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Charity begins at the IRS

By DeusExMacintosh

Steve Miller quits over IRS targetting of conservative charities

The head of the US tax agency has quit after it emerged his staff singled out conservative groups for extra scrutiny, President Barack Obama has announced.

Treasury Secretary Jack Lew had asked for and accepted the resignation of Internal Revenue Service (IRS) Acting Commissioner Steve Miller, he said.

“I will do everything in my power to make sure nothing like this happens again,” Mr Obama told news media.

The scandal has been one of several to rattle the White House in recent days.

Earlier on Wednesday, US Attorney General Eric Holder faced four hours of questioning at a Congressional hearing on the IRS, the secret seizure of phone records from the Associated Press news agency, and the attack on the US consulate in the Libyan city of Benghazi.

Mr Holder told the House judiciary committee that it would take time for the FBI to determine if any laws had been broken by IRS personnel…

Senior IRS officials told the watchdog that the decision to focus on conservative groups had not been influenced by any individual or organisation outside the agency.

Some Republicans, including two high-profile governors, have called for a special prosecutor to investigate.

House Speaker John Boehner told reporters earlier on Wednesday: “My question is, who’s going to jail over this scandal?”

At least three Congressional panels are planning hearings, and House oversight committee chairman Representative Darrell Issa said he had asked five mid-level IRS employees be made available for questioning.

- BBC News

For more background on how American charity law has been mis-managed by the IRS and electoral donation rules flagrantly abused by political groups, see this excellent piece in The Washington Post.

H/T: Skepticlawyer via facebook.

(This is also the weekend chit-chat post…)

Bubble trouble: not an easy money problem

By Lorenzo

The notion that “easy money” created asset booms is levelled (famously by Austrian school economists such as von Mises and Hayek) against the 1920s boom and by a range of commentators about the Great Moderation boom. In both cases, the Fed (dominated by Benjamin Strong as New York Fed Governor up to 1928 and by Alan Greenspan as Fed Chair 1987-2006) is held to be to blame.

Non-inflationary booms

Yet in both periods there was a dramatic lack of goods and services inflation. So, somehow “easy money” was bidding up asset prices but not prices of goods and services. This seems an odd claim. Even on the basis that goods and services production is rising strongly (which it was in both periods–the former due to recovery from the Dynasts’ War and technological advance in manufacturing, the latter largely due to the increasing integration of India and especially China into the world economy), why would rising supply of goods and services somehow “mop up” over-supplied money but leave increasing amounts “left over” to bid on assets?

roaring_twenties_6_-_da-0006-ad

Good times are here again

Worse, there was considerable variety in the degree of rises in asset prices, particularly in the Great Moderation. People talk about “the housing price boom” but housing booms did not occur in all countries and, in the US, there was great differences in the level of prices surges and collapses between housing markets. So, “easy money” was apparently not only somehow being shunted across to assets but not goods and services, but it was also being shunted far more dramatically into particular assets and not others–including particular housing markets and not others.

Suppose we could identify a period which was also marked by asset booms and busts but not by “easy money”? Would that not suggest that such events are not somehow an odd substitute for goods-and-services inflation?

springworrev02

These will connect people far faster than ever before — the sky is the limit in the new economy

As I have discussed before, we can indeed identify such a period–the various railway manias and other asset booms and busts of the C19th; a period of silver standardsgold standardsbimetallism and a noted lack of “easy money”.  The issue is not “easy money”, it is of incomes rising beyond past experience, so rising savings (due to the permanent income effect), creating demands for assets complicated by unstable expectations (pdf) from technological innovation (pdf). Since how new technologies are going to pan out is not known, there is great scope for booms and busts in assets based on new technology (such as railways or IT). This would not, however, explain the recent housing booms.

Central banks did not create the rising (real) incomes, however; rather, the lack of inflation from their policies encouraged saving and, along with the rising incomes, drove up demand for assets. Expectations of continuing prosperity meant there was not a flight to safe assets, but rather continuing demand for assets expected to provide good incomes or capital gains or both.

Cycles and catastrophes

A more sophisticated version of the easy money=boom argument is the theory of the unsustainable boom–central banks hold interest rates below their natural level, which leads to over-investment in capital goods which fail to generate the required returns, so there is a bust. (A particularly approachable rendition of the theory is given Roger W. Garrison’s Time and Money: the macroeconomics of capital structure [pdf]; technology is treated as remarkably unproblematic, however.)

