Market failures

I have been reading a book, "How Markets Fail", by John Cassidy, borrowed from the local library (and when he says local he means less than 200 yards away, European readers, about 180 metres - ed) and have not only been understanding what it says, but actually enjoying reading it (how can that be - amazed ed)!

Now being that kind of sad person (What? You have a problem with lack of light in Winter in the Northern Hemisphere - medical ed), in that I read books on Economics amongst other things. I have now read more than a few books on the most recent recession and this particular book is damn fine (like a wine, it seems to get better the more I drink of it - waxing lyrical ed).

It gives a history of economic theories over the past 150 years or so, and trips lightly to the conclusion that most (but not all - economics ed) economic theories fail to explain anything that appears to happen in the real world at all (you just can't trust those trusty theories - ed). There does seem to have been a move to more realistic theories in recent years, as they start to take into account that most interesting factor, "real people" and psychology. What took them so long you may well ask?

Most (if not all - ed?) of the older theories that had been put forward (and taught as gospel in many Universities - education ed) had a large number of assumptions that failed to match the real world, and unfortunately for us, were used as tools to help in policy making by governments and financial authorities  world wide (oops - ed)

What economics seems to boil down to is; that the world is inhabited by irrational people with an inbuilt herd instinct, who are forgetful of  history and have absolutely no ability to foresee the future (well how many more booms and busts do there need to be before we get that it is the norm - economics ed). 

So given this, what I do find amusing, is that most of us in work have pension schemes where our pension fund managers invest our money to beat "the market" but where history shows us and time again that most managers fail to beat the market average (Worth reading Nassim Nicholas Taleb's books, The Black Swan & Fooled By Randomness, which although are a bit of a hard read, are very enlightening - economics ed). Worth noting that there will always be some people who beat the market, but that is most likely (tee hee - maths ed) down to probability.

Markets of all kind seem to move in cycles, generally boom and bust (like in in the UK the market for houses - see here, for the boom and busts over just the last 40 years, including our latest one - ed) but we seem to forget it after a few short years! Remember even Gordon Brown (hiss, boo - ed) told us with all sincerity that, "we will never return to the old boom and bust", as recently as 2006, just before we entered the longest recession in generations! So much for that theory!

So, if you are a little interested in why we are where we are, this is a book I can recommend.

Afterthought
Another entertaining and very readable book is, "Whoops", by John Lanchester, a book which is a breeze to read and very informative on the subject of how we got into this current mess.

Graphery [Thoughtlet]

Definition: Graphery:- the act of playing around with interactive online graphs. Example here. First known word use here.

Tax cuts for millionaires

This keeps getting raised and it annoys the pants of me (well rotated pairs I hope - fashion ed). 

In April 2009 Alistair Darling, the Labour Chancellor of the Exchequer, announced a new 50% tax rate on all income above £150,000. Previously the highest rate was 40% for all income above £37,400. This measure was timed to come into effect from 5 April 2010, just before the next UK election, which the Labour party expected to lose, and indeed did (hurrah - agitprop ed)

So, whichever Government that was going to follow them, was going to find the economic outlook pretty grim and the Government income and expenditure in total disarray (as ever after a Labour Government - economics ed), in fact the Chief Secretary to the Treasury, Liam Byrne left a note for the next incumbent of the office, which read, and I quote, "Dear Chief Secretary, I’m afraid to tell you there's no money left. Kind regards – and good luck! Liam."

Now, given that the Labour party had been in power since 1997, that is, 12 years, before creating this new tax band you have to ask yourself if this measure was going to raise a substantial amount of income tax, why had they not brought it in beforehand?

Simply politics, given their inevitable and indeed looming defeat, the Labour Party wanted to put the following Government (now the Coalition - ed) in a bit of a dilemma, given that, removing this new tax band, would cause huge political fallout. In fact the Labour party have used the partial removal of this band to berate the new Government over tax cuts for millionaires.

This was and still is a political masterstroke, as here we are in 2013 with the Coalition, which announced a reduction of this new rate from 50% to 45% in the April 2012 Budget, and with its actual removal looming on the 5 April 2013 being berated after the Chancellor's Budget speech with this hackneyed phrase,  by the Labour leader, Ed Miliband (like the real thing, David Miliband, but softer and more cuddly - ed)

Now, I am not sure about you but £150,000 (in any ones book a lot of dosh, moolah, rhino, cash - ed) however it is not a £1,000,000  (that's even more dosh - ed) by any stretch of the imagination, but that is the Labour Party for you, never very good with figures.

