Budget reaction

For anyone looking for my reaction to the budget, they could do worse than going to Mr Eugenides’ place, where there is some glorious invective.

This speech is essentially an extended “fuck you” to his predecessors…. Vince Cable looks like he’s swallowed a shit-flavoured landmine.

The cuts are coming thick and fast – thick and fast enough to gladden the hearts of all bloggertarians, and enrage lefties everywhere… If only this presaged a wholesale assault on the size of the state, rather than applying a tourniquet to the gushing wounds inflicted by the witless fuck-muppets who came before.

I hope there isn’t a TV in whatever psychiatric ward Gordon currently resides.

Or you could peruse my Twitter feed. Up to you.

Labour’s Desperate spin

The Labour line for today is that the Budget deficit is just an excuse for CUTS that Osborne & Co. would have made anyway. The Liberal Democrats are left-flank protection. And in repeating the self-serving lie that cutting expenditure now is “taking money out of the economy” at a point where the “recovery is most fragile” they demonstrate a most profound lack of understanding.

Every pound that the Government borrows, it must borrow from either domestic savers or foreign investors. Every pound borrowed by government is unavailable for lending to business. Every pound taxed is unavailable for private spending or investment. I simplify – at the margins, a bit of extra government borrowing can create demand, but the jury’s out on whether this is possible beyond the automatic stabilisers like unemployment benefits.

So on a superficial level, firing a diversity outreach co-ordinator loses some demand in the economy as one family’s take-home pay falls by £22,000 (the £30,000 these creatures are paid, less the extra benefits he’ll receive once he’s on the rock ‘n roll. This will reduce demand for goods and services and a rapid cut in the public sector wage bill by getting non-jobs off the payroll will be noticed in the short term in the GDP figures. It may even “cause” a double dip in the figures.

But if you’re not a filthy parasite in a non-job, does this “recession” affect you? Not very much, because to offset the demand drop from your local 5-a-day support worker, local businesses find it slightly easier than they otherwise would have to secure finance because the Government has to borrow £22,000 less next year, which will be available to the private sector. The money not raised in taxes is money that can be spent in shops. Whilst the victims of cuts are obvious, by all means protect front-line services. There will not be a need to fire a single nurse, police officer or school teacher because of “cuts” when there are still ‘Healthy Workplace Advisors’ or ‘5-a-day coordinators’ being employed. Even the most cursory google search will reveal that these jobs are not mythical. the beneficiaries are dispersed. And given those “victims” of cuts are some of the most generously remunerated, securely employed, idle, bolshie, people in the country some of whom have been taking massive salaries to do very little worthwhile, it is time the public sector party at our expense was brought to an end.

Finally the benefits system which keeps a boot on the face of the very poorest must be reformed. Withdrawal rates must be improved. Bureacracy must be removed. The insecure border between welfare and work must not present a risk of losing benefits as a reason to not take an insecure first job, because the benefits system does not accept that insecure first jobs flipping burgers can and do lead to more secure and rewarding employment. Maximum benefits must be cut so that people cannot make a comfortable life on the state’s teat.

One by one, the recession caused by the deflating of a US property bubble has leaked through the home-loans companies, into the Banking system and finally into the obscenely profligate governments who were running deficits during the boom. However much they may try to blame the financial woes for Government bankruptcy, the fact the UK’s Labour Government was running a serious deficit in 2007, at the height of the boom reveals the lie.

Labour’s crocodile tears about “their people” as well as revealing the profound corruption at the heart of the Labour project, demonstrates that they will do it all again if they ever get power. They will take your money and give it to their client state of welfare junkies and public-sector union slugs. Labour accuse the Tories of wanting to cut come what may – they’re just reversing what they think: Labour never saw a problem to which ‘tax, borrow and spend’ is not their favoured solution.

As a result of the profligacy, it is necessary to cut as much as possible as quickly as possible from the public sector fat. TO fail to do this is a much bigger risk than the tiny risk of a statistical recession which doesn’t affect the private sector. Just like the recipients of ‘sub-prime’ loans, Governments overreached themselves. Today’s budget is the reckoning for those who have not yet endured their recession.

I’m aright though. I’ve had my recession and it was tough. If you’re in the public sector, enjoy yours!

America is Closed for Business.