The problem with this argument is that will get you a mild business cycle, with some poorly performing or busted assets, but it will not get you the sort of collapse that generates the Great Depression or the Great Recession. For that, you need a generalised flight to safe assets (i.e. people dramatically cut spending on goods and services) because there are widespread poor expectations about future income. The more confident people are in the future value of money, the more incentive they have to hold onto their money, so the less spending, so the worse the expectations of future income. It is not easy money which magnifies the downturn towards catastrophic levels, but tight money.

glasner-ind-prod

Hence ensuing expectations of easy money tend to encourage economic activity. FDR‘s explicit commitment to reflate the US price level led to the fastest expansion in US industrial production on record, before the National Industrial Recovery Act (NIRA) and surging wages brought the recovery to a screeching halt, with growth resuming only after the US Supreme Court declared the Act unconstitutional. In our time, expectations of easier money lead to stock market rallies, which die off when the expectations fall away. But these are about hopes of changes in monetary conditions, not the continuation (of tight money).

(Hayek called the tight money which catastrophically magnified the downturn “secondary deflation“; though that did not stop him getting the Great Depression seriously wrong at the time in much the same way Austrian commentators have generally been getting the Great Recession wrong. This paper [via] is an excellent starting point for arguments over the Great Depression.)

The Great Depression and Great Recession were periods of very low interest rates, which is what one would expect. For, as Milton Friedman said decades ago, in his famous 1967 Presidential Address (pdf):

As an empirical matter, low interest rates are a sign that monetary policy has been tight–in the sense that the quantity of money has grown slowly; high interest rates are a sign that monetary policy has been easy–in the sense that the quantity of money has grown rapidly. …

Paradoxically, the monetary authority could assure low nominal rates of interest–but to do so it would have to start out in what seems like the opposite direction, by engaging in a deflationary monetary policy. Similarly, it could assure high nominal interest rates by engaging in an inflationary policy and accepting a temporary movement in interest rates in the opposite direction.

These considerations … also explain why interest rates are such a misleading indicator of whether monetary policy is “tight” or “easy.”

So, the high demand for assets in the 1920s and during the Great Moderation were not the “fault” of inflationary monetary authorities. On the contrary, rising incomes and confidence in the non-inflationary stance of monetary policy generated surges in savings which encouraged expenditure on assets. Just as they did during the C19th.

It is possible that US interest rates were held a little low at times during the Great Moderation, but nowhere near enough to explain either the level or pattern of asset prices surges or the extent of the following Great Recession. Moreover, a good case can be made that Fed interest rate policy was appropriate during Greenspan’s tenure.

(Note, arguments about whether prudential regulation was adequate–fairly clearly not–or whether public policy imported moral hazard into financial markets–fairly clearly yes– and how much this mattered are different questions. The issue here is monetary policy.)

The perils of bubble popping

Tight money can most certainly generate busts and, if severe enough, major financial crises. The immediate precipitation of the Great Depression was the Fed, led by Strong’s successor George L. Harrison, raising interest rates to “pop” the late 1920s stock market boom. This led to inflows of gold to the US which, along with the Bank of France’s insane gold-hoarding policies, set in train the contraction whereby, in the words of one study (pdf):

Central bankers continued to kick the world economy while it was down until it lost consciousness (p.2).

saupload_japans_lost_decade

Similarly, the Bank of Japan tightened money to “pop” the Japanese “bubble economy” of the late 1980s but then kept money so tight as to generate Japan’s “lost decades“. While the immediate precipitation of the GFC and then Great Recession was the Fed passively tightening in the face of the ECB’s tight money policies and the European surge in demand for US dollars and gold (i.e. safe assets). Cases of being broken by the fix.

None of which are encouraging examples for central banks “bubble popping”. Stable monetary policy coupled with surging incomes can certainly increase demand for assets, while tight monetary policy can generate or intensify a contractionary flight to safe assets. But asset booms and busts can occur while monetary policy remains stable and without easy money. The explanations for such booms and busts lie in the dynamics of asset markets, not monetary policy.

MSE vs MOD

By DeusExMacintosh

UK defence spending unaffordable

The UK may not be able to afford projected levels of spending on military equipment over the next decade, MPs are warning.

The Commons Public Accounts Committee said it did not “yet have confidence” the planned £159bn equipment budget between now and 2022 could be paid for.

