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Brexit: What Next?

With at least 100 Tory rebels, the DUP, the SNP, collected others and most of Labour planning to reject ‘The Deal‘, it’s hard to see it getting through parliament on the 10th December.

What happens then?

Anyone who might know is keeping their options open. Bim Afolami, My local MP, held a town hall meeting last night to explain why he’s voting for it. Basically, he’s in favour of discharging the instruction of the people from the referendum, reinforced by manifesto commitments voted for in the last General Election by 87% of the vote, with as little damage to the UK and its economy as possible. This is a reasonable line to take, and I was impressed with his delivery. “The options are” he said “the deal, or no deal”. Put like that it’s hard to argue. If the deal passes, I will be satisfied Brexit can be delivered at acceptable cost. However, he’s wrong about the options. “No deal” is opposed by most of the Tory party, an overwhelming majority of the Labour party and most of the other opposition groups, it’s not realistically on the table, unless Parliament agrees nothing else, and behaves recklessly. Remaining in the EU, on the other hand, is back on the table, though few have admitted it publicly yet.

Brexiters make much of the need to strike “Free trade deals”, but these are worthless next to the single market. Why? The EU/EEA single market is the largest economy on earth, and it’s also the nearest to us, and we share our only land borders with it. To imagine that a deal, even with all of the USA, China, India, Australia and New Zealand could match the benefits of the single market is just delusional, as the Treasury and Bank of England made clear. Equally clear is the extent to which Brexiters deny that there are any costs at all to leaving. Any discussion at all of the myriad downsides is dismissed as “project fear”. The level of analysis, from the parliamentary European Research Group, to the local pub bore is the same: Brexiters have persuaded themselves, despite every expert on international trade, and more or less everyone who can spell in the UK telling them otherwise, there are no costs and vast opportunities on leaving the EU. Their only reasoning boils down hate of the EU, appeals to patriotism, confirmation-seeking and total dismissal of the entire subject of economics. No? Patrick Minford, the only “economist for brexit” assumes, for example, distance doesn’t matter in trade. One side of the debate is simply not amenable to reason.

Brexiters petty spite and cruelty is obvious to anyone who looks. Half a dozen people in the meeting spoke up about real, practical costs of Brexit – EU citizens who lose reciprocal rights, farmers who lose vital markets, businesses who will face higher costs throughout their supply chains, students who have lost opportunities for life-enriching travel and study. Lives are being disrupted and attenuated, and the old man sitting next to me simply shrugged. He actually laughed at the disabled woman and the Asian man who mentioned the climate of increased hate crime. The hurt they are causing is the point. By hurting those whom the brexiters blame for their deep personal inadequacy, immigrants, foreigners, people who paid attention in school, they feel better about themselves. That is where brexit is coming from. It’s a mood, not a policy.

‘No deal’ is overwhelmingly supported by people whose pensions will not be affected by the decision, but will be paid for by people whose incomes will be, for life.

So what is likely to happen when the deal is rejected by parliament? Afolami said he was working with Nick Boles on the EFTA/EEA plan as the next option, and I suspect that is what the Government will try to offer next. This will require an extension of Article 50 to draft an agreement. The problem is, I can’t see many problems solved by EEA/EFTA that isn’t solved by “the deal”, and I suspect it will fail for exactly the same reasons he laid out in his opening remarks about May’s deal: it’s neither fart nor shit, satisfying neither the atavistic hate of the people who wish to leave, nor the fears of most of the people who wish to remain in the EU. Indeed thanks to the Irish border, the EEA option would include the Customs union, leaving the UK closer to the EU than Norway. The only thing we’d have done is removed ourselves from the decision-making body, to literally no benefit to anyone except the French. And we’d still have Brexiters whining about being in the EEA, for life. Nevertheless, this option, rubbish though it is, is the Brexit that is most acceptable to me.

Predictably, the People’s vote people were there in force. And like lefties at every public meeting, at any point in history, their sanctimony and verbosity didn’t help their case. Nevertheless, this is, of the likely scenarios, my preferred outcome, as there is some hope of reversing the initial referendum result. (But what question do you ask… and what if ‘leave’ wins again?) But what I really want is parliament, the overwhelming majority of whose members back remaining in the EU, to observe there is no way to leave the EU that doesn’t catastrophically wreck hundreds of thousands of lives and careers, and no way to minimise the disruption in a way that satisfies the inchoate loathing of the EU. You can vote yourself a unicorn that shits gumdrops, it doesn’t mean the Government can deliver.