What is true for people is also true for the other tax-paying entity, the company. And what Barack Obama has done yesterday, in arbrtiarily confiscating assetts without due process or any form of contract, is to raise the fear of arbritary confiscations from other businesses which may displease the mob in the future. This is contrary to the principles of the rule of Law. This is not a defence of BP, who appear to have been reckless, but no-one thinks they are not already doing everything in their power (they are of course denied some assets for political reasons) to clean up the mess, and they have paid nearly all the claims for compensation they have already received. BP was emphatically NOT shirking its responsibility, and has endured a politically motivated lynch mob mentality orchestrated from the White house. Obama knows what he is doing is illegal and unconstitutional. BP could demand that its contracts are met, that Haliburton and others pay their share, but this would destroy them politically.

The conclusion is clear, whatever Fishermen from Louisiana think, Obama is abusing his office.

The risk of doing business in the USA is already great, and has got much, much worse. Many non-US companies already refuse to have a US shareholder on their books (next time you receive a prospectus, look for the words “not for distribution in the USA” on the front). Thus the capital markets of the world are closing to US interests. Soon internationally minded US companies will start moving their brass plaques from Delaware to London, Frankfurt, Dublin, Dubai, Hong Kong or other more kindly jurisdictions. Americans may not notice this while their domestic capital markets are wide and deep, but they may find their next recession deeper and longer as the once great nation slides back into the protectionism that caused the last depression.

Obama. By pandering to the mob by offering to keep his “boot on the throat” of BP and demanding extra judicial compensation (which WILL be used as a political slush-fund) has become the worst president in American History. And given who he followed, that was always going to be tough. A president of less historical renown (no peace prize for Mr Coolidge), but much greater stature said “the Business of America is Business“.

Not any more.

People don’t like paying tax!

(Via) I find an interactive map which tracks the movement of Americans around their country. And the interesting thing is the migration from blue states to red. The reason is state income taxes. Basically Americans can flee states with high income taxes and move to get better standards of living by paying less tax.

As can Europeans.

Of course this will come as a surprise to socialists who think that the lovely boondongles of free at the point of delivery healthcare and education are sufficient to make people want to pay more tax. That might wash for some idiots committed to their beliefs (though I’ll be surprised if his or anyone else’s tax return actually contains a voluntary extra payment). But most people want to pay as little as possible.

The people with the most ability to move are, of course, the wealthy. The wealthy, rather than “taking more out” of society, actually pay disproportionate amounts of tax and use services provided much less than their poorer neighbours. High marginal tax rates push these people away, meaning there is in the long-run less money to fund the boondongles socialists so love.

Economic freedom is an important component of freedom, and, yes, a well designed healthcare system (ie not the UK or US) is an important part of economic freedom. But economic freedom also means keeping taxes as low as possible, in order to fund the things that the state does provide best, but let the rest of the people get on with what ever they want to do with the rest. Otherwise, People tend to move, by whatever means necessary from places of high state control to places of low control.

In Britain, socialist fiefdoms like the North of England and the West of Scotland are seeing their brightest and best move south, leaving a broken rump of state-dependent people behind. Socialist ‘paradises’ like the German Democratic Republic for example had to build walls to keep people in, an option not open to California or Glasgow East.

The message is simple. The more you allow other people to become a burden on those who pay for it, the more resentful those who pay will become. The British welfare state is now too big, too generous and too unquestioning for the people who are asked to fund it to do so willingly. If you provide an opportunity to escape – as millions of Britons do each year to southern France and Spain, where the state intrudes much less rudely on one’s life, they will take it.

If you turn a free, prosperous country into an overtaxed panopticon staffed with ghastly bullying state employees in high-viz vests; rich, productive people will leave. The fact that the UK remains a better place to live than former communist countries in Eastern Europe or War stricken African hell-holes like Somalia where most of New Labour’s unchecked immigration is from, is not exactly a ringing endorsement of the experiment in soft totalitarianism.

Low, fair taxes. Less ‘punish the rich rhetoric’ and fewer state prod-noses. And, if you’re George Osborne, don’t raise CGT or abolish higher rate pension tax relief. It may (or probably not) get you a favourable headline in the Daily Mirror, but will only swell the exchequer of Switzerland.

The result of Means Testing benefits

No-one wants to pay benefits to rich people, right?


Benefits should be low, and where possible, universal. Means tests distort incentives and remove the incentive to work and save. Gordon Brown loved means tests in order to “target” benefits at “the most in need”. As a shorthand, Gordon Brown liking something is a pretty good reason to be against it.

