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* Posts by Tim Worstal

580 posts • joined 12 Feb 2008

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Britain's housing crisis: What are we going to do about it?

Tim Worstal
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Re: Supply and demand anomally

"In the article it considers rent fixing below the current "equilibrium" to be a cause for greater demand, which in custard doughnuts case is true, but people will generally only rent one house, while I would eat 1p custard doughnuts to an early grave.

Demand is inelastic, as in, rent fluctuations have little effect on rental demand."

That is to consider the two bed apartment as the same thing as the 4 bed house. And also to assume that a place with small rooms is equal to a place with large rooms. SE England has some of the highest housing prices in Europe. It also has some of the smallest (in sq foot) new build sizes in Europe. There is a connection between these two points: that being that while you're right that most people only have one dwelling not all dwellings are equal.

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Tim Worstal
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Re: "there is no housing shortage outside of the South East of England. "

"A house is not, in any real terms, an investment."

Quite true, and the house itself doesn't particularly change in value either. However, the value of that planning chitty, subject as it is to artificial scarcity, does change and so can be considered as an investment. Which is, again, somewhat my point. Issue more chittys and the value of them comes down.

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Tim Worstal
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Re: Economists solving the problems the last one caused

Err, yes, that's what I'm saying.

Currently we have "a house to cost more than the materials used to make it / cost of the land / cost of building it." plus the scarcity value of the planning chitty. So, issue more planning chittys and the total price of housing comes down. Issue enough of them (as in the 1930s) and houses will cost "no more than the materials used to make it / cost of the land / cost of building it."

Where I work in Bohemia houses are actually less than the build cost because there is a surplus. These markets things really do work, even for houses.

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Why has the web gone to hell? Market chaos and HUMAN NATURE

Tim Worstal
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Re: hmmm

To disappoint: no costume. I even fail the "economists do it with models" test. Although I have mocked up one of those economists' secret decoder rings out of some left over gold foil from a choccie bar.

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Tim Worstal
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Well, quite

Capitalism is a description of who owns the productive assets. Just as socialism is.

Markets are a description of how we exchange things.

Two entirely different axes of the economy.

My own continual bugbear is the way that all too many socialists (an idea for which I've much sympathy, I like John Lewis, the Co Op, Friendly and Building Societies and all those other worker and customer owned organisations) think that to have socialism you need to do away with markets.

If we assume that (and there are many more options than this, obviously) we can have a capitalist/market economy, a capitalist/non-market one, a socialist/market one and a socialist/non-market one I'll take either of the market ones and capitalism is a very much less important part of how well we'll all live.

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Tim Worstal
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Re: hmmm

As I've said here before I'm not even an economist, I just play one on the web.

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Tim Worstal
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Re: Cimrman...

Indeed he is fascinating. I'd never heard of him until I started working in Bohemia a year or so ago. Quite the cultural icon. When they had one of those contests where people vote for "Greatest Czech Ever" he was winning handily until they insisted that it had to be a real person.

Not quite an invention of Vaclav Havel and the Plastic People of the Universe crowd but contemporary with and part of roughly the same movement.

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My big reveal as macro-economics analyst: It's a load of COBBLERS

Tim Worstal
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Re: "Dean Baker (a lefty but still a good economist)"

What it really details is my admiration for his technical skills while deploring his political ones.

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SpaceX prototype rocket EXPLODES over Texas. 'Tricky' biz, says Elon Musk

Tim Worstal
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I had that Elon Musk on the email once

"Tim, would scandium make my rockets better?"

"No, but it would make them more expensive".

"Hmm, thanks....."

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The Register to boldly go where no Vulture has gone before: The WEEKEND

Tim Worstal
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Re: phwoar

Well, the fewer cheeseburgers and no soda pop diet has made Worstall about 3 stone more buff......although I'd hesitate to claim that being "more buff" equates to "being buff". Having fewer chins but still multiple ones probably doesn't qualify for the state of buffness even if the direction of travel is right.....

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Govt control? Hah! It's IMPOSSIBLE to have a successful command economy

Tim Worstal
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Re: Command economies 'don't work'

There's two ways to get economic growth. One is use more resources. Put in more raw materials, more labour (some part of 20 the cent. economic growth was women doing less housework and more paid labour) and output will rise. The other way is to become more productive in the use of those raw materials and labour. In the jargon this is known as increasing "total factor productivity".

A slightly extreme claim is that the Soviet Union managed no total factor productivity growth in its entire 70 years of existence (from a Nobel Laureate). A less extreme claim is that 80 % of growth in the market economies in the 20 th cent. came from increases in total factor productivity (Bob Solow, another Laureate).

There is a difference in performance there.

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Tim Worstal
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Re: Red Plenty...

The Cosma Shalizi essay which I link to, and even point to as the source of the first three quarters of this piece, is part of a book club discussion of, umm, "Red Plenty" by Francis Spufford.

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Tim Worstal
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Re: yeah but what about the jobs...?