Nigel Farage trying to get a refund on the Norwegian Blue Option

The referendum was advisory, the country is bitterly divided whether or not we leave or remain. Worse, it appears likely the leave campaign conspired with a hostile foreign power, breaking British electoral law by pumping dank memes and dark money, using stolen data, to win their wafer-thin mandate, and they did so with a grotesque smirk on its face. So why is the “mandate” taken so seriously? So let’s be divided, nothing but the relentless march of time can change that, but be a bit richer and remain in the EU. Eventually the mood will pass. And I expect, if the outcome is ‘no brexit’ the vast majority of Brexiters will sink into a sullen silence rather than kick off. Many I suspect will breathe a sigh of relief, in private, that they no longer have to own this feeble shit-show. They may protest, but they will be shouted down, derided, ignored and ridiculed, much like the Tory party was after 1997, and deservedly so. The Tory party will split, of course, as it should have done when “the Bastards”, Lilley, Portillo, Redwood and Howard, crippled John Major’s administration, and undermined every leader since. However, purged of the Brexiters, the Tory party will find itself electable again much quicker without the baggage of failure (does anyone seriously expect Brexit to stink of anything else?). Fear of blood on the streets, openly expressed by Brexiters, yet dismissed when raised by remainers,  is no reason to do as the quitlings demand. What did Thatcher do when confronted by people who believed political power lay at the point of production, or in the barrel of an armalite? We have defeated nativist hate and threats of violence before in the 1930s and 1980s. Brexiters are utterly unappeasable, and want nothing that can be delivered at reasonable cost. So meet them head on.

As Afolami pointed out, Parliament is sovereign, we live in a representative democracy, an MP is a representative charged with doing what is best for the country, not a delegate charged with delivering on constituents’ moods. It’s leadership the people need. Simply reject Brexit. It’s a stupid policy, utterly without upside, and vast potential costs. Parliament, and the people who kill this insanity, will be thanked, in time.

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Cleverly isn’t clever. “No Deal” isn’t an Option.

Braintree’s local Conservative association appears in the dictionary of nominative determinism under “counterexample”. Their last MP was Brooks “underpants” Newmark, and their current one is James Cleverly. Maybe they thought they could live up to their Brainy name by choosing a candidate with ‘Clever’ in his…

Alas….

Brexit negotiations aren’t like buying a house, where the status quo is ‘everyone stays in their current house and keeps looking for another house’, it’s more like divorce where the ‘no deal scenario’ is arriving home to find your key not working, your clothes in a pile in the yard; your former partner getting the kids, the house and the record collection. And you’re paying maintenance. And none of your joint friends will speak to you again, so you have to go have dinner with that guy from the pub who for some reason isn’t allowed near the school.

But they seem to believe this ‘no-deal’ sophistry, the brexiters. It’s fallacious on so many levels. And it says more about the Brexiters than about Brexit.

WTO rules aren’t a default trading arrangement. They’re what exists between countries who trade only infrequently. There are some 759 treaties governing trade that will need to be rewritten. “Easy” say the Brexiters “Just carry on as before”. Would were it that simple: most of these involve the European Court of Justice as arbiter…. I assume that will be ok?

“Well never mind” say the Brexiters, “we’ll just declare unilateral free trade”. Apart from being a childish fantasy like most simplistic utopian wibble, it isn’t remotely going to happen. The mood of Brexit, far from being in an open and buccaneering spirit, is rather sour and protectionist; more Mary Whitehouse than Sir Francis Drake. Do you think popular pressure will be to raise or lower tariffs on foreign goods? The free trade for brexit argument is what happens when you look for evidence as a drunk looks for a lamp-post. More for support than illumination.

The welfare benefits of the unilateral free trade option exist in theory, but not in fact. Much like Patrick Minford‘s credibility.

Ultimately, Cleverly’s tweet is evidence of the Brexiters’ habit of policy-based evidence-making. There is no trade advantage to “our own trade deals” except that it’s something we’ll have to do when we’ve left the EU. When you spend your life really believing the EU is a plot to subvert the UK and blame Brussels for the British weather, then the ends justify the means. “Our own trade deals” sounds like sense to people in the pub who don’t know very much, much like “take back control”. Of what? Because the most likely scenario is we’ve lost influence over rules we’ll have to abide by anyway. What about “Freedom”? For whom, to do what? Because I can think of dozens of real freedoms I’m losing. Of course even Immigration was press-ganged into service of Brexit – the immigrants the bigots really care about don’t come from the EU, do they?

One wonders who or what Brexiters will blame when they no longer have the Brussels boogeyman. “Remoaners” probably. It’s all rather pathetic. Brexit: Still a catastrophe. Still waiting for any positives at all to come from it.

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The End of A ‘Belle Époque’. 1991-2016.

The interlocking webs of policy which ‘politics’ seeks to knit are complicated. Whole books can be written on how two individual policies interact. PhDs in Economics are awarded for small snapshots of the whole cloth. Most people don’t have the time to keep abreast of developments or read sufficient history to understand why some policies are bad. Thus, people use heuristics – rules of thumb – to make decisions  about that which they aren’t expert. “Is this person trustworthy” is a key issue, and we tend to overweight the opinion of those near us. “He is my brother, and I say he’s ok” says a friend, you are more likely to believe a mutual friend, than the opinion of a stranger on the same issue.

