On Scotland, And Tax

I met a Scot the other day who offered me some good investment advice. Buy property just below the England-Scotland border, close enough so you can commute across it to Edinburgh or Glasgow.

He believes that when the Scottish Parliament is given the chance to set its own taxes, it will automatically increase them, to pay for its absurd ambitions to become a Sandinavian-style high tax social democracy. It will be cheaper to move to England, where taxes will remain as they are, and commute.

The flaw in this argument, though, is that corporate taxes will almost certainly go up, probably before personal ones. Companies that can move out of Scotland will do so. A number said they would, had the independence vote gone the way of the SNP. There won’t be that many jobs to commute to.

My canny Scot also suggested that the plan was an English one, to give the Scots enough rope to hang themselves. Raise taxes, run out of money, and see where it gets them.

Except that under the devo-lite arrangement promised to the Scots, the English will be the rescuer of last resort. This would mean the third bail-out. The first created the Act of Union in the first place, after the Scottish middle class foolishly sank its money into the failed colony in Darien, on the Isthmus of Panama. (Though this collapsed, in part, because the English Navy blockaded it.)

The second was the rescue of the Royal Bank of Scotland, at a cost of £45 billion, by the British tax-payer when the financial crisis hit. The other bank to be rescued, Lloyds, only needed this because it was strong-armed by the Labour administration to buy the other big Scottish lender, HBOS.

I reckon you could date the third rescue to about 2021.

Incidentally, the conspiracy theory is gathering ground that it is all a plot by the Tories to persuade the Scots to make the idea of a high-taxing SNP so unpopular in coming years that Scotland swings wildly to the right. So making the Labour Party unelectable. It is a theory I suspect we will hear again.

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On Mars, And Conspiracy Theories

“On Mars, on Mars, on Mars, on Mars, on Mars.” Last lines of Kim Stanley Robinson’s Blue Mars, last book in his Martian trilogy.

I have wondered before what it is about space travel that is so conducive to wild conspiracy theories.

The latest, from the Mail’s online site, has NASA sending real live astronauts to Mars along with the Viking lander in 1979.

A woman called Jackie, who claims to be a former NASA employee, rang a radio station to say she was watching a live feed from Viking. She saw the Viking rover moving around, as well as two men in unfamiliar space suits on the Martian surface. As, she said, did six of her colleagues.

This story, although oddly enough not immediately corroborated by NASA, is all over the Internet conspiracy sites, which contain the belief that there was, or is, a secret space programme.

There are a couple of problems with it, raised some way down the Mail online story. One, Viking did not have wheels, unlike more recent Martian probes. It could not run around, then. Second, there was no live telemetry feed.

 Still, it allowed the Mail to field another recent theory about the Red Planet. A man described as a physicist believes there was once an advanced civilisation on Mars, but it was destroyed by another race of aliens in a nuclear bombardment from space. This is why Mars is red. (Actually it has to do with the presence of iron on the surface which has rusted.)

It’s always space, isn’t it?

On Tax, And Moral Choice

The unelected head of Europe has survived a motion of censure over tax avoidance. That is one hell of a sentence, and seems to sum up much of what is wrong with the EU, in a few words. The truth is even more illuminating.

Jean-Claude Juncker, who comes from Luxembourg, has just become president of the European Commission because no one could think of anyone better. True. The accidental president. Questions have been raised about his role in promoting tax avoidance by huge multinationals in Luxembourg in the almost 20 years when he was that tiny country’s prime minister.

Juncker was recorded detailing how such companies could route finance through his country and pay only minimal taxes. He now says he didn’t say it. There has been a vote of censure in the Parliament at Brussels against him, on the grounds that the connivance in tax fiddling makes him unsuitable to run Europe.

A reasonable enough claim, you might think. The vote of censure had no chance of succeeding, of course. Indeed, someone as powerful as him, subject to so few controls and balances, could probably have got away with embezzling several millions of euros while impregnating half the Brussels secretarial pool. It is how these things are.

(Not that he did, though there have been stories about how he likes a drink at a time of the day when most of us are sticking to the milk on our cornflakes.)

The interesting part is that the tax avoidance stories emerged, with names of the corporations who benefited, after someone leaked documents from one of the UK’s biggest accountants over its clients’ tax affairs. The tax breaks allowed insignificant Luxembourg to build a financial services sector which accounts for more than a third of its economic output.