Mark Wadsworth
, land-value-tax fetishist extraodinaire, gives us one example involving Pension Tax Credit and Council Tax benefit. Spread this disincentive to save across the whole economy and you’ve solved the deficit which a reduction in the benefit bill would go a long way to sorting out, and the astonishing level of consumer debt explained. That’s before you deal with the cost of administering 70-odd different benefits to which people might be entitled: It just does not pay the average man in the street to save at all, thanks to an idiotically complex welfare state.

Those unfunded pensions.

The state employs, give or take, after Gordon Brown’s lunatic handling of the economy about half the people in the workforce. Many of these people are on unfunded final salary pension schemes. What people who want to suggest that “we’re broke” do, is add the net present value of some 20m public sector pension liabilties and tack that onto the National debt. Then they add the banks (at an effective value of the assetts of Zero) and suggest that we’re much, much worse than any other country in the world.

Now what I am about to say is not to defend Gordon Brown’s idiocy. He took the Deficit to 12% of GDP, and that is utterly unsustainable and probably criminal. But even at this rate, given Japan’s example, we could keep going for a several years before the shit hit the fan. When a quarter of Government spending is borrowed, you do not need to make stuff up to make it appear that we’re in a mess. The fact is that the UK started the Noughties with the lowest share of public debt as a proportion of GDP in the developed world. Because of Browns tax rises since 1997, and sticking to Tory spending plans, he took Debt:GDP from a creditable 43% to an excellent 30% by 2000.

Since then, he’s spent with the care and concern of a man urinating after 13 pints. That is not in dispute. The speed at which the debt is increasing is the issue. Not its absolute size, which for the UK remains lower as a percentage of GDP than Germany (though we will overtake them soon) France, Italy, the USA and the outlier on the list, which does not have a AAA rating, Japan.

I digress. People with an axe to grind often whack a number they claim is the unfunded public pension liability, and another “the cost of the bail out”. Both are meaningless.

The banks are financial assets on which the state is likely to make a return. They certainly are not going to lose everything they invested. To add that to the debt makes no sense at all. Unfunded pensions are more complicated.

Why are pensions unfunded? For the simple reason that a manager of a pension pot of the scale nessesary to fund the civil service superannuation scheme would wield more power than the Chancellor, and probably more power than that of the Prime-Minister too.

So the ‘liabilities’ have become just another ongoing cost of employing existing civil servants. To add a net present value (what’s the discount rate going to be? how are you forecasting indexation?) is to apply a meaningless number to a problem that isn’t there. There is no rating, the cost doesn’t go up or down with the country’s Credit rating. It is not ever going to be called in one go. It is an annual cost built into budget forecasts. No country in the world puts a value on the unfunded pension liabilties of public sector workers, nor does any country “fund” such a scheme (except Norway, but they’re a special case with options not open to the rest of the world). Public sector pensions are paid everywhere out of General taxation. My guess is in the event of a severe budgetary crisis, it will be the welfare junkies who can work who will feel the pinch, not the pensioners, who can’t.

To whack it onto the national debt just demonstrates ignorance. There are major problems with the state’s finances. Public sector pensions just aren’t one of them.

Of course if you wanted funded pensions, the only way to do it would be to have personal pensions for everyone and ban final salary schemes. But that would simply add another burden to the Generation that’s already paying off Gordon Brown’s legacy. That of course is an issue for another post.

“The EU Should Issue Debt Jointly”

The international economic system is full of stabilizing feedback loops.

If your economy is weak, you will export less, your foreign reserves will fall, your currency will weaken, making your exports more attractive, meaning you export more, pouring money into reserves, strengthening your currency and so on… If your economy is strong, your inflation rises causing higher interest rates, which makes your currency more attractive to foreign reserve holders so it strengthens. This makes your exports less attractive causing exports to fall and so on…

Look at what both these examples rely on: Yes! A freely floating currency and domestic control of interest rates. And look at what is happening to Greece (and is about to happen to Spain). They cannot control their currency, and therefore suffer disproportionately when they have the wrong interest rate and currency level. Of course, in both these countries, and in Greece especially, they’ve had Socialist Governments for most of the last 40 years, the centre right only managing to win consistently in the 90s. This means a bloated state bureaucracy and rampant government spending. And of course, since Greece joined the Euro in 2002, both the centre Right and Pan Hellenic Socialist movement have had the ability to borrow at a rate subsidised by the mighty German economy.


