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So much for 'prudence' and the 'golden rule'

Wednesday, June 11, 2008
Straight from EUPravda:

"The United Kingdom's budgetary position has deteriorated over the past year and is expected to rise above the 3% of GDP reference value in the financial year ending in March 2009. In line with the Treaty, the Commission has therefore initiated the excessive deficit procedure" said Joaquín Almunia, Economic and Monetary Affairs Commissioner.

...


The planned figure for 2008/09 provides prima facie evidence of the existence of an excessive deficit in the UK.

...

Having examined the budgetary developments as well as the short- and medium-term economic prospects and policy action taken by the UK government, the Commission concludes that the planned excess of the deficit over the reference value cannot be considered exceptional or temporary and suggests that the UK is not respecting the deficit criterion set in the Treaty.

Since 2002/03, the United Kingdom has not built a sufficient "safety margin" for fiscal policy to operate freely and supportively during normal economic downturns without significant risk of breaching the reference value. Fiscal policy was expansionary in 2007/08, in spite of robust growth, leading to a deficit estimated to have increased slightly from 2.6% of GDP in 2006/07 to 2.9% of GDP in 2007/08.

Whilst general government gross debt is projected to remain below the 60% of GDP reference value set in the EU Treaty, debt has been on a rising trend since 2001 to reach an estimated 43.8% of GDP last year.


Quite what the Commissariat is going to do apart from telling the Dour One to stand in the corner is unclear. Meanwhile I rue not knowing any Socialist and EU true believers, so I will be denied the simple pleasure of pointing and laughing.

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Socialist admits mistake

Tuesday, May 20, 2008
Not here, obviously.

However, Ségolène Royal has cast her eye over the doleful (pun very much intended) effects of La Loi Aubry, the idiotic 35 hour maximum working week brought in on Martine 'Jacques Delors is my pa' Aubry's watch:

"One knows full well that the second 35 hour week law has often been brutal, and has led to major problems in hospitals and certain other enterprises, where low paid workers in particular have seen their working conditions worsen, because the 35 hours [law] has been badly applied".

Mind you, she is still accusing the French right of 'scapegoating' the 35 hours law. That Sarko has not done the right, as well as compassionate thing and scrapped this law brings to mind Thatcher's famous comment about pendulums and ratchets.

For what it is worth, I have had the challenge of explaining what would happen as a result of this law to more than one monoglot Gaul at the low paid end of the medical business.

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A French idea worth borrowing

Thursday, May 15, 2008
"This morning [housing minister] Christine Boutin will unveil the outline of a decree bringing in 'progressive rent payments' for renters of social housing on average or above average income". Source.

While one would expect the Left to whine about this - because that is what they like to do - it can be rebutted that this is just another form of redistribution, and generally they like that sort of thing.

This is not a solution looking for a problem, with tales of the wealthy in social housing a mainstay scandal of the French press.

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The country that won the lottery - so to speak - and blew it

Wednesday, May 07, 2008
Cat calls and jeers for the leaders of Indonesia:

"Indonesian President Susilo Bambang Yudhoyono said yesterday that Indonesia was considering quitting OPEC because it is no longer a net oil exporter....The country is Southeast Asia’s only OPEC member. But it has to import oil because of decades of declining investment in exploration and extraction because of corruption and a weak legal system that makes oil companies wary of doing business there". Source

Meanwhile, "Oil set a new record high of $122 a barrel on Tuesday, the latest spurt in an advance that has seen prices double over the past 12 months". Source

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The politics of envy

Tuesday, May 06, 2008
Are alive and kicking - with some vigour - on the eastern bank of the Rhine:

"Some 68 percent of those [polled] were for a ceiling on salaries for well-paid managers, whereas only 29 percent were opposed. In former communist eastern Germany a whopping 77 percent backed capping what corporate fat cats make. The survey...comes amid a political debate in Germany whether the government should try put prohibitive taxes on high salaries to discourage widening income disparity".