What I will endeavour to show, by showing the costs of various salaries through the periods 2009-10 (last year of the Labour government, without 50% band, so max rate 40%), 2012-13 (last year with  50% band) and the forthcoming tax year 2013-14 (50% band decreased to 45%) how much tax a disparate set of incomes actually raises.

Note the figure the furthest on the right is the percentage of income that the tax payer keeps, it is quite noticeable that the proportion that you keep decreases the more you earn, progressive taxation is what it is called, not only do you pay more in pounds, you pay an increasing percentage.

The tables also shows the cost to the employer as your gross income plus the employers NI contributions that are in effect a "job tax" on the worker.

2009-10 Last Year of Labour Government 40% Upper Tax Band

Makes for some interesting reading for the year 2009-10 above, that under the Labour government a millionaire salaried worker (perhaps a Premier league footballer or perhaps a banker - ed) gets net pay of 59.63% or £596,313 (ooh that's large - ed) but also generated £530,954 in income taxes (includes income tax, employees NI and  employers NI - ed)

Last financial year with 50% upper band

For this last financial year, we can see that the "millionaire" is now only getting net pay of 49.85%  or £498,537 but is generating £638,429 to the Government coffers! That is quite a substantial extra contribution of over around £107,000 more  a year than under the Labour Government. If this is that lucrative for the Government, why didn't they raise it earlier?

Coming Tax Year 2013-14, with 50% cut to a 45% Upper Tax Band

In the coming financial year, the millionaire will be keeping 50.29% of their income, or £502,908 but still be generating £634,030 for the Government coffers. So, even with this, "tax cut", the "millionaire" tax payer is still contributing more to the Government coffers than at any time under the Labour Government.

Given the large amount of money that these "millionaires" (anyone earning over £150,000 being a millionaire obviously - ed) generate, surely we want more of them rather than fewer, as each one of them contributes one hundred and twenty times more than the £20,000 a year tax payer.

Afterthought
It is worth noting, that in the year 2009-10, according to HMRC, there were 16,000 people who declared themselves as having incomes of £1 million or greater, by 2010-11 there were only 6,000 in the same group.

It is unlikely that 10,000 millionaire income earners disappeared, it is more likely that some brought forward their income (as these high earners are generally paying themselves via dividends rather than as PAYE - ed) to pay at the lower tax rate, or they may have put off taking that income until a later time when the rate has been reduced, as high earners can usually do, as they have well paid accountants and financial advisers to help them make these seemingly tricky decisions

Those earning £150,000+ (308,000 people) pay £47bn or just under 30% of the total.

Those earning between £35,000 and £150,000 (3.7 million people) pay £57bn or 34% of the total

Given that there around around 30 million workers in the country (according to the HMRC, so the figure must be right - ed), then the rest of the 26 million works pay the rest, 36%, of the total.

What is also interesting about these figures, is that most, in fact 80% of the workers in this country earn an after tax income of less than £35,000. In fact there is a nice bit of graphery (is that really a word? - ed) over at the Guardian, which is interesting to play with.

So in an environment where the words, "paying their fair share of tax" is bandied about, given that the top 20% already contribute 64% of the tax, aren't they already paying their fair share of the tax?

Power On

Well, since 08:28 this morning, this has been a no power household. It finally came back on at 17:55. Makes me wonder if the freezer has managed OK, not opened the door at all, but did open the fridge door a couple of times to make some hand warming cups of tea. Luckily for us we have a gas hob, which had to be lit with a lighter, but managed that without any incident (Ray Mears would have been proud of you - ed)

When I rang the power company this morning they said that the power would be back in an hour. A little optimistic in retrospect methinks. Rang again at 16:15, and was told that it would be on between 4 and 5pm. Well they were a little later than that, but arguably better late than never. At least we aren't snowed in down in the South as some parts of Scotland are who haev been without power for a few days now.