It urged the Ministry of Defence to be a “more intelligent customer” when purchasing and agreeing delivery dates.

David Cameron has pledged to increase equipment budgets by 1% after 2015.

Equipment accounts for about 40% of defence spending and this is expected to rise to 45% by the end of the decade.

Ministers say they are getting to grips with the multi-billion pound black hole in procurement budgets they inherited from the Labour government.

As part of efforts to bring greater transparency to equipment spending, officials published in January a “fully funded and affordable” ten-year-plan for expenditure between 2012 and 2022.

Its central assumptions are underpinned by the government’s pledge to increase equipment spending by 1% every year between 2015-6 and 2020-21 despite likely cuts elsewhere.

The Ministry of Defence’s budget is being cut by about 8% between 2010 and 2014 and further cuts to defence spending after the next election are being resisted by Defence Secretary Philip Hammond, as well as Tory backbenchers.

- BBC News

Smart Growth = Constipated Cities

By Lorenzo

Smart Growth is a term of art. In the words of Wikipedia(tm), Smart Growth:

is an urban planning and transportation theory that concentrates growth in compact walkable urban centers to avoid sprawl. It also advocates compact, transit-orientedwalkablebicycle-friendly land use, including neighborhood schools, complete streets, andmixed-use development with a range of housing choices. The term ‘smart growth’ is particularly used in North America. In Europe and particularly the UK, the terms ‘Compact City‘ or ‘urban intensification’ have often been used to describe similar concepts, which have influenced government planning policies in the UK, the Netherlands and several other European countries.

In Oz, the equivalent of urban intensification is infill. It is an approach to urban policy that regards it as desirable to restrict the quantity of land available for housing. Restricting quantity in the face of rising demand has a predictable result–rising prices for land available for housing. Those rising prices are often the real motivation for the approach, since they provide capital gains to those already owning housing land. Land approved for housing use thus becomes a positional good. (Houses being large decaying physical objects, it is not the house which gains value but the land it is sitting on.)

smart-growth-21

Restricting land use also provides rising property taxes for governments, require (due to the use of discretionary approvals for land use) developers to buy access to officials (so helping to fund political parties) and provide windfall profits for government land supply organisations, who can acquire land around cities at the farming-only-value then “release” it for use for housing at greatly inflated value. With so many significant political and electoral interests being served, it is no wonder a useful set of justifications has grown up “showing” why restricting the quantity of land available for use in housing is a great idea.

Positional posturing

In a situation of rising population, it is a spectacularly stupid idea (if a well-functioning city is your goal). If you don’t want urban sprawl, stop immigration. But, of course, that would greatly reduce the demand for housing land and so not generate all the above financial benefits. Unsurprisingly, being against immigration has been cast into the realm of evil beliefs.

Leave aside the invidious social effects of making housing so expensive or the potential economic issues (particularly for the financial system) of so many people being so highly leveraged on regulatory approval. Let us just consider the effect of land-use-restriction on the functioning of cities-as-cities.

Networks and niches

Cities can be usefully thought of as networks of networks which can support a greater variety of commercial and social niches the bigger they are. That niche variety is much of the appeal of cities. Modern communication and (particularly) transport technology allows cities to grow indefinitely.

Better health provision means that cities–for the first time in history–have become areas of higher life expectancy than rural areas, as cities have quicker and broader access to health services. Previously, cities had higher death rates than birth rates, which meant they could only replenish themselves by migration from the countryside. If that migration stopped, cities could shrink (or even disappear) remarkably quickly.

If one thinks of cities as meta-organisms, then infrastructure–water, power, sewage, telephone, roads, rail, etc–provides skeleton, blood circulation and nerves of the city. Infrastructure is typically either a network good (such as roads, rail lines, tram lines, water, sewage, power and phone lines) or network nodes (airports, ports, television towers, mobile phone towers).

Networking

Networks provide economies of scale which tend to encourage monopolies, as the bigger the network the cheaper adding in an extra user is and the more they are getting access to. Networks also usually involve considerable sunk costs and fixed costs, which make them easy targets for political manipulation for the purposes of providing targeted benefits. Hence it is often better to have the monopoly bit government run, so that all taxpayers bear the costs of such manipulation rather than a minority of shareholders. There is also a “natural monopoly” argument for government ownership, but the tendency of governments to create legislative monopolies and the historical patterns of government ownership suggest that the ability to provide targeted benefits is a much more powerful motive in public policy.