Note the procrustean approach here. Nothing to do with whether the salaries are justified or not, but rather that they should have a ceiling set in the interests of 'social justice'.

One might note that the CDU/CSU polled 35% at the last election, and the FDP (Genschman's old lot) 10%, so there are some very confused conservatives & liberals.

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Economic acts between consenting adults

Monday, April 21, 2008
I'm all in favour of them, frankly but this government is not:

"The Government is now looking to event organisers, promoters and their ticket agents to work together to find new ways of making sure that tickets are properly distributed without fans routinely paying over-the-odds. These improvements can happen without the burden of new regulation, by criminalising fans who want to buy tickets for sold-out events or sell tickets that they cannot use".

Conceivably the people at Pravda Central, or Andy 'just how much eyeliner are you wearing?' Burnham in whose name this went out got their words a bit derrière about visage and missed out an 'or' but why should they be given the benefit of the doubt when the rest of the content is almost as dispiritingly illiberal, ill-thought out and generally ghastly.

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And if we had been asked about the theft of Northern Rock....

Wednesday, April 02, 2008
"The results of a Zogby Interactive poll...show 68% of those surveyed were opposed to federal bailouts for ailing Wall Street financial firms holding soured mortgage portfolios....A majority, 54%, said they also did not support government assistance for the tens of thousands of Americans who are facing foreclosure on their homes. A minority, 43%, of those polled said the government should help distressed homeowners who could lose their properties to foreclosure".

As to "the 25% of those canvassed believ[ing] that the government should help financial firms struggling to manage hefty losses", I am reminded of this classic from Catch 22:

"Major Major's father was a sober God-fearing man whose idea of a good joke was to lie about his age. He was a long-limbed farmer, a God-fearing, freedom-loving, law-abiding rugged individualist who held that federal aid to anyone but farmers was creeping socialism".

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Hillary in Sarajevo - new footage

Friday, March 28, 2008


All very impressive, but apparently she would be prepared to exit NAFTA if 'reforms' she seeks are not accepted.

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"....or in some contrivance to raise prices"

Wednesday, February 20, 2008
The EU's Left, both traditional and tree-hugging varieties, has banded together in an attempt to raise the price of consumer goods:

"Put forward by Caroline Lucas (Greens/EFA, UK), Gyula Hegyi (PES, HU), Bernard Wojciechowski(IND/DEM, PL), Harlem Desir (PES, FR)and Hélène Flautre(Greens/EFA, FR), the written declaration calls upon the European Commission's DG Competition to investigate the impacts that concentration of the EU supermarket sector is having on small businesses, suppliers, workers and consumers and, in particular, to assess any abuses of buying power which may follow from such concentration".

And how much experience at the sharp end do these people have?

Lucas - Wonk for sundry modish causes.
Hegyi - Journalist
Wojciechowski - Teacher and former secret police informer
Desir - Wonk
Flautre - Maths teacher

So, no experience in retail, obviously. Let alone farming. Fortunately the Commissar for Competition is one of the more sensible ones - Neelie Kroes. Perhaps she will take the opportunity to tell them to stop wasting other people's time and money.

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Three cheers for economic liberals

Wading through the Northern Rock theft bill division list in Hansard, I spotted some unexpected names in the noes list:

Clare Short. I didn't think she bothered with Parliament these days, what with her lack of chums in the House. Equally, I would not have had her name marked for being opposed to stealing the commanding heights of the economy.

Frank Field - way to go Frank. Actually no - I got the wrong Field, as Umbongo pointed out in the comments. So Frank, along with Gisela Stuart, hang your heads in shame. No sign of a vote from the member for Vauxhall....

Pete Wishart - SNPer and formerly of sundry Caledonian beat combos.

More names later if I pin down any other rebels etc.

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Would you let these people run a lentil stall?

Monday, February 11, 2008
Some time back I registered on the New Economic Foundation's website, and accordingly get the occasional e-mail from them.

This one is a classic:

"When nef's new book...Do Good Lives Have to Cost the Earth? was launched just under a month ago a rush of purchases led to stocks running out at Amazon, and a number of disappointed people not being able to buy it".