"And what about your other inputs that aren't labour based, such as raw materials."

Why aren't raw materials labour based? The cost of getting them is just labour plus capital, capital being only saved labour.

Give me unlimited labour and I could give you (virtually, certainly vastly more than the demand for them) unlimited amounts of any raw material you care to mention.

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Tim Worstal
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Re: yeah but what about the jobs...?

"Current capitalist theory precludes taking the surplus from second group to give to the first"

It does? I rather missed that complete absence of a tax and benefit system. Even over with the libertoons the argument is about how to have a more efficient one rather than the complete absence of one (and it is the libertoons in the US who think that a universal basic income would be a good idea, strangely, the Greens in the UK. And me.)

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Tim Worstal
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Re: yeah but what about the jobs...?

"The introduction of machinery made ordinary working people poorer,"

What?

Before the industrial revolution the average wage afforded one 2,000 wheat calories a day and a hovel. England in 1600 AD had GDP per capita of $1,000 a year. Yes, modern dollars (1992 actually) adjusted for inflation. With higher inequality that means the majority were living on what, $2 a day? £1 a day maybe?

We're poorer than that now, after the introduction of machinery?

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Tim Worstal
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Re: yeah but what about the jobs...?

"To put it crudely, in a world where all desires are met, human ingenuity will invent new desires."

Great, so everyone still has a job then satisfying those new desires then.

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Tim Worstal
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Why expect downvotes for that? Of course markets don't solve everything. We even have a word (a phrase and a word actually) to describe two sorts of problems that markets don't solve. Public goods and externalities. Both of which are central to any study of when the market might be a viable solution and when it won't be.

I am very much a free market extremist but even I'll agree that there are problems they just won't solve.

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Tim Worstal
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Re: Inefficiency

"So while creating the health service, "

Well, not so much. They nationalised what existed which is a little different from creation. The first NHS built hospital opened in 1963.

May or may not have been a good idea, the NHS, leave that aside. But changing the method of ownership and financing of an extant health care system really is a little different from "creating" one.

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Tim Worstal
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Re: yeah but what about the jobs...?

I've argued directly with Ford on this very point. He fails to close the loop.

If the robots are making everything then those things don't cost anything. And it's no use insisting that the capitalists who own the robots will just take all the money. Because a truly robotic economy would mean that one robot could build another, they could build two more and so on. It would only require one robot, once, to be built and given away for that idea of the capitalists owning them all to fail.

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The Register is HIRING technology hacks for the WORLD

Tim Worstal
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Re: I'd love to...

Terrible idea. Would be muscling in on my gig, wouldn't it?

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YES, iPhones ARE getting slower with each new release of iOS

Tim Worstal
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Re: Finally!

Well, I'm not an economist. Which is probably why I can explain it because I had to break it down into simple bits so that I could grok it in the first place.

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Tim Worstal
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There's two versions of the Laffer Curve. The actual one and the one that people claim to have debunked.

The actual one is simply the observation that there is some tax rate that maximises tax revenue. It's not a very sophisticated claim it's true, but we do see it in the real world. New York's latest cigarette tax rise reduced cigarette tax revenues as everyone bought smuggled ciggies instead.

So, if there's some rate which maximises revenue then it must be possible to go over that rate and thus leave open the opportunity that lowering the rate would increase collections.

For income tax where that rate is is obviously open to question. One recent paper (think it was Diamond and Saez) put it somewhere between 54% and 80%, depending on what assumptions you made about allowances, people being able to emigrate and so on.

That Laffer Curve hasn't been debunked.

The one that has is the caricature one, that all tax cuts always pay for themselves. That's not only wrong it's obviously so: for it's ignoring the very point of the original story, that there's a revenue maximising rate.

There is actually some real world use to this as well, it's not just a piece of abstract theorising. The TUC budget submission a couple of years back was written by the egregious Richard Murphy. And he assumed that a rise in the income tax rate to 75% would call forth more labour. Digging into it he had assumed that married women were particularly subject to the income effect. They'd see family income falling as a result of higher taxes and thus flood into the labour market to raise it back to target.

Unfortunately for that plan we know that married women are particularly subject to the substitution effect, not the income one. For the fairly obvious reason that they've got a career alternative ready to hand: why go out to work if the tax rates mean you can't pay for the childcare you've got to buy sort of thing.

So we could reject that TUC submission simply because it made the wrong assumptions about the different bits that make up that Laffer Curve. All of which comes from the obvious fact that Murphy entirely rejects the even possible existence of the Curve and is therefore deaf to the point that it's actually making.

Insisting that it doesn't exist is therefore likely to bring you into this sort of error.

All tax cuts do not pay for themselves: true.

There is a revenue maximising rate of tax: true.

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FREE PARTY for TEN lucky Australian Reg readers

Tim Worstal
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There's nothing in those rules that says the limerick has to be about El Reg or the party (unless I'm being particularly stupid today). So here's one I did earlier:

"There was a young lady named Beth

who swore to be virgin 'till death.