Providing infrastructure generates benefits to third parties (i.e. positive externalities) which are not easily captured by the provider of the infrastructure. Hence the US Congress often provided land grants to railway companies in the C19th, so they could reap some of that extra benefit by selling off or renting the land which acquired increased value due to the building of the railway. This railway-as-landowner helped generate the term railway baron. Which was even more appropriate, given the tendency of early medieval kings to give land fiefs with extra privileges to develop and protect frontiers. (Hence markgraf, margrave, marquis and marcher lord.)

Alternatively, the government just provided the infrastructure itself and reaped the benefits through higher land and other tax receipts. Governments could and did take the view of “build it and they will come”. Infrastructure provision–particularly transport provision–broadly kept up with urban expansion.

Return on restriction

Then governments decided that they should “manage” provision of land and discovered the fiscal joys of rising tax revenues from restricting land use and happy voters from rising value for their houses. Infrastructure provision dropped off dramatically, and we moved into the “infrastructure is evil” period–dams were evil, freeways were evil, power stations were evil, railways through established areas were evil (such as the mid-1970s opposition to the Doncaster railway line). Victoria, for example, has not built a substantial new dam in over 30 years, during a period when its population has increased about 30%.

Growing demand for water, low ceiling on water prices, no extra provision of water, what would we predict from this combination? Water shortages. Just as California, which blocked new power station construction and set a constraining ceiling on power prices, suffered power shortages.

Starving the periphery of cities of new infrastructure makes the higher infrastructure established areas relatively more valuable while expectations of capital gains and high value to housing land intensifies resident opposition to anything that might reduce said value or expected capital gains. Hence NIMBY (Not In My Back Yard) or, in places where this form of politics is particularly entrenched, BANANA (Build Absolutely Nothing Anywhere Near Anyone).

Wolfinsheepsclothing

This is the politics of inner city elites; the educated middle class whose networks dominate the public service, academe, most of the school system, much of the media but, while having huge “insider” advantages they milk for all they are worth, parade as “subversive outsiders” thereby relieving themselves of responsibility for anything in anyway negative or unfortunate–such being the result of “capitalism”, “markets”, “developers”, bad ideas, evil attitudes or wicked ways of using language.  All of which can be cured by agreeing with them; a very congenial mix of self-serving self-righteousness which relentlessly seeks to frame public debate in its own interests while parading its conspicuous compassion.

They tend to favour approval systems over explicit rules, since the former are far less accountable and favour insider connections so strongly.

Indeed, there is a striking dichotomy where the uniformed arms of state coercion (the armed forces, the police) are viewed with deep suspicion or hostility while amazing powers of social regeneration are imputed to other arms of state coercion–the arms run by, strangely, people like them. But if you are subversive outsiders heroically struggling to transform a benighted legacy into something worthy of such fine people as themselves, those who defend the existing order have an extra burden of wickedness.

Planning for whose good?

The above is city planning as promoting the “social good” (which turn out to be benefits to preferred residents) rather than general services to residents. How this good is defined changes over time, but the underlying patterns endure. Consider this study of the racial origins of zoning in US cities (pdf) which notes that:

In the case of Baltimore, middle-class reformers paid particular attention to blighted housing conditions in the predominantly Black Seventeenth Ward. A 1907 report illuminated “the horrors of the slums and the plight of the slum-dwellers” and offered various improvement strategies, such as model housing, enactment of housing codes and building regulations, and removal of alley dwellings. Although the city took no formal action on the 1907 report, interest in controlling the spread of blighted housing logically translated into support for racial zoning as Blacks crossed the color line after 1910 in search of better housing (page 5).

One can look at problems of the urban environment in terms of the underlying incentives (what generates urban blight, for example), which can lead to places one might not want to go (such as the negative consequences of existing rules one is attached to) or one can see it as crying out for the controlling hand of benevolent planners. Indeed, there is no need to consider incentives when controls will do, while considering incentives could easily undermine the case for control in the first place. (Though there is the little inconsistency that rules themselves rely on incentives; but they are coercive incentives, for benevolent purposes, so different. Or something.)

