Pyramid Comment

This journal takes an alternative view on current affairs and other subjects. The approach is likely to be contentious and is arguably speculative. The content of any article is also a reminder of the status of those affairs at that date. All comments have been disabled. Any and all unsolicited or unauthorised links are absolutely disavowed.

Saturday, October 20, 2012

Redistribution - An Example


This year (2012) warm spring weather in the Northeast and Midwest (USA) caused apple trees to bud earlier than usual. A subsequent frost damaged the delicate blossoms. The result: a severe decline in production up to 90%.

This led to higher demand and prices in Washington where there was a good harvest escalated. A classic example of supply and demand. Or demand and supply. A mild spring with no frosts followed by a warm summer provided the ‘perfect’ growing season.

This demonstrates the redistribution principle: a shortage somewhere and a glut somewhere else does not create anything extra, but just moves it about. The consequent ‘wealth‘ (market forces) to the fortunate grower is at the expense of the loss to the low yielding farmer.

Gain balanced by loss. Except the balance is probably skewed by raising prices above a balance point.  The ultimate new price/unit probably exceeds the old. Inflation in action.

Do prices revert to an earlier one or do the
prices remain at the new ‘high’?

Note added 01.01.2013


  • Bad weather is held responsible for the expected price rise of food. This should theoretically be a short-term effect until a better seasonal crop of raw food is harvested. Doubtless, however, the price rise as a result of shortage will never be matched with a reduction when there is surplus or excess. An example of sustained profiteering without justification.


Wednesday, October 03, 2012

HMRC And Vodafone


Dame Lesley Strathie was a career civil servant (since 1971). She died in 2012. As CEO an annual salary of £175,000 applied (£30,000 greater than a prime minister's official salary). Strathie was appointed permanent secretary and chief executive of HMRC in November 2008. One predecessor had left in 2007 with a pay-off worth £2.3m. This after HMRC had lost discs containing the personal details of 25 million people. The Data Protection Act 1998 imposes legal obligations to protect information. The Commons Treasury committee had already criticised the performance of the organisation when staff morale was low, but even so, Strathie was named a dame in the Queen's Birthday Honours (2010).

Attempting to defend the position:

“In any commercial business you will decide which customers
you want to acquire and which customers you want
to divest yourself of. We serve everybody.
We don't have a choice about who we serve.”

HMRC is not a commercial business

This does state that as a public servant she wished she didn't have to serve the public and appeared to suggest she would cheerfully drop people and not bother with them if they act in a way that gives the Inland Revenue the slightest trouble. So, accusations of astonishing arrogance. Questioned by MPs about business tax arrangements, Strathie insisted that 'no mistakes' had been made by her staff. If 'no mistakes' had been made then this suggests everything must have been deliberate.

Tax chiefs admitted to the Treasury Select Committee that almost twenty four million individuals could have had their tax liabilities miscalculated over recent years. Six million were expected to get letters demanding an average of £1400 or offering a refund by cheque regarding identified errors in PAYE accounts (so it could never get to a tax haven. How many BIG 'earners' actually pay tax directly, if at all? - DA). The rest (17.9 million) were 'unresolved' dating back to 2005. They should be dealt with by 2012.  Tax demands for underpayment are expected, but demands in excess of £2000 will not have interest applied. But just to muddy the waters: “only those who will not engage with us will be charged interest”. According to the current chief taxman (Dave Hartnett) only those owing £300 or less would have their bills waived. This applies to 900,000 taxpayers. The apparent “cost” the Exchequer: £160m. Of course, it costs the government nothing and is just revenue that escapes capture. It seems that the majority must pay interest (the average is £1400). While 1.4 million will have to pay an extra £1400 (£1.96bn in), 4.5 million will get refunds of an average £400 (£1.8bn out). The difference is just £160m.

Averages are very misleading, 
like the average salary of £26,000


Hartnett agreed to let Vodafone off a £6bn tax debt. The agreement between HMRC and Vodafone came after negotiations between (anonymous) revenue officers and John Connors (Vodafone head of tax). Until 2007, Connors was a senior official at HMRC where he worked closely with Hartnett. Tax avoidance was connected to profits from a subsidiary based in a tax haven. Taxable profits from a business operating in the UK somehow manages to move money to the tax haven before UK tax is applied. Written-off in full. And this after it emerged HMRC had undercharged 1.4 million Britons a total of nearly £2bn in tax and would be clawing it back. Hartnett was forced to give 'an apology' by Chancellor George Osborne. Presumably, like a Clegg apology.

