Saturday, July 13, 2013

The rich and famous have feelings too

If you mercilessly mock someone about their age, appearance or perceived inadequacies, that would be bullying, right?

Or is it OK when it's the national press doing the mocking and the victim is famous?

The thought occurred to me recently when I spotted the Mail's "Night of the Living Dead" front page after  the Stones did Glastonbury.   It is remarkable how the band keep on performing despite their advanced years but most people celebrate it rather than harp on about how old and wrinkly "the boys" have become.

Jagger and co are big enough to take it and the weak ageist jokes ("Limpin' Jack Flash") have followed them around since before they really did get old.  Maybe it's the price of being rich and famous.

I am not asking the press and the online community to treat every one in the public eye with kid gloves. For example the furore surrounding Maurice Saatchi putting his hands around Nigella's throat was a legitimate examination of his conduct.  

Some famous people (they are usually known by a single name - Jordan, Cheryl etc) play the celeb game and make a fortune from it so they can't complain if they get bitten by the hand that feeds them.  

But there is a lot of public mockery that really is out of order.  A couple of examples:

  • When Roy Hodgson gave his first press conference as England manager, the press was full of nonsense about his (mild) speech impediment ("Bwing on the Euwos!").  

  • Former Lib Dem leader Menzies Campbell couldn't shake endless references to his supposed decrepitude.  This dignified former Olympic athlete was effectively forced out by a snidey media at the grand old age of 66!
Often women get a lot of personal comments based on their appearance which seems OTT and more than they would get if they were men - Rebecca Adlington and Cherie Blair come to mind.  Recently deposed Oz PM, Julia Gillard, took some disgraceful stick about her bust size among other things.

Apart from the unnecessary hurt caused to individuals by this sort of stuff, we have to consider the example it sets to kids. If they see public figures pilloried for having a hair out of place, carrying a few extra pounds or speaking with a lisp, then how can we then tell them it's not OK to bully the poor kids in their class with the same afflictions?

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Thursday, July 4, 2013

Labour HS2 the rescue?

There is light at the end of the railway tunnel.

The tide might just be turning against HS2, the nightmarish money pit of a plan to build high speed rail links between London, Birmingham and other Northern cities.

Currently only UKIP (see "The best and worst of UKIP") and a few MPs whose rural constituencies are in danger of being disfigured by the line against HS2.

With the Coalition seemingly wedded to the plan however much business case for it is discredited, the best hope for stopping HS2 is Labour.

Officially the Opposition support HS2, but Labour bigwigs like Lord Mandelson and Alistair Darling are voicing strong doubts and threatening to break up the big party consensus in favour of HS2.

Mandy even admitted that the last government's backing for the proposal was "politically motivated".  It certainly looks like the cost-benefit analysis done to back it up consisted of numbers picked out of thin air to justify a weak economic case.

The cost projections are clearly a joke.  They keep changing every week and no one seems to be factoring in any interest costs on the money that will have to be borrowed to fund the £50bn they now say is required.

There can be little doubt the real investment cost will be higher but also it is very likely to run at a loss as most high speed networks do.  This is mainly because the estimated passenger traffic never materialises as the public choose cheaper alternatives.  HS1 and the Channel Tunnel are used nowhere near half as much as was originally claimed.

The idea that HS2 will be good for the environment is highly debatable and essentially unknowable this far from its launch date (2026 although these projects are almost always delayed).  By then we could all be using driverless cars powered by algae fuel.

The worst element of the business case though is the tens of billions claimed for the so-called wider business and economic benefits.

The economy is supposed to benefit from spreading growth from London and the South East to the North but any objective analysis would allow that the benefits are just as likely to flow in the opposite direction.

Most of the business benefits are calculated by placing a value on every hour saved by the shorter journey times, as if businessmen don't work on trains.  This is clearly nonsense: given the rate of technical advance I imagine by 2026 businessmen will be able to hold virtual conferences in a toilet cubicle if they had to.

Finally there is the lie that the Coalition has been putting around - that tickets will be no more expensive, or maybe even cheaper, than regular fares.  This is completely implausible but if it is true then the line will run at a massive loss.  So the taxpayer will be on the hook for £50 bn, the inevitable cost overruns, interest on the debt and operating losses for decades.

I hope to God Miliband listens to his party grandees and turns on HS2.  It could be one more thing he could do to make Labour a shoo in for the 2015 election (see The bold policy that could put Miliband in No 10) but more importantly save Britain from a horrendous and costly mistake.

