Recent posts.

March 30, 2019

Mervyn King, governor of the Bank of England from 2003 to 2013, says that Britain should now seek a no-deal Brexit, with a delay to allow for adequate preparation. “Six-month delay”, in “Britain and Europe”,, March 2019.

In his account of how the contemporary world was made, Hobsbawm includes the global take-off of the 1850s and the slide into the Great Depression of 1873, followed by some twenty years of recession then twenty years of expansion between the upswing of the 1890s and the outbreak of the First World War. “Nineteenth century cycles”,

The Universal Credit, which is paid to one account per household per month, is out of step with modern life, turns back the clock on decades of hard-won equality for women, and allows abusers to seize control of the family finances., August 2018.


Democracy for minorities.

December 22, 2018

December 2018

“There was a recent internal election for 9 places on the . . . committee. There were two or three ‘slates’ seeking those 9 places. The first-placed slate won all 9 available seats, despite getting 56% of the vote. Many of the other 44% of voters were not represented.”

“Did the voters have 9 votes each or one? And was the voting for slates or individual candidates?”

“Each voter had 9 votes, so many would be likely to vote for slates.

Minority voters would probably not have 9 representatives of their minority to vote for, and non-minority voters would be likely to give some of their votes to minority candidates.

So each voter would be likely to be giving most of her votes to candidates who weren’t representing her main interest. So the choice of minority representation would be dominated by non-minority voting.”

“A more appropriate way of choosing representatives for special interest groups would be a first-past-the-post ballot with one vote per voter. If, for example, there were 10 representatives chosen by this ballot, this would actually be a first-TEN-past-the-post ballot, and minorities would have a good chance of being well represented. So it would not be necessary to have representatives for specific identity groups. This would actually be more like proportional representation than first-past-the-post.”

“I don’t quite understand why your ballot idea would be proportional when it’s FPTP and how it would include minorities”

“For success in a first-past-the-post (FPTP) election about 40 percent of the vote is usually necessary.
In mixed-member-proportional systems only 5 percent is needed.
With a Single Transferable Vote, its more than 5 percent but less than 40 percent.

With my first-ten-past-the post idea, less than 10 percent of the vote would be needed. It would elect representatives of major minorities who manage to focus their support on one respected candidate.”

Land tax.

October 12, 2018

Land tax (LVT) may be the best way of taxing capital and reducing house prices and economic instability. But the introduction of LVT will be disruptive and unfair, so it should be done slowly. In the short term, rent controls or expensive housing benefits are probably inevitable. “The housing crisis”, in Land tax, November 2017.

The price of land is determined by its earning potential. An increase in land tax would cause a decrease in the capital value of the land, so that the annual cost to the landowner, paid as tax plus interest, stayed the same. Land tax, September 2017.

The tax rate on the capital value of land should be kept within the same range as interest rates, so that no more than half of the annual value is collected as tax. Land Tax, Summer 2010.

Welfare policy.

December 28, 2017

The current tax and benefit system was compared with two alternatives with the same top tax rate and net revenue. There was more redistribution from middle to low incomes with Guaranteed Minimum Incomes, and more redistribution from high to low incomes with Citizens Incomes funded by a flat rate income tax. Transition to Citizens Incomes, July 2018.

By replacing graduated income tax with a flat tax, the affordable citizens income (Unconditional Basic Income) is almost doubled.  Is a Basic or Citizens Income affordable?, November 2017.

Work should be allocated by self-selection not compulsion, but beneficiaries should have a reasonable financial incentive to do paid work. Benefit withdrawal is effectively a tax, and effective marginal tax rates, including benefit withdrawal, should ideally be no higher for beneficiaries than for high income earners. “Full employment”, in Alison’s manifesto.

Women should have their own money as individuals, not just as part of a family or household, and children need at least as much money as adults, if the cost of childcare, including the opportunity cost of parental childcare, is taken into account. Welfare reform for the 21st century, August 2010.

High priority was given to the need for tax and income support for women working in the home, and for more childcare facilities. The most logical way of doing this, with the least fuss, is by the basic income method. History of Basic Income politics in New Zealand, 1996.

Monetary policy.

November 7, 2017

The cost of borrowing remains extraordinarily low. Normalisation is an unprecedented challenge. The crash of 2008, June and November 2017.

Before 2006, to meet their inflation targets, central banks created excessive liquidity to balance the deflationary effects of Chinese trade. The Crash of 2008, December 2012.