In the evolutionary past, such a question was a matter of life and death. People only really had to trust those with whom they shared a close genetic relationship. Since the development of agriculture, we’ve been steadily widening that circle of trust. The wider you spread that circle of trust, the richer your society will be. Even before it had a name, Free market economics allowed people to become blacksmiths, knowing others have water, food, shelter and so forth covered in return. More specialisation, greater productivity, means greater wealth.

Eventually, this requires trust in people we’ve not met. Towns’ food supplies require that farmers unknown and distant supply the basics of existence. Nowadays, It’s unlikely the west could quickly supply all available plenty currently manufactured in China. Nor could China supply quickly the complex components and tools shipped from Japan, Europe and USA. Both China, and “the west” are richer from the exchange. And yet, we still don’t trust “globalisation”.

Most persistent fallacies in political economics are the result of simple policies that appeal to some base heuristics, but which when applied to the larger and wider society, fail catastrophically. Thus egalitarianism in one form or another pops up every 3 generations or so and succeeds in making everyone equal, but some more equal than others, and even more, dead. Then nationalism comes along, and says it’s all [another, arbitrarily defined group of humans with slightly different modes of speech] fault, leading to more waste and piles of corpses. And even when the results aren’t catastrophic, we seek out the views of those who agree with us on say, Nationalism to inform our opinion on, say, whether or not people are responsible for climate change.

Which political tribes stumble into being right or wrong on any given issue appears arbitrary, because no-one’s asking for the evidence before they decide on the policy. Instead of asking “what’s right”, we’re asking what’s popular (amongst the coalition of tribes that voted for me) right now. That an opponent comes out with an identical policy, for different reasons is reason enough to oppose something, forgetting completely prior support for it. After all, whatever [another political tribe] thinks must be wrong, right.

Thus

The Labour party opposes ID cards. The Labour party has always opposed ID cards. The Tory party is for the Free market and was never in favour of the Corn Laws. We have always been at war with Eastasia. Perhaps if we could think for ourselves rather than just accepting tribal dogma, we’d get better governance. But none of us have the time. So “Democracy” is merely a means to give temporary permission to one coalition of tribes to push through dogmas over many issues, until either the population notices, or the coalition of tribes breaks up, and the electorate takes a punt on the other tribe’s prejudices for a bit, and then gets on with whatever they were doing before.

Society ultimately advances by eliminating prejudices it’s acceptable to hold thus widening the circle of trust, and increasing riches. By falling back on ancient heuristics to answer the wrong question (“who’s fault?” is the wrong question) 2016 democracy has delivered the worst political outcomes on a broad front, as a result of which, we are poorer, and more likely to start fighting as a result of the collapse in political trust we have seen over this year. The post Cold-War ‘Belle Époque’, which saw half of humanity, 3 billion people, lifted out of poverty, is over.

Idiots cheer.

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The 2016 Budget; Things Other Than The Sugar Tax…

There is much to like, and much to deplore.

The steady cuts to personal income taxation continue the trend under this Government of moving the tax burden from income to consumption. The continued cuts to corporation tax are welcome, and whatever idiot journalists say are virtually cost-free to the exchequer, as money not paid out in corporation tax mostly ends up in wages (to be taxed more highly) or investment (which everyone says we don’t have enough of). Companies don’t pay tax, people do, so corporation tax is a fiction and always has been. Did I mention we don’t have enough investment? Capital gains tax has been cut. Because taxing capital is silly. And the ISA allowance has been raised for the same reason.

Now the only people who pay capital gains taxes are people with large lump sums outside ISAs. These are people who’re so rich they can afford to save more than £15,240 a year, and those who inherited money. So big ISA allowances are moderately progressive.

So far, so good. But there are further disincentives to selling property: namely the increase in stamp duty for buy to let landlords. And there are further tax privileges for the first home in the form of the ‘help to buy’ ISA into which the Government bungs some taxpayers money to help first time buyers “get on the housing ladder”.

The UK’s insane system of property taxation of encourages home-hoarding, and entrenches the perverse idea in the British public’s mind that your house is an investment, not just something to live in. In most of the world, rent and purchase are more-or-less interchangeable. But in the UK, the disincentives to sell are behind much of the continual ratchet up of house prices. The problem isn’t that there aren’t enough houses – everyone has a roof over their heads after all. The problem is that the UK housing market is insufficiently assortive: people can’t afford the RIGHT housing in the right place and must therefore pay through the nose.

We need to scrap stamp duty on property entirely, and increase the taxation of property values giving empty-nesters an incentive to sell that property on to someone who might value its space higher. Unfortunately council tax, which needs re-banding, is a political third rail.

Families cannot afford family homes, because family homes are being held onto by people whose families have long-since flown the nest. So families are being brought up in rabbit hutches, because Granny has no incentive to downsize. Indeed she has an incentive to rattle around in the big house until she dies, when that house will be once more privileged in the inheritance tax system. She will then pass it on to her children, whose own children will have already flown the nest too, and so the cycle continues.