Thursday, June 20, 2013

Nailing left wing austerity lies

Keynesians have been in confident assertive mood recently, claiming that the facts are bearing out their long-standing calls for more fiscal stimulus to "end this recession now", as their cheerleader-in-chief Paul Krugman put it.

They claim that the divergence between US and UK growth rates proves their case.

Until Osborne choked off growth with his reckless spending cuts in 2010, they say, the UK was on the path to recovery thanks to Labour's loose fiscal policy, including a temporary VAT cut.  The chickens of austerity are now coming home to roost, including a stubbornly persistent deficit.

Contrast this with the US, where Obama resisted calls to start cutting the deficit, and a recovery is gathering strength.

This Observer article is typical of the breed:

Gordon Brown at the helm, steered the world economy back on course, with the aid of a $1 trillion collective stimulus. Brown wanted to maintain the stimulus: the US government did, but the 2010 coalition did not, in the name of budgetary consolidation. The US budget position improved dramatically with economic growth while the British deficit, in the absence of decent growth, continues to be an embarrassment.

The problem is that the figures don't support this version of events.  Look at the chart showing UK and US public sector deficits as a % of GDP:

The supposed difference between austerity-obsessed Brits and spendthrift Yanks is all rhetoric and perception.  If anything the US has adopted a tighter fiscal policy than the graph suggests: there have been big cuts at state level which are not reflected in the Federal deficits shown here.

The reality is that the two countries have followed a very similar path.  They entered the recession with their public finances in remarkably poor shape given the boom that preceded it and the crisis sent deficits soaring.

Both started out with some Keynesian stimulus but eased off as political concerns over the scale of borrowing took hold.  In the last couple of years both countries have adopted a middling course, neither attacking the deficit or adding to it as Krugmanites demand.

In fact the US has made the first serious move to cut deficits dramatically as their "sequestration" law kicked in this year to lop $85bn from Federal spending.  But the US is still growing more quickly than Britain.

So, the idea that British growth is slower than the US because we went for austerity and they didn't is a myth.  There are plenty of other possible explanations for the US currently outperforming Britain.

I would highlight one - US house prices were allowed to fall back to their pre-boom levels and the banks purged a lot of bad debt in the process.  The process is widely believed to be over and housing is now contributing to growth.  By contrast the UK has done everything in its power to prevent this house price boom unwinding and is consequently stuck in low growth mode - plateauing rather than recovering (see The stalled UK economy in one chart).

There are almost certainly multiple factors at work.  Another UK-US contrast relates to energy: they have fracking and gas prices 1/4 of UK levels, we have declining North Sea oil production shaving a % point off GDP.

One thing's for sure - the simplistic nonsense about "it was austerity what did it" needs to be laid to rest.

From our website:  UK and Spanish tax implications of a rental property in Spain

Thursday, June 13, 2013

The 10 least sincere phrases in the English language

Yes everybody lies, and it's not just little white ones "to save their feelings".  It's just easier and more comfortable to say what will get the job done rather than what we think.  Here is my selection of the least sincere phrases around:

10.  “I am in a really weird place right now”
  • The modern equivalent of letting someone down gently with the it’s-not-you-it’s-me routine.

9. “Your call is important to us”
  • Why don’t you answer the freakin’ phone then.

8. “How was football?”
  • Non-sporty partners are not remotely interested in the reply.  Try answering “awful actually, someone broke their leg and had to go to hospital” and see if you get anything more than the stock “very nice dear” reply.

7. “A major motion picture event”
  • Saying this in a deep voice at the start of trailers for “Smurfs 2” and “Hangover 3” does not make them events.

6.  “Regrettable”
  • Always a phrase used by somebody blissfully unaffected by the announcement and thus with no reason for regret it e.g. a Chief Exec announcing redundancies or a utility company raising prices.  Regrettable, yes, but not by them.

5. “Sorry”
  • As said by a child to a sibling they have reduced to tears. Usually only spoken under threat of water-boarding and so quietly that  NASA listening devices wouldn’t pick it up.

4.  “Injured in an accident that wasn’t your fault?”
  • The real question that these ambulance-chasing sharks are asking is “long-forgotten incident which we can extort a few quid out of?” but they and their truth-dodging clients have to keep up the charade.

