Vir Cantium

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Monthly Archives: November 2011

Parish Notice

Yes I know, blogging has been light to non-existent recently. The good bad news is that it will remain so until the end of January.

And of course, as per usual, they’ve gone and scheduled Christmas just weeks before the tax return filing deadline!

Play nicely while I’m away.


Dear Unions, Those Pensions/Mortgage Analogies of Yours? You’re Doing It Wrong

We are now just a few weeks away from the 30th November public sector strikes, when public sector unions will be (officially at least) protesting over the thinning of the gold plating on their pensions. Some of the more interesting points being made by the unions are the analogies being drawn with mortgages.

For example, one disgruntled public sector worker on the radio today likened the pension reforms to having a mortgage where, a few years in, the estate agent ‘phones up and says the original purchase price has increased and so your mortgage repayments have to go up.

Then there was Brian Strutton, the GMB spokesman, who said that estimates of the the pension deficit were…

… the equivalent of taking a snapshot of your personal finances part way through a mortgage – it looks like you’ve got an unaffordable debt but the reality is to look at the long term and whether you can meet that debt.

There Mr Strutton has, unwittingly hinted at the problem. The things is, the mortgage analogies could be good comparisons, if only they were to use accurate ones.

To properly compare a pension to a mortgage, a far closer comparison can be made with a endowment mortgage. As many have learned literally to their cost, the endowments running alongside their mortgages are not necessarily going to pay out enough when the time comes to clear the capital debt.

In a very similar way public sector pensions are akin to the mortgagee who, having discovered that the forecast endowment value in a few years is insufficient, is having to either make extra repayments (or investments) and/or will have to remortgage or extend the term of the loan – rather like a defined benefit pension scheme member having to increase their contributions or work longer.

So by all means let’s compare public sector pensions to mortgages: poor performing endowment mortgages.

The big difference with public sector pensions, of course, is that they would rather the taxpayer continue to compensate for the shortfall in the final payout. Many of those taxpayers can never hope to build up the pension pot that many in the public sector will retire with (or the equivalent thereof). In a race to the bottom, those taxpayers are already well past the winner’s tape while public sector pension members will barely have to jump the first set of hurdles.

The Archbishop Wades In With Irony and Ignorance

It seems that a man whose career is built on faith in the supernatural and thinks Sharia Law is a good idea now supports the ‘Robin Hood Tax’.

I could just end the post there, really, but as I haven’t blogged for a week or so, I’ll carry on.

The Archbishop has clearly been taken in by the ‘it’s all the bankers fault’ fallacy. Need I point out yet again that for an irresponsible lender there must be an irresponsible borrower? I assume Dr. Williams is not in a forgiving mood. He has obviously had some divine gift in actually being able to ascertain exactly what the St. Paul’s squatters are on about. In his view, the answer is our old friend, the Robin Hood Tax.

This means a comparatively small rate of tax (0.05 per cent) being levied on share, bond, and currency transactions and their derivatives, with the resulting funds being designated for investment [sic] in the “real” economy [sic], domestically and internationally.

The Tobin Tax / Financial Transactions tax / Robin Hood Tax is unworkable, as to be truly effective all countries would need to impose it. That is not going to happen as there will always be those who see an opportunity to capitalise on other nation’s masochistic tax regimes.

Even as far as it does get imposed, the cost of such a ‘small’ tax – it would take £30bn out of the UK economy – will ultimately fall on us, not the bankers. That’s us, through our pensions, bank charges, insurance premiums, energy prices, in fact almost every day to day commodity uses the sort of financial instruments that the tax would hit. I’ve blogged before on it (look for the first comment on there – a good technical demolition of the tax). Furthermore, naturally, the better qualified Timmy has had a go this morning.

So that’s the ignorance dealt with, now for the irony. Let’s look at the irony of the Archbishop supporting a tax.

If we want to take seriously the moral agenda of the protesters at St Paul’s, these are some of the ways in which we should be taking it forward.

Moral? Tax is immoral. Yes, it is a necessary evil; it is the most practical way to fund certain indivisible public services, but far beyond that it is used as a (largely ineffective and counter-productive) tool of ‘social justice’ through the forced redistribution of wealth or supporting one group’s view of deserving causes. That’s the “investment in the ‘real’ economy” cobblers the Archbishop is coming out with. Let’s face it, if you were mugged it wouldn’t make the crime any less immoral if the mugger then donated his ill-gotten gains to the local homeless shelter, would it?

The fact is that if the Archbishop truly understood the issues that the so-called ‘anti-capitalist’ squatters claim to be concerned with, he would recognise that it is not capitalism that is the problem, it is corporatism, and more tax and regulation will simply push us towards more of the same.

As further reading I can recommend Alistair Heath‘s piece today, but for my part I will leave you with one last thought for the day. Previous high profile supporters of the Robin Hood Tax have included actors, Bill Gates (the visionary who failed to foresee the rise in popularity of the internet and smartphones) and, naturally, politicians (so no vested interests there then). With the exception of the last, these supporters hardly have any real influence on matters. If you think the Chief Executive of the Church of England falls into the same category, and that it doesn’t really matter if he wants to come out with such economically illiterate socialist cobblers, then I will just say this: ‘faith schools’.