Meanwhile, the assault on Buy-to-let landlords means the supply of rental homes will dry up too. The “housing crisis” will be made a little worse by this budget.

If a family wants a family house, either Daddy has to be very, very well paid, Granny has to die young, or be very, very generous. And the Tories have a massive blind-spot about people’s houses. Thatcher’s dream of a “property-owning democracy” casts a long shadow, and measures to facilitate this, are now actually behind the sheer unaffordability of property for the average worker, while working against increasing the supply of reasonably priced rental homes.

One thing I will say for the Chancellor, the Sugar tax has done its job. It’s a pissy, regressive, fabian authoritarian little bit of nanny state spite. If you think taxing sugary drinks is about obesity, I’ve a bridge to sell you. It’s a bone thrown to the Daily Mail authoritarians, gets a noisy and oddly influential mockney prat with a fat tongue to support the Government and because everyone’s talking about it, It’s an effective dead cat, flung on the table to distract from controversial cuts to benefits, income taxes and corporate taxes, which are mostly going unnoticed; as is the “miss” of fiscal targets.

Ah yes, the targets. The worst thing about political journalism is the absurd weight that is put on Office of Budget Responsibility fiscal forecasts. If there’s one thing less interesting than the deficit, it’s an official guess as to what the deficit might be in 5 years. Then, armed with this utterly fictional state of the finances 5 years out, journalists hyperventilate about whether the Chancellor has “hit” or “missed” his target to balance the books by the end of the parliament, and go on, and on about how much he “has to spend” or “has to find” in the future. So the chancellor puts measures in that may or may not come to to be superseded in future budgets, just to “hit” a “target” that only really still exists in the minds of journalists.

Labour excoriate the chancellor for “missing his own target”, while opposing anything that might bring the books into balance. The deficit is falling, perhaps not as fast as many would like, but debt to GDP isn’t rising all that much, and may soon start to fall. Thus the deficit is under control, to the satisfaction of international creditors, and there’s no risk of a run on Sterling. So the target to balance the books, and get the debt burden down is a noble one, it’s also pretty low on a sensible chancellors list of priorities right now. The rabbit he’s hoping to pull out in the next few years is a big increase in productivity which will finally close the “output gap” bring down the deficit and raise people’s living standards, and cover the “living wage” without increasing unemployment, all in one go.

I don’t think there’s an awful lot the chancellor can do to increase productivity, though cuts to corporate taxation will help a little. We’re still dragging ourselves out of the mother of all balance-sheet recessions, which means investment is low, productivity growth is low, nominal wages aren’t rising fast enough, and the economy sits on a permanent risk of deflation.

Personally I think the Chancellor’s threading the needle between “stimulus” and Japan-style debt mountain pretty well in what remains an extremely cash-constrained fiscal situation. But let’s encourage him to deal with the perverse incentives in property taxation that have long poisoned the British economy, before bleating about fictional forecasts or whining about a silly nanny state sugar tax. The fixation people have on stuff that really doesn’t matter is beyond me.

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On Germany’s “Morality”

Germany’s population is falling, German women are breeding below replacement rates and so they have 1.7m empty homes. Thus offering to house 800,000 Syrians is a great deal easier for Germany than it is for the UK, which has net migration of more than 300,000 last year, plus something of a baby-boom (now tailing off). Germany can, and indeed needs, more immigrants. The UK does not. Syrian immigrants solve a problem for Germany – low housing prices, declining population and economic drift in many regions. The very same people in the UK would merely add to pressure on housing, and do little to boost an already strong economy.

Build more houses you say? The UK is building at capacity, there’s a shortage of Bricks and Brickies, and we’re not keeping up.

So there you go. It’s handy when morality solves a problem for you. Cheap too.

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How Syriza crashed Greece.

Consider a single-currency area, like the UK. There are bits of it that are doing well. London and the South-East for example, that subsidises the rest from its excess taxation over expenditure. Only London and the South Eastern regions are net contributors to the UK treasury, but it is barely questioned there that it is reasonable for taxes levied in Reading be used to build roads in the Rhonda or Rothesay. Thus the Welsh for example are compensated for having an interest rate not quite suitable for their economy, as interest rates are set for the economic centre of Gravity, which in the UK probably lies somewhere around Oxford.

