Tim Worstall

Coase: “I can tell you– I was helping when Britain was trying to get a loan from the United States immediately after the war, and I was talking to one of Keynes’s assistants. And Keynes came in the room and walked over to us and the man I was talking to us said, ‘This is Coase, who is helping us with the statistics. I don’t think you know him.’ And Keynes said, ‘No, I don’t.’ And walked off. And that’s my life with Keynes.

Not a lot really.

Superficially flat taxes look attractive. People like the idea of simplicity. It’s an easy sell. The fact that it takes 417 pages to explain the proposal suggests that this idea is not simple though, and that’s because it isn’t.

What, as opposed to the 17,000 pages of Tolley’s for the current tax system?

The rest of it is the usual drivel: people are evil for even suggesting that a smaller state might be a useful thing to think about.

And that mathematician says “I dunno, let the market sort it out“.

I trust to science and am ready to believe there is some great mathematician, some Fermat’s last theorem, who can write an equation showing where energy policy should turn. I have never met him.

The equation would start with the current market price of coal, gas, oil, nuclear and so-called “renewables”. That would give simple primacy to coal and gas. The equation would then factor in such variables as security of supply, which – being imponderable – can be argued from commercial interest and prejudice. Then it would have to take account of global warming and the virtue of lower carbon emissions. At this point the demons enter.

We must consider CO₂ reduction through substituting gas for coal, carbon capture, nuclear investment, biomass, wind, wave, solar and tidal generation. We must consider the application of fiscal policy to gas and petrol use, to energy efficiency and house insulation. Each has a quantity attached to it and each a fanatical lobby drooling for subsidies. As for achieving a remotely significant degree of global cooling, that requires world diplomacy – which has, as yet, proved wholly elusive.

We actually have all of the tools that we need to deal with this calculation.

The first tool is to agree with the results of the socialist calculation problem of old. It’s simply too complex a calculation to actually be done in anything approaching real time. Too much information is held locally and cannot be gained by the centre doing the calculation.

This does ot mean that the calculation is impossible of course. It just means that it’s not going to be done by planners in an office. We have to turn to that other calculating method, the only one we’ve actually got that can deal with the dispersed nature of information: the market.

However, we also know very well that the market unadorned does not deal with this problem. The effects of climate change are not incorporated into market prices and thus do not influence that behaviour which is guided by market prices. The externalities problem.

Which brings us to our second tool. We know how to deal with externalities: Pigou Taxes. So, we apply a carbon tax to emissions so that the costs of climate change are incorporated into market prices and thus influence those decisions which are guided by market prices.

And our third tool? The Stern Review. This tells us that the social cost of carbon emissions is $80 per tonne. Thus we add $80 a tonne to emissions and, whatever revenue is raised from such we reduce other taxes by the same amount.

We now have the future effects of climate change incorporated into market prices. We can now let the market be our calculating engine as to what we should do about climate change. We can simply ignore the politicians pontificating, shoot the lobbyists and all 65 million of us can go along in our own sweet manner of changing our behaviour as guided by these new prices.

In short, our mathematician is the market: we just have to feed him the right equation.

If Hirst did not try to paint an orange accurately, no one would know he can’t do it. But he has tried, at least I think it’s an orange, and the poor sphere seems to float in mid air because of the clumsy circle of shadow below it. For a moment I thought this was intentional, then I realised it was a competence issue. Such issues abound. You look at a branch and it is obvious he has worked at it: equally obvious the work was wasted. At their very best these paintings lack the skill of thousands of amateur artists who paint at weekends all over Britain – and yet he can hire fools to compare him with Caravaggio.

He doesn’t like it then.

I’m not sure I quite understand this:

That’s because the threat of a disorderly Greek default – which could still take place inside the euro – has the potential to trigger a cascade of bank runs and knock-on crises across the eurozone whose impact could dwarf the Lehmans crash of 2008.

OK, it’s Seumas on economics so obviously it’s wrong.

But I’m not sure that I actually get it. Why would a Greek default knock over the banking system?

The private sector holders (ie, the banks) of Greek sovereign debt all too a 70% haircut only a few weeks ago. I’ve not checked but I think the new debt issued now trades at 50% or less of par.

So the purely private sector effect of a Greek Government default is going to be trivial.