Originally, Vodafone bought German engineering firm Mannesmann for 183bn euros (£112bn). Attempting to avoid paying UK taxes, it set up a subsidiary in Luxembourg (tax haven) where profits would be taxed at less than 1%. This broke anti-tax avoidance rules. Manipulating legal teams, the phone company paid £800,000 and a further £450,000 over 5 yearsHMRC ruled that Vodafone would not have to pay tax on its Luxembourg subsidiary (tax havenprofits. Other tax avoidance games were apparently played by Vodafone. The 'unbelievable cave-in' by HMRC was deemed customer-confidential by HMRC.

The Public Accounts Committee considered claims (from a whistleblower) that an agreement to waive a potential tax bill of up to £7bn from Vodafone may have been outside the powers of HMRC. Chair Margaret Hodge, said that the main allegation is that senior officials at HMRC have acted ultra vires [beyond their powers]. In a dispute that dates back to 2000 when Vodafone acquired Mannesmann, Hartnett has been accused of letting Vodafone forgo a reported £6.75bn in tax. A senior HMRC official was asked by committee member Stephen Barclay:

“[The settlement] seems strange on a numbner of levels.
First it included the 2011 and the 2012 profit,
but given the settlement was reached in 2010,
I would welcome your thought on how they
knew what the profit would be in 2012?”

Answer: refused by virtue of legal privilege

Hartnett has avoided full scrutiny by also citing legal privilege. It also seems apparent that HMRC does not have the powers to include estimates of future earnings. The claim was made that HMRC officials had let-off the US bank (Goldman-Sachs) paying £20m, but instead pay just £10mHartnett admitted making mistakes while settling high-yield tax disputes with multinational companied.

This whole affair descends into dark intrigue
and is quite nauseating. But money clearly
talks the loudest and integrity and truth
both take a back seat in the shadows.

George Osborne it seems has no stomach to deal with BIG business issues that amount to £bns, yet forces cuts, cuts, cuts everywhere onto the 'average' (there's no such animal as averageDA) taxpayer in the UK. It amounts to systemic abuse of the small man. This nails Osborne's, Cameron's et al colours to the mast. No surprises here.

Monday, October 01, 2012

Decline: A Carrot And A Stick

The movement of global finance can only be decline and the fixed amount of 'money' just redistributed amongst the ever-growing population. Never increased. The carrot to entice greater effort is called Growth. But the enormous stick-of-the-day is the 'austerity package'. The perceived importance of offsetting inflation is to acquire more 'money'. This is not possible since inflation increases at a greater rate than personal income.

The only other 'growth' is that of debt. Probably the real 'growth'. The illusion of everything getting better, but with the consequence of inflation, this can never happen. Decline with an illusion of 'growth'. How can something that cost a few shillings or less twenty years ago, now cost several pounds? Wages go up and everything costs more. The effect: nothing gained. When costs go up and wages do not keep up with the rises, decline must happen. Austerity attempts to cloak and deceive. Government continues to 'borrow' more and more £billions every month. The real question that should be asked: where do all these £billions come from? Where is this huge pot of money? It's a theoretical debt.

£Trillions

There is no 'money'. How could such borrowings be verified? They can't. It's all taken on trust. After all, a governments don't lie to the people. Of course not. They are made up of honest, decent people.

As the population increases, the amount of wealth does not increase. The rich can skim off some of this wealth to increase their 'take'. This simply leaves less to spread around the growing population. Everyone else who is not wealthy must therefore become poorer. The redistribution principle.

Consumer And Retail Price Indeces
Consumer Price Index (CPI)
Retail Price Index (RPI)

Essentials involve energy and food. Energy is necessary for heating. Petrol is an essential for powering the device that itself has become irreplaceable.

Everything devolves to 'making money'. It has long been the only 'reason for living'. A man-made concept/device as the reason for life? That's absolutely absurd. Whatever the reason for living may be it is certainly not to make money. Life came thousands of millennia before 'money'.

It is the current 'god'. To die for. Crazy logic.

Modern thinking (majority) is that if you fail to amass personal wealth then you are considered a... failure. That is as ridiculous a concept as money being the 'reason for living'.

It makes for an ironic epitaph on the grave of the human race.