Now consider the Eurozone. There are no fiscal transfers, because Germans, who didn’t mind subsidising other Germans upon unification, baulk at subsidising Greeks whom they regard as feckless layabouts (erroneously – further discussion here). But the centre of Gravity of the Eurozone probably lies somewhere around Frankfurt. Thus the Germans, and their associated northern European countries have an appropriate interest rate, and the Spaniards and Italians do not. The Spanish Government, denied monetary levers in the run-up to the crisis, sought to cool an over-heating economy by running a fiscal surplus. You cannot accuse the Spanish Government of being “profligate”. The same is true of Ireland. Portugal’s situation wasn’t quite as clear-cut, but their debts were not out of control. 
Obviously, the asset price bubbles built up in Spain and Ireland, and the subsequent bust took out their banks, which required bail outs. Denied the stimulus of looser monetary policy, by an excessively hawkish European Central Bank, who’s setting rates effectively for Germany, the only other option to these economies is a devaluation in place – cutting wages and living standards until they’re competitive with Germans.
The falling tax revenues mean deficits. Lack of EU fiscal transfers mean Austerity, and meanwhile the ECB is still not responding with interest rates. For the periphery, even Governments like those of Spain or Ireland who sought so, so hard to be prudent in the good times, the Euro is massively pro-cyclical. There will be booms, there will be massive busts and there’s little, if anything any Government in Madrid or Dublin can do about it. This was predicted by economists from the notorious pinko Paul Krugman to arch-“neoliberal” Milton Friedman.
Added to this, the Greeks were not prudent. They near-openly lied about their debts and deficit to get into the Euro, hoping lashing themselves to the mast would encourage some degree of fiscal sanity. But the problems were too entrenched, and sorting them out meant unpicking the settlement of a civil war. The result is that while the Spanish and Irish have endured a savage recession, the Greeks “devaluation in place” was a depression costing 25% of GDP. A grinding, seemingly endless round of austerity and reform that left 50% youth unemployment and an economy in tatters.
The ironic thing about the election of Syriza in January 2015 is that Greece had done the hard work and by mid 2014 was the fastest growing economy in the Eurozone, and had a primary surplus (meaning they were balancing the books before debt service was considered). Given the bailout terms, Greece’s debt service took a smaller proportion of GDP than did Ireland, Spain, Italy or Portugal. By 2014, Debt to GDP in Greece was actually falling. All they needed to do was keep up the reform, and “Austerity” – continual tax rises and spending cuts would no-longer be necessary. The Germans would get their money back, eventually. Greek growth would take over the heavy lifting from austerity after years of tax rises and spending cuts. Economies emerging from such depressions can often grow fast.
Then, in January 2015, they elected a bunch of hard-left Yahoos, who encouraged a bank-run, shattered what was left of business confidence, and were forced to introduce capital controls because of a childish and unreasonable petulance wrought by economic fantasy which could only have come from a Marxist academic “economist“.  Privatise state assets? The horror! Make civil servants turn up to work, and don’t let them retire on 80% of salary at 58? The inhumanity! The Greek people may have been sick of Austerity. But if they’d just seen it through, they’d be heading up now, rather than enduing a 3 week bank-“holiday” and queueing up at ATMs for their daily ration of cash. Syriza have probably cost Greeks another, entirely unnecessary, 10% of GDP, and the resultant continuation of Austerity that comes with it. This makes Yanis Varoufakis (the “minister of Awesome” according to twats on Twitter) the most unsuccessful finance minister in history.

All the pointless yes/no referendum on the terms of the bail-out did was make a Euro exit, something Greeks apparently don’t want, much more likely. As it happens, Alexis Tsipras, after sacking Varoufakis, looks like a man who’s about to capitulate completely. It would’ve been better had he done so much, much earlier, and not caused such a catastrophe for the ordinary Greek citizens.

*slow hand clap*
There is a theory that all this was deliberate; a means to build socialism in the ruins of post-Euro Greece. But this assumes skills and ability “anti-establishment” parties almost never possess. Never ascribe to malice that which can be put down to incompetence.

This crisis is ultimately the fault of Generations of Greek governments, especially the ones who conspired to get Greece into the Euro by all means fair and foul. It’s the fault of the designers of the Euro who ignored all economic advice and wanted Greece in for silly, romantic reasons: Hellas is mythologised as the birthplace of a European idea of democracy. But the current acute crisis was not inevitable. And the blame for that is the hard-left morons of Syriza and the Greek people who voted for them.

“Democracy is the theory that the common people know what they want, and deserve to get it good and hard.” HL Mencken

If you elect the hard-left, you get a financial crisis. Every. Single. Time. Basically because capital is faster-moving than the people who want to confiscate it. Greece was warned. They did it anyway. The only thing people like Syriza and their supporters are any good at is shifting blame onto anyone but themselves. 

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Budget 2015 – it’s as if Gordon Brown never left.

So, the laws of supply and demand have been suspended for a Tory chancellor? Because his “living wage” of £9 an hour by 2020 will (by his own admission) cost jobs. 60,000 of them, according to the OBR. Just as the minimum wage cost jobs for young people. (yes, it did – youth unemployment started its inexorable rise in 2000) so will Osborne’s living wage. But the people it hurts most will be the loudest to cheer it. Osborne isn’t even pretending this is anything more than a shameless political reach into Labour territory. It won’t make people much better off, because tax credit cuts (long overdue) mean the extra money is clawed back by the Government, and it means more tax revenue. Gordon Brown used this trick a couple of times.