Sure, all the Greek banks go bust in such a default. But there cannot be a single European bank that has not written down any such Greek banking “assets” to something equivalent to the value ofnthe sovereign paper, ie spit.

And it’s not as if the banks haven’t had 3 years to prepare for this either.

The ghastly losses will be in the official accounts: the ECB, the EFSF and so on, where Greek sovereign paper is being valued at par (I think). And the Target 2 system will go kablooie: but that again is central banks, not private ones.

As far as I can see, and I’m sure I’m overstating this but still, the risks and costs of a Greek default have now been almost entirely socialised. The private sector banks have already taken their lumps, written down their Greek assets and the difference between the current 15% of original par value and 0% in disorderly default is, umm, not very much.

Agreed, it all becomes rather more scary if Spain and Italy etc follow but Greece itself I just can’t see it.

So, where am I going wrong?

And for the better:

However a second man, farm worker Chris Mahlangu, 29, was found guilty of murder, attempted robbery and housebreaking.

During the day, as the verdict was read out at a court in the farming town of Ventersdorp, there were clashes between hundreds of uniform-clad white supremacist groups and local supporters of the two defendants which were broken up by riot police wielding batons and shields.

Mr Terreblanche rose to prominence in the 1980s with angry speeches calling for a separate Boer nation. He was beaten to death with a machete and an iron bar in the bedroom of his farmhouse in April 2010, shortly before South Africa hosted the World Cup. Following his death, Mr Ndlovu and Mr Mahlangu handed themselves in to police. Mr Terreblanche was found lying on his bed, with deep wounds to his head and body. His trousers were undone and his genitals exposed and blood covered the walls and floors of the room.

But you really do need to be reading this blog.

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The caption reads:

“According to the WWF as many as 90% of all large fish have been fished out.’ ”

Salmon…farmed….shrimp….farmed….snails…..farmed…..

And we’re all out of Aurochs for your steak frites too Monsewer.

I met Arianna Huffington last week. Thoroughly decent woman, I thought, and sharp as a tack. Like Ivana Trump with O levels.

We need bigger solutions: bring back rationing for fish immediately, end the majority of advertising for highly processed foods, introduce the compulsory teaching of cooking in schools, reverse the rise in meat consumption, legalise much higher welfare standards for animal husbandry, ban GM foods. Turn over common land for people to grow food on, limit the power and presence of supermarkets and demand action much higher up the chain of command.

Aren’t we lucky that The Guardian hires electronic musicians to tell us what food policy should be?

Next week, Fanny Craddock on how to tune your Moog.

Hmm.

So you think you’re having a hard time, what with the cuts and the scrapping of public services and those threats of losing your job? Well, I bring good news. The austerity we’ve heard so much time about – this historic, unparalleled slashing of spending – is all made up. David Cameron is simply fudging his figures. Those Jobcentre staff haven’t been made redundant. And remember the Sure Start centre that you thought had shut? Why, it’s still open, and bursting with toddlers.

This magical thinking comes from one of the world’s biggest money brokers, Tullett Prebon. It argued last week that Britain’s austerity is “mendacious” spin, and a “con” and, in case you hadn’t got the message and been bathed in sufficient spittle, “bare-faced deception”.

Gosh, that’s interesting. For Tellett Prebon’s figures were in fact accurate. There hasn’t been much cutting of total spending and much of the deficit reduction has been from tax rises.

But it’s the final trick that gives away what the austerity deniers are really up to. The Tullett research lumps together departmental budgets, which are almost all being slashed, as Theresa May and her police officers can tell you, with total government expenditure, which includes welfare benefits and repayments on already outstanding loans. Since there’s not much any chancellor can do about debts racked up by his predecessors, what’s the one group that leaves to be hit? That’s right: the disabled, the unemployed and the others on benefits.

Well, yes, that’s the point that is being made. There have not been any massive cuts to total expenditure. Much the same amount is in fact being spent. It’s just that, as you say, the last lot spent too much and so those debts must be paid and departmental budgets cut.

That is, Tullett Prebon is actually correct. Total spending has not been slashed.

Yet the thing is this: there is a part of Britain that isn’t experiencing austerity. It’s the banks that have received £325bn of free money in the past couple of years, as part of the Bank of England’s quantitative-easing programme.