Clegg ‘Apology’

Deputy prime minister Nick Clegg has 'apologised' for helping to condemn generations forever into paying an enormous hike in tuition fees. He's sorry after two years of silence. There is no sincerity in words. It needs action to demonstrate 'sorry' . This is totally and patently absent.

A change in behaviour is essential and an attempt to put right that which has required the 'apology'. It is quite clear that Clegg is just electioneering and attempting to undo the unforgivable reneging on a 'promise'. This is NOT an apology, however contrite he may seem. He's a politician. The face in front of the cameras.

Very, very cynical.

Atos, Disability And Paralympics


David Cameron leads a Government that is systematically attacking the rights of the disabled and financial support is being confiscated. The ability to have an independent life is being attacked. “Scroungers” are subjected to humiliating tests and regarded as drains on the public purse. Abuse towards the disabled is on the increase and Keith Robertson (Scottish Disability Equality Forum) warns that 'welfare reform' is leaving disabled people feeling “suicidal”. The 2012 Paralympics are sponsored by Atos (incorporated in France as a société anonyme (limited company). A French corporation charged with driving disabled people off benefits by using a points-based work capability. Atos is charged with examining those with disabilities or illnesses and those who receive fewer than 15 points are deemed "fit for work" so that they lose Employment and Support Allowance (ESA). This is often a degrading process and the charity Mind describe the assessments as “unfit for purpose” and having “a detrimental impact on people with mental health problems”.

Many seriously ill people are being judged able to work and according to gold medal-winning Paralympian Tara Flood:

"It is a shocking irony that Atos is a main sponsor of
London 2012 whilst destroying disabled lives
on behalf of the [UK] Government."

A major concern must be that since Olympians can perform remarkable feats as disabled individuals, then the argument can cynically go that everyone else (totally unrealistically) should also be so capable. If that were the case then absolutely everyone (disabled or able-bodied) could rise to Olympic standards.

Activists from Disabled People Against the Cuts (DPAC) and UKUncut are expected to drive the point home during the opening ceremony. They have already gathered 85 pages of stories about how sick and disabled people have been treated. "The stories are disgusting, really harrowing," says DPAC's Linda Burnip. "They are people who are really, really seriously ill who couldn't possibly be expected to work - and yet they're being found capable." Disabled people are being driven to "suicide and death", she says. The stories will be placed in a coffin and delivered to Atos' headquarters.

A Freedom of Information request in April found that 32 people were dying a week so a coffin is appropriate. In short, the means for disabled people to have an independent, dignified life is being trashed.

The Independent Living Fund, supporting 21,000 severely disabled people, will be closed by 2015. "It allows them to go to university, go places with friends and family, do things others take for granted," says Ms Burnip. Her own son is a recipient, and it allows him to work: "I don't know what his future is, if he has any." In Worcestershire, the county council is considering plans to scrap support for at-home care. Across the country, disabled people face being driven into care homes, ending their independent existence.

By forcing people into 'homes' it moves responsibility to parents/carers and so disavows any future responsibility. The potentially very lucrative gains by the 'care home' industry must not be overlooked.


DA 

The weak and vulnerable are again targeted as an easy (unmoving) target. There are many more able-bodied 'scroungers' that this government fails to tackle.

These decisions clearly do not consider Human need. Compare arbitrary targets to slash welfare spending by 20% to the Government's estimates of overall disability benefit fraud, which is less than 1%. In Cameron's Britain, support for the disabled is a luxury no longer affordable. It seems a paradox where Cameron has personal experience of disability.

Human empathy is strong, and attacking society's most vulnerable can only be achieved through a campaign of demonisation. Benefits fraud may be low, but "scroungers" are portrayed by the media as the norm. The Sun has launched what it calls a "crusade to end the scandalous benefits fraud crippling the country".


Remember, The Sun supports the

Tory party

 This has consequences for real people. Last month, 46 per cent of respondents to a survey by the charity, Scope, reported that attitudes towards the disabled had worsened over the year.

"It's telling these figures come as the Government continues to put weeding illegitimate claimants at the heart of its welfare rhetoric," says its chief executive Richard Hawkes. “So, by all means, let us celebrate the Paralympics. But don't let this Government capitalise on it. They are leaving sick and disabled people frightened, impoverished and stripped of dignity, independence and hope. Not that they are taking it lying down. Disabled activists will stage actions throughout the Games, demanding to be heard, and I hope many of you will support and join them. Cameron will hope that the victims of his policies will suffer silently: but, if they don't, these policies can be defeated and the struggle for dignity, security and independence can be won."