So, they have A - grossly misjudged prospective demand, and then B - taken the thick end of a month to schedule a further print run and get the book back in stock. And C, they appeared to have scheduled it to come out just after Christmas. Only missing the busiest time of the year for the book trade.......

'Economics as if people and the planet mattered' is its website mission statement. I would have thought 'economics as if rank amateurs were allowed anywhere near the till' would be nearer the mark.

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One for the anti-globalisation mob

Thursday, February 07, 2008
The BBC World Service has commissioned a global opinion poll on globalisation etc, and has some findings that mesh with its institutional biases, thus allowing this headline:

"Most See Unfairness in Distribution of Benefits and Burdens of Economic Growth".

Note, however, that the BBC polled rich countries and developing countries, and does not weight the figures by population, thus giving the nonsense of giving as much heed to Lebanon as China. Yes, really.

What it chose not to highlight quite so dramatically is the 'perception of pace of economic globalisation', and in particular, the simple majorities wishing it was quicker in:

  • Central America (all of it bar Belize)
  • Brazil
  • Mexico
  • Russian Federation
  • Portugal
  • Turkey
  • Kenya
  • Indonesia
  • Philippines
And what is more, the countries where support for globalisation is at its strongest is where there is a sentiment that the benefits and burdens of economic growth to their nation have been shared unevenly.

By and large the countries strongly wishing it was slower are developed economies - us, the French (fancy...), Oz and the US etc, plus Egypt and the UAE.

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Obscenity watch

Thursday, January 31, 2008
In a changing world there are few things one can rely on beyond death and taxation - but kneejerk reactions from trade unionists are one of them. Noting a BBC headline about Shell's 2007 results and its record profit, I just *knew* that there would be some economic illiterate ready to denounce them as being 'obscene' .

So drum roll, and up to the plate steps Tony Woodley of the T&G Unite:

"Unite's joint general secretary Tony Woodley described the level of profits in the oil industry as, "quite frankly obscene". "Shell shareholders are doing very nicely whilst the rest of us, the stakeholders, are paying the price and struggling."

I cannot lay hands on figures for Shell's revenue this financial year, but in 2006 it pulled in $318.8 billion, of which $26.3 billion was profit. I make that about 8%..... I did rather better than that with a few things I flogged on ebay, so I hate to think how Woodley would describe me.

We've been here before, of course, with Tesco.

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It isn't just Dismal Gordon who thinks he's abolished the economic cycle...

Monday, December 24, 2007
"Russia will become the world's fifth largest economy by 2020, if its GDP continues to grow 6-7% per year, the Russian economics minister said on Monday.

"If we maintain GDP growth at 6-7% per year, we'll join the group of the world's five largest economies. We are setting ourselves this goal," Elvira Nabiullina said". Source.


Much though I wish the Rodina and its inhabitants every economic good fortune, it is not going to happen, lady.

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Have the British finally got it?

Thursday, December 06, 2007
I am beginning to think that maybe we have:

"I am now going to ask you about freer trade, that is to say making it easier to buy and sell products internationally by reducing tariffs and other barriers to trade. (PROMPT only if needed: ‘Barriers to trade’ include taxes on imports – called tariffs – and limits on imports). Which of the following two statements about freer trade comes closest to your view?"

"I am in favour of freer trade" - 84%
"I am not in favour of freer trade" - 13%

And guess which country is bottom of the class, and apparently still wedded to Colbertian Mercantilism? The French. In favour - 37%, against - 63%

And there's more:

Remove all remaining tariffs on goods traded between [The US and the EU]

UK pro - 70%, France pro - 50%, US pro - 48%

And less encouragingly:

Freer trade costs more (NATIONALITY) jobs than it creates

Only in Germany does a majority disagree. The split in the UK was 42% for and 43% anti. 59% of polled Gauls agreed....