And that’s a very strange thing to say indeed. QE just isn’t free money. A bank, or anyone else, cannot knock on hte BoE’s door, ask for 50 p for a cup os tea and walk away with a few billions. They have to sell something to the bank to get the cash. A gilt, a corporate bond perhaps. This just isn’t “free”.

But then, as I’ve said before, The Guardian doesn’t do itself many favours by having an historian writing its economics leaders.

This is really rather amusing. George Monbiot writes to Noam Chomsky about denialism over Srebrenica and the Rawandan Tutsi genocide. The back and forth has to be read to be believed.

Chomsky is taking the Russian defence one step further. That defnece used to be that, whenever the Soviets were accused of wiping out a few more artists or Jews or Baptists of whatever in the Gulag, well, the Americans lynch Negroes, don’t they?

What I believe is known as the tu quoque.

Chomsky’s taking it a stage further. He’s not even saying yes, Hutus slaughtering near a million Tutsis with machetes is bad but look at what happened to the American Indians.

He’s saying it’s irrelevant what happened to the Tutsis because look at the American Indians.

Sorta confusing: I thought grammarians were supposed to at least be aware of logic.

I couldn’t believe this nonsense.

Observers monitoring European fish quotas are being regularly intimidated, offered bribes and undermined by the fishing crews they are observing, a Guardian investigation has discovered.

More than 20 former and current observers on Portuguese and Spanish ships said that they had experienced tactics such as beingput under surveillance, deprived of sleep, or threatened with being thrown overboard, or having their official documentation stolen by fishing crews to conceal a culture of overfishing.

Seriously?

The twats expect to beat over fishing by putting a man with a clipboard at sea?

Jeebus.

What you’ve got to do is align the incentives for the fishermen so that it is in their interest to preserve the stock. When over fishing reduces profits then it will stop. Not men with bloody clipboards for goodness sake.

All osrts of lefties keep telling us that interest rates are very low right now so the government should borrow to invest in infrastructure.

Very much the same group of lefties tell us that we must decarbonise the energy production system in this country.

The cost of nuclear power is almost entirely determined by the interest rates one must pay on the debt contracted to construct the plants.

So why aren’t those lefties arguing that the government should borrow at very low rates to build the nuclear plants that would decarbonise the electricity production system?

All very puzzling really….

Facebook shares were expected to soar on Friday, but they shares finished just 0.6pc above their $38 offer price. Today’s 12pc fall implies bankers got the flotation price wrong.

The company, the extant shareholders and the bankers got 12 pc more money for their shares on Friday than they were worth on Monday.

In what world is this a failure?

They were trying to sell, recall?

Splutter:

We could give it back to the Turks. Supporting Greek independence was always a mistake. Seems better than the last two solutions we tried – allowing some Germans to run it. Plus they had a third go in the 1940s. Never seems to work out well.

We can tell the Turks we will throw in half of Cyprus for free.

But would the Turks take it?

And SMFS gets this week’s prize for the most outrageously wonderful joke of the week. Prince P, Duke of E, would approve.

It plans to invest an unspecified amount in solar generation capacity sourced from SunPower Corp, plus solid oxide fuel cell technology from Bloom Energy.

The fuel cells will supply stored power generated from the sun, when it isn’t shining, and use a ceramic powder instead of platinum to produce electricity with greater efficiently than traditional fuel cells.

They operate at extremely high temperatures, typically above 800°C, which improves their electrical efficiency.

Bloom Energy uses scandia stabilised zirconia, one advantage of which is that it operates at lower temperatures than alternative materials.

Gender equity, income inequality, state control, bastard banks, more power to the UN.

Mix and match the various phrases as many times as necessary to produce the required number of paragraphs.

Do not, whatever you do, ponder on the charitable status of an organisation publishing a call for the imposition of global social democracy.

Because of course we’re not talking politics here at all, are we?

A significant expansion of efficient public banks,

And unicorns that poop rainbows no doubt.

The problem being that no one has ever worked out how to have state owned (which is what they mean by public) and efficient. It is oxymoronic to demand both, they are mutually exclusive.

the financial sector, which has
been under-taxed (indeed the financial sector does not
pay Value Added Tax).

Err, yes, the financial sector does pay VAT. It pays VAT on al of its vattable inputs.

The financial sector does not charge VAT to its customers: this means that the financial sector cannot claim back the VAT they have pid on their inputs.