For those of us who ALWAYS regarded the Euro as a stupid thing to recommend for anyone outside the Franco-German-Benelux core, the problems of Greece should stand as a warning to anyone recommending it in the future.

And if you add to the idiocy of removing the automatic stabilizers of currency fluctuation to the idiocy of Socialist government to whom you give the temptation of nearly free money, OF COURSE YOU’RE GOING TO GO BANKRUPT.

Schadenfreude is not pleasant to see, but if the misery the Greeks are feeling now can serve as a warning to Europhiles to prevent them advocating UK ever going into the Euro, I shall indulge in it a bit. And if the queues of Jobless in Greece and Spain lead to unrest, then perhaps that should serve as a warning to the UK electorate. And maybe the British Government will get on with firing the parasites in the public sector (no, not the sainted Nurses ‘n Teachers – I’m talking about the worthless box-tickers, the prod-noses, the diversity outreach co-ordinators, the 5-a-day workers, the Quangocrats, the Fake-Charity wallahs) to prevent the same happening here.

Britain is NOT Greece. Our National Debt, measured as a balance outstanding as a percentage of GDP is one of the smallest in the developed world. Though our deficit is large, we are still able to borrow Long-term, and we also have the longest-dated national debt in the OECD. Furthermore, Sterling is a major currency which floats freely. We have time to sort out the catastrophic mess left by our last Lunatic government.

Today a low-grade Bank Clerk called Herbert Van Rumpy-Pumpy or something like that suggested that “EU countries should issue debt jointly”. Basically that allows socialist lunatics in Greece to spend even more of German tax-payers money (ie that earned by Germans not yet born) than they do already.

We are NOT in Greece’s position in part because of the economic policies of the Thatcher Major years to pay down the National debt (which stood at just 45% of GDP in 1997 and fell to 30% by 2000, as Brown stuck to Tory spending plans), in part because a well-developed financial sector provides a market for all that Government borrowing and in part because we’re not in the Euro. A Liberal Conservative Government is fixing it, and the federast Lib-Dems have realised that ‘Europe’ is a tough sell right now. Remember this; and don’t let socialist europhiles ruin it. Again.

Tennis, Porn and Gender Discrimination.

The three areas of endeavour in which women are paid more than men for equivalent work are Tennis, Modelling and Porn, and this is because we men like to look at pretty girls. Preferably naked, but a short skirt will do. Or one with all see-through bits like Jasper Conran‘s latest catwalk show.

Let’s go back to sport. I don’t know why women get offended by people choosing to watch pretty tennis players. The motivation for women to watch rugby always seems to involve the word “thighs”. Do I feel objectified? I like pretty tennis players because I am biologically programmed to seek out healthy, youthful-looking women as mates. Girls like muscular Rugby players because they are programmed to seek out dominant, physically fit men to give their offspring the best genetic inheritance. A pretty face, and large size are some of the unfakable caricteristics with which men and women signal their biological fitness to each other. The fact is we are, as the Bloodhound gang pointed out, “nothing but Mammals”. Men and women want to check each other out, and then get to grips with those they fancy. Because we like different characteristics in each other, men and women have evolved to please the opposite sex’s predilections leading to sexual dimorphism.

You may not like me saying what I am about to say, but I do not like reading “men are redundant” in what is supposed to be Britain’s paper of record. Wishful thinking based on better exam marks does not mean the hairy half of the human race is ‘worthless’. Men are not redundant. Despite male performance in academia falling behind that of females, this can be put down to Girls’ greater diligence, and the increase in coursework, which favours the ‘female’ way of doing things over exams, which in general favour boys.

Life is a little less fair, and more rewarding of risk-taking than school. Whatever the exam results, Men are largely responsible for the advances which have seen people’s life expectancy at birth to reach 80, as for all their dominance at university, few Girls take a pure science. Name me one thing a woman has invented, Or one field of human endeavour in which a woman has blazed the trail. For every Marie Curie, there’s a dozen men of greater achievement: Albert Einstein, Isaac Newton or Charles Darwin leap to mind. Would you pay to watch women play sport? Don’t say ‘yes’, the audience figures on TV and in the stands shout otherwise.