There is no likelihood that the accountant involved, which is refusing to comment, is any worse than any of its competitors in this grubby little trade. Some Luxembourg politician was on the radio defending the tax schemes on the basis that, if we didn’t do it, someone else would. And other countries do.

This is the excuse made by arms peddlers, loan sharks and, for all I know though I’ve never heard it from one, people smugglers and drug dealers.

It hardly smacks of moral probity on anyone’s part. The bit that interests me is that there are thousands of accountants whose jobs involve ensuring quite legally that rich individuals, and even richer corporations, do not pay enough tax, so the rest of us, who cannot afford their services, have to pay proportionately more. It is a recognised sector of the profession.

This is a little like the senior people who work for tobacco producers, as I have suggested before, and choose to earn their living selling things that will kill one in four of their customers. Those accountants have transferable professional skills that allow them to do any number of other things in accountancy.

Yet presumably, when introducing themselves at cocktail parties, they say something like, yes, my job is ensuring people and companies already obscenely rich remain so by avoiding their fair share of tax. What do you do for a living?

It is an odd moral choice. And it is a moral choice, because as I say, anyone with that level of financial expertise could easily earn a living by other means.

On Public Schools

The headmaster of my old school has been on the radio and in the papers saying that ordinary middle class families such as my own are being priced out of the market for independent schooling, and institutions such as his own are little more than “finishing schools for the children of oligarchs”.

He’s got a nerve. The place costs about £20,000 a year. That puts it at the pricier end of the spectrum and means that, to educate two children you would have to earn £56,000 before tax, on a higher tax band. Unaffordable, indeed, to most families. The increase in the cost of independent schooling has been running well ahead of inflation, about 5, 6 or 7 per cent a year for some years now.

This means that in real terms, from when your child enters the sausage machine at age four to when he or she leaves after A levels, or whatever they are called these days, the cost of that education will pretty much double, in real terms. What is affordable at the start is unaffordable at the end.

Our own children, thank God, both decided that once they had sat their O-levels, sorry GCSEs, they no longer wanted to attend institutions that seemed only interested in giving an education to the spoilt, rich and privileged. Both went to state sixth form colleges – one went from this humble institution to Cambridge, so there.

Andrew Halls, who is apparently the head of my alma mater, said schools like his are so reliant on rich pupils from overseas that they are in danger of a banking-style crash, should such lucrative business one day disappear.

To which I can only say, my sympathy is limited. You have priced yourself out of the market. You no longer serve ordinary families such as mine.

Two thoughts. One, if the middle classes are not able to afford private education, then the state system can only benefit, as pushy parents insist on the highest standards for their offspring.

And if my alma mater is indeed purely for rich oligarchs’ children, perhaps it might stop pestering me for money to subsidise their education. As it has been asked to several times. Yet still the begging letters for a contribution to the new Quad, or sports fields, or whatever, come through the door.

Oh, and by the way. I got a partial scholarship, which is how my family managed to afford it. This paid for a third of my school fees. The school’s website today says that junior school scholarships “of up to £1,500 a year are available”. This is, if the rudimentary maths I was taught at the place does not fail me, rather less than a third, which suggests that the value of such contributions may have fallen a little behind in the intervening years.

Not that this would bother the average oligarch.

On Crossrail 2

A letter drops through my front door in suburban south west London. “Your property or business is located within 200 metres of land that may be needed in the future to build Crossrail 2 underground rail line.”

The route is “currently protected by Safeguarding Directions made some years ago”. Strip out the gobbledegook, and much of my job involves deciphering such corporate weasel-speak, and this means it is possible my house, and the land it occupies, may be needed in the building of this project, which will run north-south across the capital from Hackney through to Wimbledon.

As a consequence, any development on that land will have to be cleared with the authorities. Should I choose to sell my house, any buyer will have to be informed of this fact. This is called planning blight. Houses all over the country are rendered unsaleable because  someone might want to build something on them some time.

Except that, if you look a little closer, the threat is almost non-existent. My house is not on the route of Crossrail 2, which as it is planned will end at the nearest overground rail station, a good 15 minutes walk away. Not 200 metres.

My house may, or may not, be on the route of a proposed extension to Crossrail 2, I learn from the project’s spectacularly unhelpful website. They have yet to agree whether to build the basic route. This will need the private sector to put up half the money. It will need whatever government is in power to find the rest, by the estimated start of building work in 2017.