Freer trade leads to lower prices and more product choices for consumers

The Poles, have been at the sharp end not so very long ago get it: 80%. As do 77% of Britons, and 62% of the French.

Freer trade makes the world more stable by putting people from different countries in contact with each other

Poland - 81%, UK - 75%, France - 55%. Shades of the Golden Arches and Dell theories of conflict prevention. The former is well known, the latter less so: "The Dell Theory stipulates: No two countries that are both part of a major global supply chain, like Dell’s, will ever fight a war against each other as long as they are both part of the same global supply chain".

Another oddity:

"Lowering trade barriers between [European Union: the European Union/US: the US] and Africa could address modern threats like unstable states and poverty". France and the UK - 78% pro. The Slovaks come last at 44%.

And the most depressing of the lot:

"The European Union and the U.S. government provide billions...in support for domestic agriculture. In your opinion, which of the following should be the top priority when providing domestic agriculture support?

I do not believe government should support agriculture (SPONTANEOUS): Poland, Slovakia, UK - 1%, US 2%.


There's a lot more available at the German Marshall Fund's site.

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Looks like the EU doesn't believe in 'trickle down'

Friday, November 23, 2007
Or, indeed, getting basic facts straight. The 'borough of Bethnal Green?'



And while bashing the 'anglo-saxon' model - which does not 'redistribute wealth' the way euro commissars would like, it prays in aid Richard Layard, a Labour Lord, and one David Vardy, a Canadian academic.

And ends "GDP is a good way of measuring production but there's an increasing consensus that new tools are needed for calculating progress, well being and our ecological footprint on the planet...take into account social, environmental and economic progress...more and more people are coming to the conclusion that it's not just the quantity of growth that's important, but also its quality".

Not exactly a bloodless piece of civil servant-ese, is it? What is social progress? Who defines it? As I was suggesting the other day, I think whatever the new formula cooked up is called, it is really about finding a way that will make the EU look better than other OECD economies.

And I'll leave the last word to Hume: "If we take in our hand any volume; of divinity or school metaphysics, for instance; let us ask, Does it contain any abstract reasoning concerning quantity or number? No. Does it contain any experimental reasoning concerning matter of fact and existence? No. Commit it then to the flames: for it can contain nothing but sophistry and illusion".

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The EU wants the undeveloped world to stay poor.

Friday, November 02, 2007
Not that it puts it quite like that, but that will be the result of this policy position, if acted upon:

"The EU is stepping up its efforts to promote 'fair globalisation' by ensuring that the international community takes better account of the effects of globalisation on people's working lives. Employment and Social Affairs Commissioner Vladimír Špidla will confirm the EU commitment to promote 'decent work' – meaning more and better jobs with welfare protection, equal opportunities and social dialogue – at an International Labour Organisation (ILO) forum on decent work for a fair globalisation in Lisbon today" Source

Špidla, is of course, a Socialist and therefore has chosen not to note that a panoply of expensive social protections and the like will serve to undermine the competitive advantage of the labour force in other parts of the world.


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Petition o' the day

Tuesday, October 16, 2007
And this one is typical of the reasoned, well thought out submissions that I have come to expect:


"We the undersigned petition the Prime Minister to Work with progressive partities (sic) and orgnisations (sic) to introduce a European Union Minimum Wage".

And what is the petitioner's proposed level? €5 per hour.

Bulgaria, I believe, takes the prize for the lowest income per head in the EU, and a bit of sniffing around has thrown up these figures:

"In 2004 the average yearly salary (gross) is 3618 BGL (about 1810 EUR). According Lyuben Tomev, Director of the Institute for Social and Syndicate Surveys, about 66% of the households in Bulgaria live on an income of 165 leva (about EUR 83) per capita".

So, that equates to just under €35 a week. So the apparently fortunate Bulgars would only need to work seven hours at the minimum wage per week in order to reach that level. Not that that would actually happen. What would happen is that the Bulgarian economy would collapse because of the dramatic increase in the cost of labour, and Bulgarians would make haste to a country where the cost and the reward of labour were rather less out of kilter.