These are facts. There are many reasons for this. Women are on average more risk averse, preferring the safe, if less remunerative job. Women are weaker, more prone to injury if subjected to physical exertion, and therefore aren’t as much fun to watch competing. In any case, Women tend to be more consensual, preferring cooperation to vigorous debate, and tend to be less competitive. Which is why they rarely come up with ground-breaking innovation, which requires a bloody minded arrogance that you know best which is much more common in men. Naturally these characteristics are variables, there are women with male pattern behaviour, and vice versa, but there is no doubt where the mean lies, and this explains much of the difference in representation in Boardrooms, trading floors, politics and the upper echelons of professions. When you adjust for the fact that women on average prioritise job security, and do more part-time work, and above all, have and raise children the Gender pay gap becomes the motherhood pay gap. There is a no gender pay gap amongst the single, childless population.

The sisterhood will probably put all this down to “society imposing gender roles” or something, but there are important biological differences, which any attempt to explain away with social-science wishful thinking renders their entire political philosophy ridiculous; like Frances in The Life of Brian, it is pointless to fight for “Men’s right to have children”. Women have less testosterone, which makes men aggressive and take risks. Women are often observed to have lager Corpus Callosae which enable the two hemispheres of the brain to communicate and is responsible for Women’s much vaunted
inability to focus on one thing at a timeability to multitask. Women also have 2 copies of the X chromosome, whereas men have just one and the much smaller Y. This means men express many more recessive alleles, and therefore have greater phenotypic variety than women. The male normal distribution in many measures is platykurtic. Thus there are more male Geniuses, and more dunces, whilst the mean intelligence is the same for both genders. So perhaps we should not expect to see women equally represented in boardrooms and parliament, if society is, as it is supposed to be, meritocratic. There are just more remarkable (and remarkably stupid) men than women.

Then there’s the undeniable fact of parturition. Women give birth and men generally don’t. When they do, women more often than not want to nurture their offspring. Those years taken out of the workforce, and female preference for safer, less well paid work explain almost all of the Gender pay gap. Men, if they’ve been given a say by the mother of their child tend to feel the urge to provide. Married men with kids work harder and earn more than their single, childless peers. Which again leads us to the ‘Men are redundant’ meme. Are single mothers happy? No. It appears that women choosing to have children out of wedlock is a large contributory factor in women’s happiness declining relative to men since the 1970s.

Most people need a significant other to be happy, and for the majority of people, that means someone of the opposite sex. Herein lies the problem – the opposite sex are space aliens, because as I outlined above, men and women are not the same. We should try to understand each other, and have sex rather than engage in a futile battle of the sexes. But accept that for all the necessary equality, men and women are likely to be very different. Complimentary, but different.

But there is the question of what, if anything public policy can do to address these issues. My solution is to allow genuine choice. There are options available to Men and Women which include Nuclear Families, Childlessness, Single Motherhood, Celibacy. The state should not be sanctioning people’s life choices, and measuring things like the gender pay gap or the number of women in Board-rooms lead to measures to do something about it which may well be worse than the disease. As are policies like defining marriage so as to exclude homosexuals. Single or homosexual parents may not be ideal (and even that is debatable), but what is certain is that a loving home is better than state “care”. Whenever the state intervenes in people’s lives, it creates perverse incentives and misery.

Take parliament. There are many fewer women than men on the green benches. But fewer women put themselves forward than men, probably for reasons outlined above. If 80% of applicants for a job are men, then if everything else is equal you would expect 80% of the successful candidates to be men. By this measure men are discriminated AGAINST in politics. It is therefore reasonable to argue more women should be persuaded to apply for politics, in the interests of better representation. It is not reasonable to look at a very male House of Commons and cite this as evidence of discrimination. Just as the Labour party enshrines discrimination with all-woman shortlists, Harriet Harman, by comparing Male full time work with female part-time work to come up with a Gender pay gap of 17% is guilty of the abuse of statistics to justify what she already thinks is necessary: more anti-discrimination legislation.

I am not arguing for a return to traditional gender roles. Nor am I arguing that women are on average less able. Nor am I arguing that discrimination should be tolerated. Just that with the complexities involved it would be better from a public policy point of view if we were all treated as individual people, not put into gender boxes, by making the insane assumption that men will choose the same things in the same numbers as women.

Now overt discrimination is a thing of the past, better just to let people get on with their lives, without being told they’re a failure if they want to bring up children, or take a safer, easier job for better quality of life. Or indeed if they work every hour of the day to provide for a family, or even buy a bigger car. How about just accepting that people whether they’re men or women are the experts in the incentives in their own lives and react accordingly? Because if you’re arguing for more state regulation, when you look at the evidence it rarely tells the story you wish to tell.