The stagflation of the 1970s called into question the effectiveness of government intervention in the economy. “Inflation”,

The Positive Money campaign isn’t targeting the kind of banking which was a factor in the 2008 financial crisis, and won’t stop the creation of money by private banks. Monetary sects, March 2014.


September 25, 2016

In a new book, fuel taxes to reflect environmental costs are estimated for 156 countries. The revenue could be used to reduce other taxes, or to pay down public debt. This would be better than relying on a patchwork of uncoordinated policies, or waiting for global agreement on climate policies. “IMF fuel tax toolkit”, in Green taxing and spending, July 2014.

With taxes on imports from non-carbon-pricing countries, a coalition of two or three powerful nations could create a strong incentive for a global carbon pricing scheme. Green taxing and spending, July 2015.

Environmentalists disagree about what combination of renewable energy, energy efficiency, fourth generation nuclear power, and carbon capture and storage should be used. They should unite in a campaign for green taxes on resources and pollution. “Energy price reform” in Green taxing and spending, November 2013.

A Green tax switch from income taxes to green taxes is being prevented by the widespread belief that progressive income taxes are essential for wealth redistribution. Citizens incomes could make green taxes progressive. “Progressive tax and inequality”, in Citizens Incomes and progressive tax, 2006-2008.

Probably we will get both warming and cooling, first one and then the other. What is least likely is that the man-made effect will be exactly the right amount to balance the ice age cycle, and keep the climate stable. Climate change, September 2015.

Boom and bust.

May 8, 2015

Ideally a country’s economy should have the household sector as net savers and the corporate sector as net borrowers, with the government budget nearly balanced and net exports near zero. “Foreign exchange”, Inflation, interest, and the supply of money, May 2015.

A k-wave downturn, driven by demographic change, may have been a factor in the global financial crisis. Other factors were Chinese exports, American mortgage law, and financial deregulation. “Back in the downwave”, The crash of 2008, January 2012.

After the 2007-8 crisis, banks took big losses on securities based on US mortgages. The widespread existence of ‘non-recourse’ loans in the US may have been an important factor. Lenders may recover debt from defaulting borrowers’ homes, but not from their other income or assets. The crash of 2008, July 2009.

To reduce economic instability, land tax, better management of protectionism, and better understanding of demography are my suggestions. The search for a stable economy, 2011 and 2015.

Referendum diary.

September 20, 2014

May 2011. The Scottish National Party won the Holyrood Scottish Parliament election.

May-June 2012. Yes Scotland and Better Together were launched.

October 2012. The Edinburgh agreement was signed. In the agreed referendum there was to be no third “devo-max” option on the ballot paper.

September 2013. I wrote in an email: If Scotland doesn’t choose independence, it doesn’t seem right that Scotland’s central bank should continue to be called the Bank of England.

January 2014. The Bank of England governor commented that a durable, successful currency union requires some ceding of national sovereignty.

March 2014. The Chancellor and the Chief Secretary to the Treasury stated that there would not be a formal currency union between an independent Scotland and the rest of the UK.

April 2014. I wrote in an email: I haven’t got any strong opinions about Scottish independence and I don’t think its my business. (I’ve only lived here for a few years).

25 August. Alistair Darling’s attempt to explain the currency problem in the second leaders TV debate was swamped by interruptions from Alex Salmond and the audience. The Yes campaign appeared to think that they had won the currency argument.

6 September. In a new YouGov opinion poll, support for Yes had increased, and was now greater than support for No.

8 September. American economist Paul Krugman commented that sharing a currency without sharing a government is dangerous, and if Scottish voters really believe that it’s safe to become a country without a currency, they have been badly misled.

10 September. I emailed the Krugman link to some political friends in England.
( ).

11 September. In a graphic of a new Survation referendum poll, in Metro, the figures were shown the wrong way round. Perhaps someone at Metro had assumed that the popularity of Yes had continued to increase. Actually the trend had reversed.

12 September. Standing up in a bus to get a Metro, I fell over. The driver and other passengers were a bit upset, and I got a big bruise. Metro had reprinted the graphic with the correct figures and an apology for yesterdays mistake. No had got 53 percent and Yes got 47 percent.

16 September. Three new opinion polls were announced, with 52 percent No and 48 percent Yes. The leaders of the three main pro-union parties promised, in “The Vow”, that if independence was rejected further powers would be devolved to the Scottish Parliament, with a fair share of resources.