Such an approach also devalues knowledge embodied in social interactions as well as the standing of the aspirations of the socially benighted while elevating the superior knowledge of the planners and the supporters of the “social good”. An example of this is the sneering at the working class love affair with the car (cars provide a profound sense of freedom) and at the enduring preference of people for houses-with-gardens–people want their own open area, particularly if they have pets or children. Given the choice, generally only about 15% of people prefer to live in apartments or equivalent. But gardens require space, and space leads to “sprawl”. So this preference for gardens has to be devalued in the service of justifying quantity controls. Conversely, getting 15% of trips to be via public transport is doing well in any city that is not geographically constricted along the lines of Hong Kong or Manhattan.

Invidious incentives

While these interest-network politics are important part of the story in the serious under-provision of infrastructure, the biggest problem in how smart growth produces constipated cities is the invidious effect on government incentives. Driving up the price of land makes infrastructure provision much more expensive–either in acquiring land or in land sales foregone. Worse, restricting the quantity of land provides revenue gains much more cheaply and extensively than providing infrastructure. The revenue incentives for infrastructure provision are swamped by the returns to restriction.

The freeways of Houston (Pop 6.1m)

The freeways of Houston (Pop 6.1m)

We no longer have infrastructure leading or keeping up with population growth, now we get massive lags; with infrastructure only being provided when voter pressure gets too intense.

Melbourne, whose flat geography should make keeping up with transport demands comparatively easy, has transport infrastructure increasingly inadequate for the demands being put on it.

Though there is one revealing exception to the infrastructure provision lags. Where once people could have housing in places without curbing and guttering or sewerage–allowing cheaper entry to home-owning–now such provision is compulsory, creating a barrier to entry, aiding the process of land use restriction, with developers (and so market-entrant home-buyers) paying for their provision.

Indeed, an extra benefit of immigration is not only does it drive up the demand for housing, but migrants are typically not citizens or, if they are, are poorly politically connected, thus further undermining the overall political pull of housing market entrants. Elevating the value of migrant diversity and disparaging assimilation increases this effect and decreases the chance that migrants will compete with the established cultural-capital elite.

Where I live, in a new area of Western Melbourne, everywhere has curbing and guttering and sewage, but a single lane road (Sayers Road) services at least 10 suburbs with about 6 or more being laid out but no widening of the road, which already gets clogged up early in the morning. The roads between suburbs seem almost designed to create bottlenecks. The only bit of “Smart Growth” we actually get is the price effects of limiting land use and increasing the value of inner city areas with better services and established infrastructure, but that is the real point of the exercise. (I live in the PM’s electorate, so a safe seat decision-makers can largely ignore.)

The combination of land use control, high immigration and hostility to infrastructure provision is a highly incoherent policy mix that suits interests of inner city elites. So-called “smart growth” is actually quite dumb in the sense that it seems to ignore the incentive effects of constrained supply and discretionary power. Alternatively, it is merely deceitful; using ostentatious virtue as a cover for generating insider benefits.

Always remember the two basic principles of public policy analysis:

(1) In the race of life, back self-interest, it’s the only horse that’s trying.

(2) A fool can put on his trousers better than a wise man can do it for him.

Mentalcore

By DeusExMacintosh

Tim Lambesis arrested

The singer of Grammy-nominated US heavy metal band As I Lay Dying has pleaded not guilty to plotting the murder of his estranged wife.

Prosecutors said Tim Lambesis, 32, handed $1,000 (£650) in cash to an undercover policeman with instructions on how to kill his wife Meggan.

The judge set bail at $3m (£1.9m) for the singer, who faces up to nine years in jail if convicted.

Mr Lambesis’ lawyer Anthony Salerno said the singer had been set up.

“Law enforcement was fed something by someone who effectively orchestrated the whole thing… He did not intend to harm anybody,” Mr Salerno said.

Tim Lambesis’s band As I Lay Dying are due to go on tour later this month
Mr Lambesis was arrested on 7 May at a shop in San Diego, California, after a meeting an undercover agent who went by the alias Red.

He was recorded saying he wanted his wife killed, according to prosecutor Claudia Grasso.

The undercover operation was staged after the singer told a man at his gym that he wanted his wife killed, Ms Glasso told a court hearing in Vista, California.

He had allegedly complained that she was making it difficult for him to see their children and to complete their divorce, the prosecutor added.

- BBC News

And in other news, the Westboro Baptist Church announced plans to picket the funeral of Slayer guitarist Jeff Hannemann. To which Slayer fans have responded, “bring it”.

Jeff Hanneman RIP

This is also the Weekend chit-chat thread.