Inheritance tax changes further privilege property. This is a policy I once endorsed. But it’s the privilege of property in the tax system which is, along with its shortage, responsible for Britons seeing their home as an investment, not consumption. I’ve no problem with raising the inheritance tax threshold, but make all capital equal.

Hypothecated taxation is the politics of the moron down the pub. We need roads. It doesn’t follow that Vehicle Excise Duty (a bad tax anyway -much better to get rid of it and raise more from fuel) should be spent on roads, so to put its proceeds into a “road fund” is idiocy. US roads are funded from petrol taxes, and petrol taxes are unpopular in the extreme. So politicians won’t raise them, so US roads don’t have enough money, and so bridges crumble. And that’s before the “you cyclists don’t pay road tax” nonsense. Words cannot describe how bad this policy is.

There were a number of measures I approve of – the changes to dividend taxation seem sensible and make ISAs valuable to basic rate tax-payers once more and the moves to build more homes. But this was a political budget. Osborne has got the big questions right over the past 5 years, and this budget was his reward: Its purpose wasn’t the good of the country, but to plunge a knife into the twitching corpse of Labour, by stealing their identity and parking Tory tanks on Labour’s working class lawn.

The difference between him and Gordon Brown? Osborne is a politician of Tony Blair’s class. It’s a privilege to watch such a master of the liars’ craft at work.

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On Osborne’s Inheritance Tax Cut

Back in 2007, I wrote

there is a very simple solution to the problem, which prevents middle Britain being hit by a tax that is designed to punish the very rich: first homes should not qualify for IHT (subject to caveats such as time occupied and value to prevent abuse – you couldn’t have everyone buying mansions to die in to avoid tax)

…which is more or less what George Osborne appears to be proposing. However I didn’t consider it a priority then, and I don’t think it a priority now.


There will be lots of guff about how “insane” cutting this tax is. It’s not insane. Inheritance tax is deeply unfair, unpleasant and resented. It’s falls hardest on those who’ve not prepared for death. And it has come after big cuts to income taxes, so I’m reasonably content.
The main problem with the UK economy is for people to see property as an investment, not as consumption. This encourages people to see their homes as their main asset, and care deeply about how much it’s worth. People oppose dilution of their assets. This is why any and all development – new houses – are opposed so viciously by “the community”.

The problem isn’t inheritance tax, it’s the tendency of old people to hang around in the big family homes long after their family has flown the nest. And their family, when they come to produce grandchildren cannot have a family home because they’re all owned by the baby-boomers. Children are being brought up in flats while granny lives in the big house. And Granny’s in rude health. By the time the house gets passed on, it will be to people well on the way to being grandparents themselves.


Rather than cut inheritance tax on homes, it would make more sense to abolish stamp duty, and make the housing market more liquid. Encourage granny to downsize as soon as little Jonny and Camilla have left for university, with increases to property taxes like council tax offsetting cuts to other income taxes. Granny should take the equity in the house, and invest it in productive assets for her retirement, or use it to help Jonny or Camilla  buy a house for their families.

Above all, we need more houses. And cutting inheritance tax on houses doesn’t help more of them get built. I never oppose a tax cut. And I dislike inheritance tax because it is unfair. From 2007 again 

It is essentially a voluntary tax and is often described as a tax on the unlucky and the unwise. Businesses are exempt as are farms. Potentially exempt transfers can usually see to the rest, and the threshold at £285,000 [now £325,000 – transferrable] is generous. The problem is that it hits unexpected deaths harder than quiet passings in old age. Consider this: A family loses both parents in a car crash and the tax-man – as a direct result – also takes the family home. That’s not on.

I’d want to see stamp duty go, or see more income tax cuts before I cut inheritance tax. After all, Inhertiance tax is, for most people, entirely voluntary, so long as they trust their children, and don’t die unexpectedly. I see why the chancellor is doing this – UKIP have pledged to abolish inheritance tax completely and inheritance tax is wildly unpopular, even amongst people who are unlikely to pay it. This is a policy aimed squarely at the Daily Mail reader and there’s an election very shortly.

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On that One, last, Insurmountable Inequality Between the Sexes.

If the Pompeii Graffiti and Punternet agree, the price of a shag with a lady of negotiable virtue has remained about a working man’s daily wage for at least 2,000 years. With this in mind, let’s not try to pretend human nature has changed all that much. We are still the same upright Ape that wandered out of African savannah 100,000 years ago. And as such, modern life is not what we evolved for. It’s stressful enough without trying to alter what we are and what we find attractive in the opposite sex. And with Internet dating, those of us with an anthropological bent have been given an enormous amount of data to see what people actually want. It isn’t usually what they say they want, or what society pressures us to want.

Slavica totally married Bernie for 24 years because of his looks and famous charm.