As if this was not quite 'progressive' enough, the petitioner reckons "It [would] also [be] an important first step in the introduction of a global minimum wage". Must be marvellous to be 'progressive'.

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Petitions o' the day

Wednesday, September 12, 2007
Yup, common sense is still on a never ending round the world cruise, rather than facing the unpalatable business of going back to work:


"We the undersigned petition the Prime Minister to have at least basic Welsh/Gaelic taught to school children throughout the UK" Source


Because there is so little information that needs to be conveyed to pupils during the school day, and there is an army of Welsh teachers engaged in thumb, or rather, bodia twiddling.

"We the undersigned petition the Prime Minister to stop trains charging more at peak times" Source


Supply/ demand anyone? Quite apart from it being the case that the operating companies charge less off peak, not more on peak.

"We the undersigned petition the Prime Minister to Allow Direct Recruitment into Police Armed Response Units". Source.


Hello death squads and an unaccountable paramilitary police.



There are more, naturally, but I do not think my blood pressure can cope with any more of them.

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Wonks for higher unemployment

Monday, September 03, 2007
In this case the ippr, which thinks that Londoners should have a higher minimum wage, mainly it would seem because:

"ippr’s (yup, they refuse to capitalise the 'i' even at the start of a sentence) research shows that a minimum wage worker in London earns just a third of the average wage of the capital. But the average UK worker on minimum wage earns more than half the national average pay".

Now why might average pay in London be higher than in the rest of the country? Let me count the ways... London weighting in the public sector and in large corporations, the City, the headquarters of most professional services organisations, the media etc etc. Comparatively little agricultural work, far fewer unskilled jobs outside the catering / hospitality sectors and so on. All remarkably obvious, frankly. A burger flipper in London is highly unlikely to be any more skilled than one in Skelmersdale, and the core economic message sent to that burger flipper is that he or she would be better off flipping burgers in Skem than Kensington because of wage relative to the cost of living, or perhaps he or she should seek to get better educated / trained and do something more remunerative.

The ippr manages a particularly good peppering of its foot with buckshot with this comment:

"ippr analysis shows that the ‘purchasing power’ of the minimum wage in London is weaker than anywhere else in the UK. ippr (see, they really hate capital lettters) argues that a higher minimum wage would also make work more attractive to London’s unemployed".

Folk on lower incomes are disproportionately likely to be spending at businesses that employ low skill / wage employees - retailers, fast food joints etc etc - and any increase in the cost of employing these people will be passed on to consumers. A director at Goldman Sachs is unlikely to wince at a rise in the price of basic foodstuffs, whereas a few pence here or there is rather more significant for the office cleaner. Note also the second sentence, this being a frank admission that the benefits system acts as an incentive not to work, a truism over which I thought the Left was still in denial.

And another cute aside:

"“If the Government is serious about tackling the gap between rich and poor but reluctant to tax higher earners, a higher minimum wage in London – where average wages and living costs are significantly higher than across the rest of the country - must be part of the solution.”

There we have it - 'social justice' is just as good if Procrustes cuts off the extremities of those too tall for his bed as if he stretches those too short. As I have noted before, 'social justice' is envy soft soaped into a higher virtue.

Lest anyone doesn't 'get' the headline, I cannot hope to do better than quote Milton & Rose Friedman:

"The minimum wage law requires employers to discriminate against persons with low skills. No one describes it that way, but that is in fact what it is. Take a poorly educated teenager with little skill whose services are worth, say, only $2.00 an hour. He or she might he eager to work for that wage in order to acquire greater skills that would permit a better job. The law says that such a person may be hired only if the employer is willing to pay him or her (in 1979) $2.90 an hour. Unless an employer is willing to add 90 cents in charity to the $2.00 that the person's services are worth, the teenager will not be employed. It has always been a mystery, to us why a young person is better off unemployed from a job that would pay $2.90 an hour than employed at a job that does pay $2.00 an hour". 'Free to Choose', Avon 1979, page 227

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