Funnily enough had just lit some candles in the front room, as the light was fading, and dug out the rewindable torch, but failed to find the battery powered torch. Know that I put it somewhere sensible (dangerous thing when he knows where something is - look what happened in the Attic - ed) but have not been sufficiently goaded to properly look for it. Think I am all searched out after Sunday in the attic.

But the  power is now back on I am just knocking out a quick post about it. I mean my readers need to be informed.

Seems that not all of Alton was struck, as I braved the bitter cold of the great outsdoors earlier, well I did  pop to Boots and Sainsbury's to stock up on a couple of items and noticed that Alton High Street was unaffected.

Mildly disappointed that the power is back on, I was looking forward to deciding whether we should go out to The George for dinner, assuming they had power or staying in and cooking a meal on the gas hob and eating a candlelit dinnner which did sound quite attractive, but that would require a bottle of wine to make it romantic?

Nothing on the Scottish and Southern Electric Power Distribution Site with the reason for the failure, all they said this morning was that there was a problem at a local substation.

What was noticeable, with the power outage, was that when the mobile phone ran out of charge and I couldn't access any form of news or social media and strangely the world didn't end? Bizarre eh! We are lucky to still have a landline phone (that old style technology does sometimes come in handy - ed), and the extension in the bedroom worked, but the main phone downstairs didn't as needs mains power. But what can you do with a landline in terms of accessing information on the internet without a working router (which needs electricity - ed) not much it seems.

Afterthought
Might be worth investing in a spare battery for the mobile to give me a little bit more time on the internet should we get another power outage (but you would have to keep it charged, and somewhere where you can remember, so that you can find it should the need arise - ed)

Attic

Been having a bit of a sort out of the attic. Not the one between the ears, but the real one up between the rafters.

Now, this is one of those jobs that gets postponed and postponed, but I was looking for something and I thought I knew where it was (he didn't as it turned out - ed) and unwisely I was determined to find it.

So Sunday afternoon, when it was bitterly cold outside and it was merely cold in the attic, the hatch was opened, the ladder lowered, and my loins were girded ready for action, Luckily I have a system which was put into effect when the boxes went up into the attic a couple of years ago. But even with the initial best of intentions things in the attic have lost a little shape since then, as you will see below (sigh - ed)

However, a slight aide before I start the story. I do have a number of theories to do with putting boxes in the attic, namely the following rules:

1. Don't do it at all. Never ever, ever put boxes in the attic. Remember don't do it, because if you do, at some point there will be something you need that is in the attic and will not been findable or alternatively you are moving house and need to 'Clear the Attic', which involves bringing the boxes down from the attic, repackaging the contents into newer, less decrepit boxes, moving the said boxes to  the following house, putting the boxes back up into the next attic. I recall taking two days to empty an attic at one house, luckily, the contents never went back into the attic of the following house, as I applied rule 1 very firmly indeed. 
2. If you do feel you need to put boxes of 'stuff' in the attic, catalogue the contents of each box and put that list on top of the box, take a photo of the contents of the box and number and date the box on both the lid and the side. The box can then be put into the attic. Ensure that the photos with the content picture and list/catalogure are put onto computer  - preferably in the cloud. Note: As and when more stuff is put in the attic, apply the same actions, otherwise madness ensues
3. Simply write on the box lid a brief overview of the contents (David's ref books, Star Trek TNG DVDs, etc - ed)
4. Put boxes in the attic all higgledypiggledy with no form or structure, because we all know that is the real way to do it.
5. Date and time boxes, which then, if remain unopened for X years are taken out of the attic and binned/recylced without opening. Remember, unopened, because you know as well as I do, if you open the box, you will find a reason to redate the box and leave in the attic. Remember, boxes in the attic are not just for Xmas, they are for life!

Now having tried, 1, 2, 3, 4 and more recently 5. at different times and in different houses, I have come to the conclusion, that 2 is the one that should work (whaddya mean should - suspicious ed).

There is a large CAVEAT in that if the boxes' lids are swapped whilst digging through boxes at a later time, this particular methodology fails unless as part of methodology 2, you write the number of the box on the side of the box as well!