The next administration is going to be even more strapped for cash than the current one. I can find  no mention of how much the project is going to cost, but Crossrail 1, which is going ahead, needed £15 billion. It looks unlikely that a future government will sanction another large infrastructure project while shutting schools and hospitals and slashing the welfare bill.

Even if it does, that extension that would affect me is even further into the future – the basic line will not open until 2030. If it ever does.

Meanwhile, any attempt to sell my house will require that caveat to be published to nervous buyers.

Still, Boris Johnson wants Crossrail 2. The man who wanted a huge island built in the Thames Estuary to serve as London’s main airport, a messianic project that had nil chance of success and has now been canned. (I met Boris once. Engaging character. Not someone you would want running the country.)

I reckon the chances of Crossrail 2 and its extended bastard brother affecting my property are infinitessimal. Still, no reason not to worry the punters. Send a letter anyway.

Bloody bureaucrats.

On The Twitter Mob

I never thought I would find myself defending Emily Thornberry. I admit I laughed along with the rest when THAT tweet was published on Thursday afternoon by the now former shadow attorney general.

It was “Bigotgate” all over again, when Gordon Brown called a member of the public who questioned the wisdom of unfettered immigration a bigot. One of those occasions when the mask slips, and we realise the contempt with which the inner political circle holds us and our views even as they fawn over us for our votes.

But there is something disturbing about the way she was hounded out of office by a Twitter mob. Engagement with social media is obligatory now for politicians, and gaffes are inevitable. Our political class is obsessed with such mistakes, because it takes attention away from any debate on substantive policies, which might require them to put some unpalatable truths before the electorate.

She should have brazened it out. Pointed out that, as it happens, she had been raised in a council house.

In recent days the Twitter mob has also whipped up a campaign against a Californian who claims to be able to teach men how to seduce women. Sexist. As a result he has been banned by the authorities, as if he were some neo-Nazi or Islamic hate preacher. We have to be protected from hearing his asinine ideas because the Twitter mob says so.

It is terribly easy to ignite a Twitter campaign, because of the self-feeding, self-replicating nature of social media. One click becomes ten clicks, becomes a hundred clicks, and so on. Soon it appears that large numbers of right-thinking people support it. Actually, it is a few thousand nutcases and single issue fanatics, brought together by the Internet.

Better for said Californian to be allowed into the country, given time on prime time TV and then taken apart by a seasoned interviewer. Not difficult, and ridicule is what such people fear most. Being made to appear a martyr only feeds their sense of importance.

All this matters because Twitter, and social media, has been used on a number of occasions recently to shut down reasoned debate at universities, somewhere where you might think the putting and abutting of robust views would be welcomed. Oxford, Cambridge and others have cancelled public debates on important subjects because of the Twitter mob.

Students must be protected from hearing opinions that do not accord with the world view of a few single issue fanatics. Heaven forbid they should be introduced to new ideas and allowed to make up their own minds. That’s not what universities are for, is it?

My Old School (Again)

Where did it come from, this bizarre habit of schools dunning their alumni for cash? I blogged here recently of my alma mater’s attempt to extract money from me for various projects, a process that, given the fee inflation since I went there makes the place unaffordable to those on my kind of salary, would have meant me subsidising some parents who are by definition much richer than me.

Now my daughter has received a request for a donation from her old school, to pay for some new playing fields, or some such. She is aged 20, in her second year at Cambridge. In my experience, students do not generally have a lot of cash to splash around, and what little they have goes on books, rent, food and one or two of life’s little luxuries.

Do many say, ooh, yes, I won’t eat for a month to help out on the new hockey field? Plus, as a blistering post on her blog makes clear, she has no great fondness for the place, or for the teachers who seemed to have a problem remembering her name, in her 12 years there. And who told her, when she left at 16 for 6^th form college, that she wouldn’t amount to much if she left.

Peak Chocolate

You may have heard about Peak Oil. But here comes Peak Chocolate.

Peak Oil is a theory that there will come a year when the maximum amount of hydrocarbons has been extracted and we start to run out even as demand continues to rise. Cue collapse of civilisation. The trouble with the theory, a factor in the equation seemingly missed by those forecasters who first popularised the term in the early Noughties, is that we keep finding more of the stuff.