3.  “I like you … the audience loved it – you’re a breath of fresh air"
  • TV talent show judges are apt to gush like this when someone has somehow got the sympathy vote and has to be put through to the next round despite being rubbish. Think of an 80 year old widower who can play “My Heart Will Go On” using his dead wife’s rib-cage as a glockenspiel. 
2. “Aaah…he looks just like you"
  • Someone claiming that a baby looks just like Mum or Dad is not being sincere.  It’s a classic diversionary tactic when faced by a truly ugly new-born: simply pick a parent at random, point out the supposed likeness and a lively discussion will ensue, neatly obscuring the fact that you have failed to comment on the nipper’s appearance.
And the winner by a country mile ...

1. “Ryanair apologises for the late departure of your flight this evening”

  • Even the screaming baby in row 23 knows that they don't really care about anything they put their passengers through.  Their slogan should be: “We don’t give a flying fxxk”

Wednesday, June 5, 2013

Since when did Ryanair get so expensive?

UPDATE: a reader who books with Ryanair messaged me with some tips on how to avoid the highest fares.  In his experience, the fares are cheapest 3-5 weeks before the date of travel.  They quite often start expensive unlike on Easyjet, where the first price is usually the cheapest quoted and it's downhill from there.
He has also found that it is cheaper to book in Euros which is done by putting the Spanish destination first.

No one much likes Ryanair (What 2 years of flying Ryanair will do to you) but millions of us put up with it because it’s “the low fares airline” .  Well it used to be.

I visit Spain regularly and generally end up flying Easyjet or Ryanair because they are cheaper than alternatives like Monarch and BA.  In the past Ryanair has usually had the edge on price but I recently noticed a huge shift when booking flights for next Winter.  

Flicking between the two websites for the weekends I needed, Easyjet was invariably coming out on top.  In some cases Ryanair was almost twice the price of its rival:

I had a quick look at Monarch and BA.  BA was the most expensive but, as they are at pains to point out, are not a no frills outfit.  Monarch, was more expensive than Easyjet but they also easily beat Ryanair.

I booked my flights for this Summer ages ago and got a mixture of Ryanair and Easyjet flights.  Looking on the websites now for a couple of dates in the high season, they look very similar.

So maybe it is just the winter fares on this particular route that Ryanair have decided to put through the roof.  I would be interested to hear what other regular flyers have to say.

One thing's for sure, you can no longer take Ryanair’s boast of having “the lowest fares” at face value.  They have clearly decided to cash in on their dominant position.  Flyers should not simply assume that Ryanair is cheapest and need to shop around.

One pleasant side effect of booking with Easyjet is that their website is easy to use e.g. you can quickly click through to pay for your booking without having to say NO to pages of add-ons like transfers and carry on cases.

Thursday, May 30, 2013

The bold policy that could put Miliband in No 10

Ed Miliband could transform the UK economy and his electoral prospects at a stroke by adopting radical tax reform policies.

The thought occurred to me during the Labour Leader’s spat with Google over its policy of routing profits to low tax Ireland.  Miliband attacked Google’s legalistic defence, proposing tougher rules and increased international cooperation to make multi-nationals “pay their share”.

He will no doubt be pleased by the ensuing headlines but I don’t think this rhetoric on its own will do much to improve Labour’s chance of a return to power in 2015. 

The public will see it like they do banker bashing.  They may agree with the sentiment but talk is cheap and not entirely convincing coming from Labour which toadied up to banks and business something rotten during the Blair/Brown years.

But what if Ed turned the issue into something more than speech-filler and put tax reform at the heart of his manifesto?  Rather than promise a few tweaks to transfer pricing rules and an international conference, he could propose to scrap the bulk of company tax reliefs in return for halving the corporation tax rate to 10%.

Although the Treasury would lose out from a lower headline rate they would gain from the abolition of tax reliefs and, more importantly, remove any incentive multinationals have for funnelling profits abroad.  Indeed the UK would gain from multinationals shifting revenues and profits in the opposite direction.

The knock-on benefits are potentially even more significant: more foreign investment in Britain, more home-grown start ups and billions saved in accountants’ fees.

And why stop at corporation tax?  A similar, although somewhat trickier, deal is begging to be done on personal tax: simplifying the structure, perhaps including NI abolition, lowering marginal rates and abolishing reliefs.  Tax receipts overall should hold up if enough new income is declared at the lower rates and the more efficient system feeds through to economic growth.

There’s a snag of course and that’s why it will almost certainly never happen.  

Labour is traditionally dead-set against lower tax rates and made a lot of political capital by raising the top rate of income tax to a damaging 50% and calling the Coalition “the millionaire’s friend” when it partially reversed the rise.  The left has never bought the argument about lower tax rates paying for themselves by reducing the incentive to avoid and boosting the economy.