Now, in our house, we have in fact implemented both Rules 1 & 2, with a little 3, 4  and 5 thrown in to make things that much more interesting. All of  Bridget's gear is boxed, photographed, numbered and dated and placed in number order in one half of the attic (excellent, well done Bridget - ed). Strangely, we never seem to need to find anything from Bridget's boxes, possibly as that would be simply too easy.

The other half of the attic (well considerably less now, as most of it has been brought downstairs to clear out - ed) is in a mix of 3/4 with lids changed to protect the innocent. So a box entitled "Ref books", which should contain Software Development Reference books, is found to contain Science Fiction books. A box named DVDs, contains a couple of bags of marbles and a treasure chest (and there was I thinking you'd lost your marbles - ed).

So, why am I clearing out the attic, I needed to find something (and when that mood is upon him, nothing, absolutely nothing will stop him, sigh - ed) and as part of that search I wanted to find a specific Fantasy book that I knew (possibly not - ed) was in the attic, Alvin Maker, by Orson Scott Card (though he did find books 2,3 and 5 in that series, failed to find the first, sigh - ed).

But, given that the looked for item was not to be found by use of any kind of  intelligent search algorithm, as I simply 'knew' it was up there, and I 'knew' what was in the box with it; due to the astounding failure to apply Rule 2, when my stuff was put into the attic the search became a look through almost every box in my half of the attic, and unsurprisingly result in a "failed to find" event; followed by an initial give up, "I'm never going to find it, mutter, mutter, Dick Dastardly", moment, that caused Bridget to apply, "Davey Control Rule 1 - feed and water at regular intervals".

So, we retreated downstairs for a cup of tea and something to eat (two fried eggs on toast, with a grind or two of black pepper, hmm - culinary ed). This was then followed by a return to the attic, now with my batteries fully charged and applying the, "You must have moved it", Rule, that is, as we had failed to find the item in my half of the attic, it must have somehow been moved to Bridget's half and it wasn't me that moved it...

So we ended up taking a look through Bridget's half of the attic only to find some unnamed, unnumbered boxes of  mine (oops - ed), which of course, did not contain the sought for article. 

At this point, the frustration had reached, "Danger Will Robinson", levels, (with siren and the flashing red lights - ed), and I decided unilaterally to,  "Sort Out", (in best Ray Winston, cockney Londoner fashion - ed), the attic good and proper. Well, obviously only my half, as Bridget's is well, already what you might call, sorted.

So what then. Every single box in my half of the attic was gone through, with all books sorted into ones to go downstairs (as he will never read them again - ed)  to be sold or given away. Alton has a very understanding 2nd hand bookseller, who will take certain types of Science Fiction and Fantasy books, so I might even make a couple of quid (enough to buy the book you failed to find? - ed)

After another hour in the dusty cold environs of the attic, when we reached the last couple of boxes, guess what, we found the box we were looking for, which, bizarrely enough, did have a description of the contents, including the item that I was looking for, written on the lid!

Somehow it had been overlooked in the intial reconnaissance (I would say, "Now there's a surprise", but that might elicit a slap to the head - cowardly ed) , as would almost naturally be the case. So, success in the end, but the failure to find the Alvin Maker book was a bit of a blow.

But, my half of the attic is, "Well Sorted", now, so I know where my marbles are (you must feel so proud - ed), I know where all my LPs are,  I know where all my CDs are, I know where all my DVDs are, the books that are being kept to potentially read are in just a couple of boxes, my work related reference books are in boxes with lids named "Ref books", it is almost like a plan. (Did you apply any of  Rule 2? - ed).

All the stuff to go, has been brought down, a dozen or so board wargames from the 70-80s, also Strategy & Tactics, Fire & Movement, Phoenix, Ares, Omni magazines, which according to the web, are now worth something, so they will be sold, hopefully as a job lot else I will be busy on speciliast websites or ebay. Can't say that that is something I am looking forward to.

Afterthought

There is a much (much much - ed) funnier blog about attics and moving written by a chap called, Michael Marshall (Smith) . Well worth a read, as are his books.

The cough that comes with going into the attic for any prolonged length of time has returned. Bizarre, that, the post cough taste, is well, "Atticy", I think that is the best word that I have to describe it. Luckily, it only lasts for a day or so until the lining of my lungs has caused a sufficient number of coughs to clear out all of the "Atticyness", gunk that I inhaled whilst moving and interrogating boxes.

