do things like this to us and them

It's the wrong major Christian holiday of the year to be getting obsessed with the price of eggs but there does seem to be a distinct lack of goodwill to all men in this action by the European Union:

The plight of his company, and the broader agricultural sector, has come to encapsulate a wider disenchantment in Ukraine with a trade agreement signed two years ago with the European Union. The deal, which went into force in January, included protections for farmers in the European bloc, and, as a result, one of Ukraine’s most successful industries has been effectively shut out of the new opportunities.

The Ukraine sits on one of the largest blocks of the finest arable land on the planet. The last time we had free trade with it, the 1870s as the railways extended into the steppes, this increased the living standards of all of us as we could buy yet more of ever cheaper food.

At the expense of our local landlords of course, this was one of the triggers of the agricultural depression of that decade and the great landed estates never really recovered. In the work of Saez and Zucman on the development of wealth this is made very clear. Agricultural land as the great store of wealth, monopolised by all too few, simply disappeared as an important part of the societal stock of wealth. Disappeared into the maw of the population as cheap food.

This we would argue is a Pareto improvement. And more than that, it's exactly the thing which the EU's CAP is designed to prevent. For example:

For a blend of economic and political reasons, Ukraine built a singular capitalist achievement after the fall of Communism: enormous, technologically advanced chicken farms that are among the largest in the world.

At its peak, Avangard had space nationwide for 30 million laying hens. Thanks to cheap grain and low labor costs, it is able to produce billions of eggs annually at a low price. The wholesale price of an egg in Ukraine is 4 cents, compared with 25 cents in Poland and 35 cents in Germany.

The quotas applied make it near impossible to import those eggs into the EU. And no one should be under any misapprehension that our own production comes from some happy farmer's wife throwing handfuls of grain to clucking free range chickens. The only question is whether the barns are there or here - and whether the people profiting are making a margin on 4 cents there or 35 cents here.

This is one of the things that Brexit allows us to correct. As with Cobden being right in the 1840s, the point of free trade is that we get to consume the cheaper food grown by others. And of course, the cheaper their food is the more open to their imports we should be, not this idiot system of refusing to allow food in precisely because it is cheap.

Unilateral free trade with the Ukraine, that's what we want for Easter, even if not for Christmas.

An Austrian recession a'comin'

We are not huge fans of macroeconomics around here. Not because we think the various theories are all wrong, quite the opposite. There're truths in pretty much all of the varied theories about recessions and booms we feel. The disutility of the subject coming from the fact that it's near impossible to know which model is appropriate to explain any one particular event - making the diagnosis of the appropriate cure somewhat difficult.

Our view thus tends to retreat back to Adam Smith, peace, easy taxes and tolerable justice are the things to aim for in economic management. We might add a bit more about public goods, externalities and the prevention of monopolies but that is roughly the set of tools we think we've got which are useful. And certainly they're the ones we think should be concentrated upon.

However, we are not exclusive about this. Given that we do think there are truths in some models at times it is possible to identify the correct model and thus the correct solution. Larry Elliott is calling the top for the Chinese economy with the signing of Oscar from Chelsea. No, we're not sure about that top. But we are about this:

.."the debt super cycle is over when the cost of malinvestment and misallocation of capital outweighs the benefit of good credit creation." 

Which is the Austrian view of a recession of course. China has indeed enjoyed a massive boom as the idiocies of Maoism were dropped and free markets allowed reign. And it has been those markets - the thumbnail sketch is that the state directed economy continues but ever shrinks as a portion as the free market one grows up around it.

But this can hit the buffers and when it does it will be for that Austrian reason. Having identified it we can then apply to appropriate salve. Which is liquidationism. Those misallocations have to be unwound. That Keyneisan solution to a recession, demand boosting management, is not appropriate as that isn't actually the problem. It becomes instead extend and pretend.

We end up with the rather gloomy prediction that perhaps China should have a recession. 

The Guardian. Wrong about everything. Always

This simply is not so:

Sir Philip Green may have to pay £1bn to resolve the problems facing the BHS pension scheme under proposals tabled by MPs.

We do not, as a general rule, bring in retroactive law. Meaning that whatever changes are made to pensions systems will apply to things which are done in the future, not to things which have already happened.

What has rather surprised us about these suggestions from Frank Field's committee - the Guardian being wrong does not of course - is what no one has as yet noted. That this will entirely kill off what remains of defined benefit pensions schemes.

The work and pensions committee, which is chaired by Labour MP Frank Field, has called for the government to introduce a “nuclear deterrent” to stop companies or individuals trying to avoid their responsibilities to pension schemes.

This deterrent would be a fine from The Pensions Regulator (TPR) worth three times the amount it believes a company or individual should contribute towards filling the deficit in a pension scheme. Given that the regulator is understood to be seeking £350m from Green for the BHS pensions scheme, this means it could threaten the billionaire tycoon with a charge of about £1bn.

Added to this:

As well as threatening punitive fines, the MPs said TPR must become a “nimbler, more proactive regulator”. They said the regulator must consider recovery plans for pension schemes in deficit that last more than 10 years as “exceptional” and that it should approve every major corporate transaction.

If you've a defined benefit pensions scheme then every corporate transaction must be approved by the pensions regulator. Said pensions regulator would rapidly become the de facto economic planner. Except, of course, that everyone will simply stop having defined benefit pensions schemes.

An interesting and correct way to do housing taxation

As Henry George pointed out to us all the art of land value taxation is to tax the unimproved value of said land. Another way to say the same thing is that we're trying to tax the value that society adds to the land, not what the owner has added themselves. Land in the centre of London has a higher value than much land elsewhere just because it is surrounded by London. It seems reasonable enough that some of that value created by London should be taxed to pay for London.

This is of course not how we currently do it. If we, the owner of a house say, improve the house then we can expect to pay more tax upon it. This is a disincentive to increase said value - not what we want to be doing at all. 

Thus this in Portugal is interesting:

People buying a home in Portugal that has unspoilt sea views or faces the sun may be hit by a 20% increase in property tax, under fiercely contested fiscal changes which became law on Monday.

Those with a place overlooking a cemetery or water treatment plant may enjoy a tax reduction of up to 10%.

Someone always does end up next to society's disposal systems so why not? 

Given that one of us does in fact pay this tax we would note that the system is not perfect. For they also increase the tax when you improve the house itself.

But the basic idea has merit. Those who currently, in our native Britain, insist that nothing should ever be built anywhere near them for fear of spoiling the views probably should be taxed on the value of those views. Even if they still won't allow the building at least they're paying for their pleasures under such a system.