18 September. Referendum day. In the middle of the afternoon I went for a walk along a cycle path and past the polling place. I knew which way I wanted to vote but still wasn’t sure that it was my business to do so.

Later. The final opinion poll, taken on voting day, was 53 percent No, 47 percent Yes.

Bedtime. There was a rumour on the radio that North Lanarkshire, which was expected to have a No majority, had voted Yes. I went to bed and left the radio turned on.

19 September, early morning. Soon after midnight the first regional result was announced. Clackmannanshire had voted No, with a larger majority than had been expected.

About 3 hours after that, 7 regional results had been declared. The City of Dundee and West Dunbartonshire both had Yes majorities. No had 50.2 percent of the total votes announced.

About an hour later, 21 of the 32 regional results had been declared, and No had 55 percent of the total vote. Orkney had the highest No vote, 67.2 percent, and North Lanarkshire had voted 51 percent Yes.

Next came the Glasgow result, 53 percent Yes. This was only enough to reduce the No share of the total vote to 54 percent. This was the moment when it became almost certain that No had won.

Next time I woke up it was daylight and No had won with a 55 percent majority.

Later I went shopping. The sky was grey, there was light rain, winter is coming on, and I’m still in the UK. I felt quite cheerful.

European election.

June 10, 2014

For me, in all the thousands of words I saw about the European election campaign, one sentence stood out. It was in the Manchester Friends of the Earth’s list of 10 policies:

” a new EU economic strategy . . . which shifts the tax burden from labour to resource consumption . . . ”
( ).

Environmental taxes on resources and pollution could be better than income taxes, not only for the environment, but also for reducing inequality.

( ” Progressive tax and inequality”, in “Citizens incomes and progressive tax”, ).

I think this policy should be a major feature in the 2015 Westminster election campaign.

Going round in circles, again.

February 1, 2011

The monetary reformer quoted some of my last lot of replies out of context, and didn’t put the rest on his blog. So I’m not sending him this lot, I’m just posting them here. I hope there won’t be any more.

X: For you, economics seems to be about money. For us, economics is about life.

A: That’s not fair.

You wrote: “Economic growth requires (at least in part) increasing loans. If loans do not increase, the economy, as it is presently structured, fails.“

That’s a purely monetary definition of economic failure. Also I think its wrong, from a monetary point of view as well as from a Green one.

I wrote “Economic growth or decline is about GDP, in other words, money. Sustainability is about resources, climate, population, and other species, as well as money.”

That definition of economic growth is not just my opinion. Wikipedia says: Economic growth is the increase of per capita gross domestic product (GDP) or other measure of aggregate income, typically reported as the annual rate of change in real GDP. (

And we agree that there is more than just money to the definition of a sustainable economy, but I said it before you did.

X: I take it you standardised the figures for a generation according to the life expectancy at the time you were measuring?

A: Its about age at reproduction not life expectancy. I used lognormal distributions to model age-specific fertility rates, and let the computer find the numbers which fitted the data best. For more details, see “Couples and the K-wave” on my website.

X: If it is not created at the point a loan is made, where and when is it created, in your view?

A: You‘re arguing with yourself. I’ve already agreed that money is created when a loan is made.

X: One cannot sustainably borrow in order to provide for daily living needs.

A: As I’ve already commented, the mortgage system is an example of sustainable borrowing to meet daily needs, and its also an example of sustainable investment, usually, with exceptions, as in the last decade.

X: A: I have shown that [debt does not necessitate ever increasing production and productivity.]

A: The bit in square brackets was added by you. Its confusing without a hyphen after “ever”. You had written “Hoogendijk has shown that debt necessitates ever increasing production and productivity.” I replied that I had shown that it doesn’t. My opinion is that debt does not always make it necessary to increase production and productivity.

X: Two manufacturing firms . . . They are now in competition as before, but now they have to service their debt. How can this fail to drive both to boost throughput of materials?

A: You’re talking to yourself again. I didn’t say it would fail, I said they probably wouldn’t get into debt if the economy was unfavourable, because they wouldn‘t get a loan.

X: This system is an important driver of economic growth, since the real economy is burdened with the necessity of paying back interest.

A: Now you’ve gone full circle right back to where we started.

1. The real economy also benefits from the interest, which is paid to the depositor, from the borrower, through the bank.
2. The real economy is also burdened with the necessity of paying wages. Nobody thinks that wages should therefore be abolished.

I don’t want to go round this circle again so I hope there won’t be any more replies.