Please Reconsider

By DeusExMacintosh

Japan and Turkey sign nuclear deal

The Turkish government has signed a deal with a Japanese-French consortium to build a new nuclear power station.

The $22bn (£14bn) contract is Japan’s first successful bid for an overseas nuclear project since a tsunami wrecked the Fukushima power station.

The deal was signed by visiting Japanese Prime Minister Shinzo Abe.

Turkish Prime Minister Recep Tayyip Erdogan said it would transform relations with Japan into a “strategic partnership”.

“What happened at Fukushima upset all of us. But these things can happen. Life goes on. Successful steps are being taken now with the use of improved technology,” the Turkish prime minister added.

The deal comes as part of renewed efforts to promote Japanese nuclear technologies abroad, despite concerns over safety.

One of the Japanese firms included in the consortium is Mitsubishi Heavy Industries, one of the companies behind the Fukushima plant damaged in the 2011 earthquake and tsunami.

Turkey is also prone to earthquakes, and the government cited Japan’s expertise in earthquake protection as one of the factors in signing the deal.

- BBC News

Paid Parental Leave v Income Splitting

By skepticlawyer

Income splitting-AB's worked exampleTwo things have come to my attention in the last 24 hours.

First, in Australia, both Labor and the Coalition are introducing/plan to introduce a form of paid parental leave to replace the baby bonus. Labor’s policy is set at the minimum wage and is therefore cheaper to the taxpayer and less onerous on the employer; the Coalition’s (which really is gold plated) will probably crowd out private provision and prove burdensome to small business. Both policies are bad ideas, although they are better than the baby bonus, as they (if you accept that this is a reasonable goal for public policy) will have eugenic, rather than dysgenic effects. That is, they reward breeding by people who are in work, rather than breeding by just anyone. It is not terribly kosher to say this, but broadening the tax base in order to pay for any sort of state (including a welfare state) via taxes requires the production of more taxpayers.

Second, when I pointed out that there is a policy alternative, and that the alternative actually involves a tax cut, I was surprised to find that many people – even libertarians/classical liberals – do not know what it is, or how it works. The alternative is ‘income splitting’, and if it is to work properly it needs to be combined with the provision of cheap childcare, preferably through a generous regime of tax deductions (including for help in the home). It is cheaper (considerably) than paid parental leave, but involves changing the way we think about welfare. Only one country has ‘the full package’: income splitting + cheap childcare via tax deductibility + tax breaks for couples with 3 children (but not, interestingly, for families with 6 children). That country is France (which means France is a lower tax country than it otherwise appears). France has the highest birthrate in the developed world, including among educated people (the group that applies cost-benefit analysis to the bearing/rearing of children with the most rigour, as demographic data across the developed world indicates).

Now, if you accept that population growth among the educated and employed is a proper goal for public policy (not everyone does, but it is clear that Labor and the Coalition both do, and there is cross-party agreement on these policies in France, too), here is how income splitting works (the most ‘numbers heavy’ part of the deal). The graphic provided here was produced by Mr Alan Barr, a Scottish tax lawyer of genius. I was lucky to have him as my tax tutor, with an eventual view to practising in this area. This is his Chambers profile, and this is his firm page. Mr Barr’s figures use real HMRC rates, which are available via HMRC’s website. The ‘personal allowance’ is what British people call Australia’s ‘tax free threshold’. To make the figures clearer, he has excluded the operation of National Insurance Contributions. This has the effect of making them look ‘more Australian’, as Australia does not have NICs.

As you can see, the first set of figures shows what happens now, particularly in a PAYE arrangement with few or no available deductions. The Bells finish up with a tax liability of £23,864, which in the expensive-to-live-in UK, will probably have the effect of forcing Mrs Bell into the workforce when her children are small, something now known to be deleterious, especially for the ‘squeezed middle’ (for some reason, both single parenthood and early childcare has no effect on the top quintile of the population; there is a mountain of data on this; no-one knows why). The Bells will then likely find themselves going backwards, as childcare is  (a) expensive (b) overregulated, and (c) not tax-deductable.

Solution? Fewer children. People do not like being played for suckers.

In the second example, the Bells have undergone French-style ‘income splitting’, which reduces their tax liability significantly – to the tune of £10,116. As you can see, income splitting allows the apportionment of the higher earner’s income between the two parties for the purposes of tax efficiency. When combined with cheap childcare, it allows a reasonable split between childcare in the home, and paid childcare (whether in the home or outside it).