BTW Haven't forgotten about the Tax Cuts for Millionaires blog, it is really just bubbling under. Be available Real Soon Now.

Flaming Hot Pickled Onions Batman

Our favourite butcher, Norman Reads, over in the nearby town (without a soul - ed) of Four Marks, which also has an embedded cheese shop (no Python sketches, thank you - ed) had a new item on their display table the other weekend. What was that I hear you ask?

Yes it was the, intriguingly named Flaming Hot Pickled Onions. These are very strong pickled onions, with chillis added. Never heard of this combination before, so had to give them a try, I mean what else could a poor boy do?
Simply, wow, I mean, wow, well actually I mean, WOW.

Absolutely incredible, now I like pickled onions, shallots, well any pickled onion like substance. But the addition of chillis just takes them to another level of wonderful.

The first one I ate caused so much zing in my mouth that I unintentionally drooled, (never a good sight to see a grown man drool - ed). It was that flavoursome, my taste buds just didn't know what had hit them, or indeed what to do with this unbelievable combination of flavours (or the excessive drool - ed).

Luckily for all, and to stop further damage to t-shirts and jumpers (he's that kinda guy readers - fashion ed), we have come up with a plan. So simple (in retrospect - drool control ed), cut them into quarters, that way eating a quarter at a time doesn't cause the consequent drool overflow my mouth (wonderful - any more details you'd like to share - culinary ed)

Here is a photograph of the jar, to show that I am not joking (seriously not joking - truth ed). 

Popped back to the butchers a little earlier on today to get some more, only to find they had none left, but they did have a couple of jars of cocktail onions with chillis, so bought them, and also asked two have two jars of the large onions put by, the next time there was a delivery. The staff at the butcher's had no clue when the chap would be delivering again. If push comes to shove come make my own, now that I know what a killer combination this is (any bacteria left in your mouth after that first whole onion? - ed)

Strangely, for something so fantastic, there is no name or address on the jar to say who makes them and where they are made. If I find out, I will let you all know, as these zingy wowy zowwy (perchance were you listening to David Bowie taday - music ed) things are the best thing ever to bring life back to a tired mouth.

Afterthought.
In case you were worried that I hadn't ranted enough about the Budget, I have another post in the offing about the so-called Millionaire's tax cut (careful now, he is primed and could go off on a rant at the merest hint of interest - economics ed).

But I have been a little busy today to get it finished. Seems that another painting is gestating. May well be another Birthday present, but very hush-hush so absolutely no information until the Birthday has been and gone.

Naturally once it is officially on display, I will  put a link to the many stages of the painting, from not quite initial sketch (was a bit of a bugger to get it into the right shape - ed) to completed article (as I am sure you would all love to see it - art critic ed)

Post Script
It is sad to report that the chap who created these beauties has stopped making them as his labelling was not up to scratch according to Trading Standards.

Budget Analysis

Well, that was mostly a non-event. Apart from George frothing and spitting as he spoke, he really could have done with wearing a bib, causing Ed Balls and Ed Miliband to spend a lot of their time ducking and diving to avoid the spittle flying from one side of the house to the other.

There is a sop to house buyers with extra help for not only all first time buyers but all those wishing to move up the housing ladder (on houses less thatn £600K - most of us - ed). It will be interesting to see whether or not this will have any effect, as the devil will be in the detail, and getting the government involved in house purchases in any way would seem to be an opportunity for an increase in form filling and might even make the system grind to a complete stop.

What has been offered to small businesses (SMEs), is an Employment Allowance, a rebate of £2,000 on their Employers National Insurance contributions, that is only one amount per company. This will be very valuable for very small companies wanting to hire their first worker, as it will wipe out the entire amount of Employers NI for workers with a salary up to £22K. But this is a pre-announcement and will only be from April 2014 (it is never from tomorrow, unless it is a tax rise, when it is usually midnight tonight - ed)

What is significant, is that from April 2014 (another year to go - ed) is that the income tax threshold is to be increased to £10,000. This means that you would be able to earn £10,000 before you pay any income tax, but you would still be paying National Insurance of £288.

What I like about this and they need to go further still, is that it is a further move to getting all those that are on low wages, and are deemed poor by the Government out of paying tax altogether.