Peak Chocolate is more worrying – if you like chocolate. It seems we are running out of the stuff, even as demand grows in emerging markets such as China and India. By 2020 we will be producing 1 million metric tonnes less than we will want to consume.

The price of cocoa has been rising on world markets from a point when it was a mere commodity to a time today when it is looking increasingly like a luxury. There are three culprits. Climate change is expected to lead to water shortages in key growing areas in west Africa.

Then there are two diseases, frosty pod and witches’ broom, both funguses, to which existing plants have no resistance. The problem is that cacoa trees are extremely slow to grow, so it takes several years to develop resistant strains.

One such has been developed, for frosty pod. Unfortunately, all the experts agree that it tastes horrible. Developing strains that are both tasty and resistant will take considerably longer.

The makers of chocolate will most likely react in two ways. They will adulterate their product by shoving in other ingredients, such as vegetable fat and dubious chemicals. They will shave the size of their product, so you pay the same for a smaller bar without knowing it.

This is a disreputable process that food manufacturers have been using for years to rip off consumers and pass on rises in commodity prices without their knowledge. Plus, I imagine chocolate will become more expensive.

Peak Chocolate.  Something else to worry about.

On Philae

Can it be too long before theories start to circulate that the European Space Agency’s Philae lander, sent out to a comet immeasurably far away, is a stunt cooked up on the back lot of a film studio?

There is something about space travel that attracts the conspiracy theory nuts, as I have noted before. I have had emails in the past from people keen to persuade me that the Apollo programme was faked up. There are pages and pages of this stuff on the Internet.

The latest news is that, while Philae has landed on the comet, no one is quite sure where it may be. This is bound to excite some interesting theories. Kidnapped by aliens? Plus, a colleague of mine has tweeted, in jest I trust, that it was a dry run for a subsequent journey, to any comet threatening the Earth, by a craft bearing a nuclear weapon, as in the film Armageddon. Expect that one to come around again.

Anyway, here is an exclusive picture of Philae coming into land:

http://i.dailymail.co.uk/i/pix/2013/10/15/article-2460233-02012A5C0000044D-409_634x383.jpg

One Sandwich Short Of A Picnic?

A glorious row has blown up over the decision by a British company to go to Hungary to hire workers for a sandwich factory here, because local people, it claims, are not interested in the work. This has allowed for one of the weirdest headlines ever from the Daily Mail, a publication prone to occasional bouts of surrealism.

“Is there no one left in Britain who can make a sandwich?” it wails, in a tone that might better be reserved for a serious natural disaster, or perhaps the discovery of some festering political scandal. To add to the joy, the row has blown up just at the start of the annual conference for the CBI, the employers’ federation.

It is worth looking more deeply at the connection between these two events. As the Mail explains it, arrivals from Hungary who take the work making sandwiches and get the minimum wage will automatically have their pay topped up by tax credits to take them to what is seen as an acceptable standard of living.

This means that the company, which can hardly be blamed for its actions, is being allowed to import workers whose wages are then subsidised by the British state. It can pay below par wages because we will make up the difference.

One has to deduce that those local people who are not prepared to take the jobs available are doing so because they are not prepared to work on low pay and rely on the state to top up their wages. Better to cut out the middle man and subsist on welfare benefits alone.

The CBI’s solution is for tax cuts that will take poorly paid workers out of the tax system and allow them to take home more. This is, if you analyse it, more of the same. Its members can continue to offer low wages because workers will not pay tax on them.

This is a state subsidy in another form. It does nothing to address the real issue of poverty level wages, and it reduces, imperceptibly, any efforts to reduce the UK’s budget deficit, which, contrary to what you may have heard, is actually getting worse after four years of “austerity”.

At no stage is anyone suggesting that employers should pay a proper wage in order to attract sufficient staff. This is how a true free market would work, something employers’ organisations such as the CBI claim to believe in. Any business that could not afford to pay a proper wage would fail. This is called capitalisation in action.

Instead we have crony capitalisation whereby businesses that are not actually viable in that true free market are kept going by state subsidy. The tax system is manipulated to reinforce low wages. While senior executives rake in huge salaries, taking home hundreds of times what they pay the workers who keep those businesses going. Making sandwiches and the like.

Not a point of view we will hear from the CBI this week.