But it’s the very unlikely nature of Miliband promoting such a policy that would make it a master stroke equal to anything Blair came up with.  Tony was the master of stealing his opponents’ clothes.  

When he adopted an apparently right wing policy he wrong-footed the Tories and used the resulting opposition from within his own ranks to his advantage.  Standing up to his internal critics made him seem strong and non-partisan to moderate voters.

That’s exactly what Miliband needs to bury the Red Ed tag.  Facing down some left-wing carping about tax cuts for the rich would do wonders for his standing with the majority of the country.  He would also have a substantial economic policy which isn’t just about spending and borrowing more which would finally distance himself from the Brown legacy.

Most importantly he would sew dismay and discord in the Conservative ranks.  They would be shorn of one of their key arguments (Red Ed’s is weak and has got nothing new) and the right wing of the party, including already wavering financial backers, would be further disillusioned seeing Cameron outflanked on their territory.

There are a myriad different ways of reforming the tax code on a lower-rates-less-breaks basis.  Ed Miliband could pledge to do it in a more Labour-friendly way by focusing more on the closing of loopholes than the lower rates.  But I don't suppose he will which is perhaps just as well because Labour's return to power would in general be a nightmare.

From our website:  Spanish maternity benefit

Monday, May 20, 2013

The best and worst of UKIP

I am delighted to see the continued rise of UKIP because it’s really rattling the established parties.   The big parties are so poor at the moment that the old joke “Don’t Vote – The Government Will Get In” keeps coming to mind (and the Worst government policy 2012).

What’s interesting this year is that UKIP has ceased to be just a home for Eurosceptics.  According to YouGov its anti-immigration stance is more attractive to supporters (76%) than its EU withdrawal message (59%).

UKIP has no chance of getting its hands on any levers of power, but it’s clearly going to be disruptive force in British politics for a while.  So it’s a good time to consider its wider policy agenda.

The BBC has published this guide to UKIP policies.  There are lots of things I would agree with but it’s more of a right wing “wish list” than a realistic policy platform.  Saying they’d like to double prison places and set a flat rate of tax signal their appeal to a certain sort of voter but have that other-worldly, we’ll-never-get-in-anyway feel that you get with minor parties.

But to be fair to UKIP, it’s really noticeable going down the list how many policies are unique to them and fly in the face of the combined big party consensus.  For instance, no one else is speaking out against the madcap energy policies that Labour and now the Coalition are pursuing.

I am particularly heartened to see that UKIP oppose HS2, the multi-squillion pound high speed railway project. 

If you speak to most people about HS2 they are really sceptical – about the build costs, the alleged benefits, the time to delivery, fare affordability and simply whether the government is being honest about the case it is trying to push through.   Unsurprising when you consider what happened with the much less ambitious HS1, a 68 mile line between London and Folkestone.  Passenger numbers have been 1/3 of what was predicted and the consequent revenue shortfall has left the taxpayer on the hook for £10bn!  People can wearily see HS2 going down the same track (sorry for the pun) but at much greater cost because it’s five times as long. 

So hats off to UKIP for at least trying to slow down the public sector money-wasting machine.

I am less impressed by their immigration policy which is under review but is currently a commitment to freeze immigration for 5 years.  That’s frankly ridiculous.  London is the UK’s biggest success story in recent decades and a relaxed policy to immigration has been a key component.  To think Britain can thrive while locking its doors to the rest of the world is very misguided.  To give an example of the harm this policy would do, we would become a much less attractive to multinational companies and high net worth individuals who come here to spend money, invest and start businesses.

That’s not to say there isn’t a problem – uncontrolled mass immigration of the kind Labour and the EU have foisted upon the UK has caused all sorts of legitimate concerns about crime, jobs and strain on public services. 

But the right way to go about it is leave the door open to immigration while simultaneously tightening the requirements for staying in the country: anyone not working for an extended period or who breaks the law should lose their right to stay.  

UKIP and the Coalition are at least making the right noises about immigrants having to pay tax for several years before having access to benefits and public housing.  As UKIP recognise, doing anything meaningful on immigration will require Eu withdrawal (EU's migrant rules prove the Referendum case).

All in all UKIP is a welcome breath of fresh aware and deserves to harvest the right of centre protest vote, but risks looking old-fashioned and intolerant without some more nuanced thinking on one of its flagship policies.

From our website:  Taxation of Spanish Rental Properties
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