Let’s think about human mating as a transaction, because it is. Men trade intimacy for sex, and women trade sex for intimacy. And then there’s the whole bio-mechanics of seeking a fertile mate. Females seek a provider, and males seek a fertile and healthy woman to maximise their mutual chances of offspring being successful. And then there’s the cost of Gametes: men will seek to spread their seed (cheat), while women face an incentive to get impregnated by a “better” mate should their provider be a bit unsatisfactory (cuckold). And the reason paternity isn’t routinely tested is often alleged to be because society couldn’t cope with the result.

We are not evolved to be monogamous, as there is significant sexual dimorphism. The hidden ovulation and permanent receptiveness of the human female is extraordinarily unusual.

We are a highly sexual animal. Yet both genders seem pathologically incapable understanding the simple fact that men and women want different things of each other. Any attempt to generalise about this invites ridicule. But, physically, broadly, women desire a man taller than they are. This is why so many women, if they put anything in their Tinder profiles at all, it’s their height, to male bemusement. Men simply are not interested in how tall a woman is. And men, displaying their abdominal muscles look faintly ridiculous. Physically most of what a man wants in a woman can be described as ‘not fat’ and they’re assuming women desire the same in men. Women desire a high status man (a man who can make people laugh is almost always in control of the room). Men desire youth, beauty, health and a caring nature.

I remember being asked recently by the friend of a lovely-looking girl who was thinking of breaking up with her nightclub bouncer boyfriend “are you an earner?”. I was shocked. Essentially it’s the female equivalent of going up to a woman and saying “show me your tits”. But it’s those unused to hiding their base desires who most often reveal what is in the human id.

The female lawyer, saying “I’m strong and successful, why don’t men find me attractive?” is making exactly the same mistake as the sad-act sending out pictures of his penis to women on the internet from his Parent’s basement and being confused by the responses. They’re both guilty of projection. I desire this of men/women, so they must desire this of me.

Women want a man they can admire. Men, broadly do not want to be competing with their other half and would rather be supported by someone they can cherish. Given this – it’s not a mis-match, is it? – complementary nature of desires, it’s not surprising that fewer women, having found their higher-status man and persuaded him to commit, give up on the rat-race. After all, what’s in it for them? Most women, in my experience do want to settle down, raise their children more than they want to become a partner in the law firm. And the man, to keep up his end of the bargain, will work his fingers to the bone for the rest of his life to provide for his wife and kids.

And this act of providing for a family provides the same deep sense of satisfaction to a man as motherhood does to a woman.

Women suitably qualified, often leave their professions, for long periods of time to raise children. And so the women who’re qualified don’t end up putting themselves forward for professorships or indulge in the savage politicking necessary to get to the top of a corporate pole. They are, like my mother, quite happily looking after people they love. And many such women, of enormous wit, intellect and brilliance take offence at the idea that this is a waste of their talents. The lack of female CEOs is certainly partly down to the choices many women make to not bother with the corporate game. So long as there is no discrimination against those women who DO choose to climb the pole, I fail to see why this is a problem.

There are costs to equality and women’s emancipation. At the other end of the social spectrum, with the welfare state providing for the women and children at least as well as men, the men become utterly worthless to their womenfolk, completely disposable sex-objects, valuable only for fertility. Which is why there is so much violence on the sink estates. Big muscles on the nightclub doorman give him status in a world where men, without economic or social pull, have little else but psychological and physical abuse to keep ‘their’ women in orbit.

Men who suddenly find themselves unable to provide for their women through unemployment are often quickly and efficiently ditched, whereas women’s relationships often survive unemployment. A man supports a woman, whereas a man isn’t “supported” by a woman, he “lives off her”. Society judges. Unemployment is a leading cause of male suicide. As is Divorce. To a married man, unemployment is therefore a much, much greater threat than it is to a married woman as it opens up a yawning chasm of social worthlessness. There are men who’d happily be taken on for the ride as a supporting player to a successful woman, but such a woman would find him revolting. You can send your much more successful wife off to work while you change the nappies, but she’d probably end up shagging the boss of a bigger firm. And when the divorce comes, she’s off, and he’s…. already been emasculated, has a gap in his CV and is worth little to employers or eligible women. This is why female breadwinner, male childcare families are rare and unstable and most female breadwinner families are single-parent.

So, the psychological, social and sexual rewards to men are greater for an equal degree of professional success, and the punishment for failure is far, far more severe. Is it any wonder men work longer hours, will take the shitty jobs with anti-social hours, and don’t prioritise family time and flexibility? And these incentives are innate to us. They are not social constructs. Women like wealth and status like men like a nice high, firm, round bosom.

“So Debbie McGee, what attracted you to Millionaire Paul Daniels?”