Effect? More children, and the understanding that society is not playing parents for suckers.

I have a stack of exams to sit (including one in Alan Barr’s subject, tax), so I have not discussed other implications of this policy (in France, for example, it has been observed that poorer families often prefer income splitting with a stay-at-home parent, usually but not always the mother; wealthier parents often prefer the cheap childcare option). I have written this post mainly as a public information service, so people know how the system works, as well as know that it is used in one developed country and considered seriously in others, as Mr Barr’s tax classes indicate.

May I also suggest that neither Labor nor the Coalition have been thinking very carefully when trying to develop Australian tax policy in this area?

YouTube the time thief

By Lorenzo

I have found that YouTube is something that can swallow lots of one’s time. Particularly given the “similar recommendations” column down the right-hand side.

Recently, for example, I got sucked into the Sterek phenomena. The interest by fans in imagining that there is some budding (or actual) relationship between the characters Stiles Stilinski and Derek Hale in the TV series Teen Wolf. (Stiles + Derek = Sterek.)

And I didn’t even watch the show!  (I do now, at least on DVD.)

People with clearly far too much time on their hands create really clever compilations such as this.  (Note both characters are straight; but that’s the fun.)  Inventing such a relationship is called “shipping”; the actors involved–Dylan O’Brien (who has serious comic talent) and Tyler Hoechlin–also have fun playing to the game.

There are even competitions about best fantasy couple–with Sterek winning a recent one by a landslide.

For those who want the background to the show, this fan guide is (mostly) informative and very funny. As is this

Then there are the YouTube columnists. Such as Wavey Davey, who has some amusing columns; for example, this “best tits” competition with a shapely young lass who is also a YouTube columnist (something for everyone).

Some of the fan compilations are great. Such as The Matrix as retold by my Mom.

There are also a lot of short films on YouTube (and not a few complete full-length movies). Shorts are, of course, a classic young film-maker’s starting point. So lots of shorts are about youthful experience. Some I have watched recently include The Boy Next Door, a lovely short on touching another’s life briefly but deeply. Or James, a heartrending examination of how if none of the “right” people will lesson, the wrong one is resorted to. We Once Were Tide, a deeply poignant short about one friend leaving and another staying to look after his terminally ill mother. The Love Within, a wistful piece on the confusions of youthful emotions and sexuality. Basketball Math Gay, on the confusions of adolescent emotions and sexuality. Water, about a lonely and solitary boy struggling with a controlling mother and awkward feelings.

But I am forgetting the most important thing: music videos!  So, I will leave with a classic Placebo tract, because we all need some Placebo in the morning.

This is also the Saturday chit-chat post.  (A bit updated.)

Coke and Carob

By DeusExMacintosh

Gillard condemns Max Brenner protest by UNSW students

JULIA Gillard has denounced the boycott, divestment and sanctions movement ahead of anti-Israeli protest action planned at the University of NSW today.

BDS action at UNSW has turned ugly, with anti-Semitic and Holocaust-denying material appearing on a Facebook page opposing the opening of a Max Brenner chocolate shop on campus. Postings on a Facebook page promoting today’s protest have attacked “Jews and Jew lovers” and said the figure of six million Jews murdered by Nazi Germany was an exaggeration.

“Tell us again how there was no hidden Zionist agenda with the Holocaust and the eventual creation of the state of Israel,” one reads.

The Prime Minister said yesterday through a spokeswoman that the government had always been firm in its opposition of the BDS movement, which equates Israel with apartheid-era South Africa.

“This campaign does not serve the cause of peace and diplomacy for agreement on a two-state solution between Israel and Palestine,” she said.

“I welcome the strong ties our universities have with Israeli researchers and academic institutions, and I hope those ties will deepen in the years ahead.”

The University of Sydney Student Representative Council this month called for a boycott of Israeli academic institutions, including severing the university’s ties with the world-renowned Technion in Haifa…

The group Students for Justice in Palestine has called for a boycott of the University of NSW Max Brenner outlet, due to open in June.

BDS activists claim the chain is owned by the Israeli Strauss Group of food and confectionery manufacturers, which produces some rations for the nation’s defence forces and accuse it of complicity in “Israeli war crimes”. However, the local management insists it is wholly Australian owned and operated.

- The Australian