Measuring equality in society by the number of female MPs or FTSE100 CEOs is just stupid, because the cost, effort and time invested in becoming a successful politician/architect/CEO/Formula 1 impresario pays off  for men in the only currency I can find which has never depreciated: access to a desirable mate. But it doesn’t pay off for women in that currency, all that much. (Both Dennis Thatcher and Joachim Sauer were already successful when they met Margaret Roberts and Angela Merkel). Men are defined by their social status, for which earning power is a good proxy. Short, odd-looking rich men like Bernie Ecclestone and Paul Daniels do have their pick of attractive women, in a way Angela Merkel doesn’t have muscular hunks dripping off her arm (instead, a hugely respected research physicist). Wealthy, successful female lawyers who tell you they paid for their own BMW, thank you very much, are often single. Wealth and power is irrelevant to female attractiveness to men. Wealth and professional success enhances (is…?) male attractiveness to women.

Rich professional, single women like to think that men are intimidated by strong women. I think that’s a comforting myth spun by women whose biological clocks are ticking, but who haven’t worked out what it is men want. And old, short, odd-looking rich men like to think it’s their charm and wit, rather than their money and power, that’s attractive to the leggy amazon they’re escorting. Yeah.

And so, in the currency that matters, the one that ultimately drives us, access to a desirable mate, wealth helps men, but not women, achieve what they want. That which women can leverage to secure that high-status man is a wasting asset, drifting away while they’re chasing the career. Women can get through the glass ceiling, if they’re prepared to risk celibacy and loneliness with the successful women who have it all dangled as a tempting carrot, which is unlikely to ever be universal. Men do not face that trade-off, but they do face a great deal more pressure to succeed. Most people get this intuitively. That, not discrimination, seems to be the main reason a FTSE100 boardroom is a sausage-fest.

Please note, if you’re minded to comment, that I don’t believe this is as it SHOULD be, but how it IS. And I don’t imagine there’s a great deal that can be done about it. We are wired up how we’re wired up, and that’s that.

The author is currently single.

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Charybdis and Scylla

Alone among the PIIGS (Portugal, Ireland, Italy, Greece, Spain), Greece was running a massive structural deficit before the crisis. Ireland and Spain in particular were torpedoed by the financial crisis, despite running prudent fiscal surpluses in 2007, which was the only bubble-cooling option available to their governments in the absence of monetary levers. The Irish and Spanish were not partying on Germany’s tick, but were instead trying to manage the structural flaws in the Euro. The Greeks on the other hand were using Germany’s credit card to pay the settlement of their civil war.

Since the 2008 crisis, the Greek right has, inflicted enormous pain on the population, removing graft and non-jobs which had become a birthright for many, and tried to deal with the widespread tax-evasion (evasion probably isn’t strong enough. Many Greeks simply ignored the need to pay much in the way of taxes). Tax rises (for that is what making people accustomed to not paying cough up is) and cutting spending (for that is what dealing with graft and non-jobs is) represents a fundamental re-structuring of the Greek economy, which is now 25% smaller than it was before the crisis. This is beyond depression, and looks more like an economy emerging from a major war.
However, on its own terms, Greece’s austerity has worked. The population now has a GDP per capita more appropriate to their actual productivity, and the country is running a primary (ie before debt service) surplus. More taxes are paid, and public sector jobs mostly exist and require their holders to turn up. This is an appropriate time to default as the smoke can clear before the country needs to tap the bond-markets again. The Greek right will take the opprobrium for the pain of the last few years, the left the plaudits for the recovery. Ain’t it ever thus?
Germany, for its part, will have to wave goodbye to the money it lent Greece, and muse on the fact that it has the European empire the desire for which has burned in the Teutonic heart since the country was unified under the Hohenzollerns, and that means it must sometimes pay others’ bills. Think of it as payback for living under the US security guarantee, which costs American taxpayers 4% of GDP, when Germany spends 1%. With power, comes responsibility.  
Greece should default. Germany should pay. Greece cannot default unilaterally, as they lack the resources to stand behind their banks, so they need Troika co-operation to do so. There’s ultimately no need for Greece to leave the Euro, even though this would probably be better in the long-run for everyone; this would allow the Greeks to default, devalue and move on. However there is no political will for this amongst the players that matter (Greece and Germany), however much British anti-EU types yearn for it. Grexit won’t happen. The default and devaluation would probably mean another 2 years of economic uncertainty, and Greek society may not be able to cope without descending into violence, and it’s probably not worth that risk.
Syriza will not be able to deliver promised spending increases, though the austerity is probably going to be a lot less severe from now on. This is going to leave a lot of people very disappointed. The non-jobs, the state pensions paid for life to siblings, the fictional tax returns Greeks used to enjoy are not coming back. The only certainty is whatever happens, Alexis Tsipras is going to get a very sharp lesson in economic reality and power politics when he sits down in front of Frau Merkel.
Muddling through with a Grumpy German taxpayer picking up the bill for a Battered Greek economy, leaving the fundamental structural flaws of the Euro in place is probably the least bad solution all round.
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