Then she lost her front teeth

while fighting a thief

and finally learnt to say yeth."

If the plane ticket was going to be part of the prize I might even write a new one.....

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HP, Microsoft prove it again: Big Business doesn't create jobs

Tim Worstal
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Re: Jobs?

" I keep hearing number that 50% of people work in very small businesses."

I don't have a graph but that could be right. I'd actually expect it to be higher than 50% in small business.

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Tim Worstal
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You're correct there. I still like the "pissing in the soup" story about setting up your own low cost competition.

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Tim Worstal
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Re: Good article, but...

It's actually just because I am grossly prejudiced.

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Native Americans KILLED AND ATE DUMBO, say archaeologists

Tim Worstal
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They also ate the North American horse to extinction. The ones the Indians rode (as in all the movies) were escapees from the Spanish settlements.

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'iPhone 6' survives FRENZIED STABBING. Truly, it is the JESUS Phone

Tim Worstal
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Re: On sapphire...

"As far as I know, adding something would only compromise the properties, so we're talking pure alumina, as pure as you can get."

Quite correct. Standard alumina, for making Al metal, is 99.0 to 99.7 % Al2O3. Certain higher grade Al s (ie, say for packaging chips in I think) at 99.9, 99.99% Al purity will start from an Al2O3 at 99.9 or 99.99 % purity.

Sapphire manufacturing usually starts with a 99.9% alumina for low grade material, 99.99 % and 99.995% are well known in use and there's a few people starting with 99.999%.

The higher purities become very expensive. Mostly because they're simply not produced at scale (a few hundred tonnes a year maybe, as against tens of millions of tonnes of alumina more generally).

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Tim Worstal
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Re: Tim Worstal

What?

But, but, the mere idea that anyone wouldn't have believed me/us is so absurd as to make this comment superfluous! Borderline apostasy in fact, bringing the Church of Reg into disrepute by even positing the possibility of error!

Nurse, my pills please and a nap.

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El Reg is looking for a new London sub-editor

Tim Worstal
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Re: Sir

FT Alphaville hired some people recently. £35 -£40k was the general impression I got of the offer.

Although you might have meant full time rather than Financial Times....

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Tim Worstal
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Re: Sir

Journalism pays rather less than most of the computer industry. Without going into details of what El Reg pays (I only know my freelance rate which is just fine, thank you) a reporter on a local paper might be on £20k a year, last I saw at the Guardian for a section editor (Fashion, Books, that sort of thing) was about £40k and a star columnist like Polly is on £110k or so. Moonbat is on perhaps £40k.

Mail pays more than the broadsheets.

But don't forget, all except that local paper stuff is London wages. Discount by 30% or more to get out of London wages.

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Creepy battery-operated TEDDY BEAR SEX TOY. Sadly, this is for real

Tim Worstal
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How bizarre

Yesterday (no, really, 'tis true this) I was discussing with a sex toy designer what gaps there might be in the market. And neither of us managed to come up with a teddy bear that performs cunnilingus as the answer.

Amazingly enough.....

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You're inventing the wrong sort of tech for bad people who want to buy it. Stop it at once

Tim Worstal
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Re: I'll take your quote and raise you...

The fishermen story:

http://www.economist.com/node/9149142

"This more efficient market benefited everyone. Fishermen's profits rose by 8% on average and consumer prices fell by 4% on average. Higher profits meant the phones typically paid for themselves within two months. And the benefits are enduring, rather than one-off. All of this, says Mr Jensen, shows the importance of the free flow of information to ensure that markets work efficiently. “Information makes markets work, and markets improve welfare,” he concludes."

What happened when sardine fishermen off Kerala got mobile phones.

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Tim Worstal
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Re: "Men have become the tools of their tools" Henry David Thoreau

"However, the writer clearly leans to the right of the political spectrum."

Depends what you call "right". It's true that I sometimes foam at the mouth when explaining the joys of free markets. But I'm absolutely uninterested in those traditionally conservative concerns about what other people put into their bodies (either interesting substances or parts of other people's bodies in whatever combination).

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Tim Worstal
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Try this search

"the impact of mobile phones on economic growth in developing countries"

Second result in Google is a Deloitte paper that looks at 2G to 3G replacement and that's 0.15% on GDP per 10% of population. I've not read the whole paper (it's beer time where I am) but I would expect that it will link back to the original research on 2G.

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Today's get-rich-quick scheme: Build your own bank

Tim Worstal
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Perhaps I should also mention

That I know Matt Ridley. He's had a banking licence in the past so.....ah, no, that won't work, will it?

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Bloke squeezes Apple's boules, predicts millions of iPhone 6s, iWatches

Tim Worstal
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My word, how amazing

"which are making boules way bigger than anyone expected."

I'm sure someone or other pointed this out. Oh yes, last year:

"As the sapphire is made in ever fatter ingots, the price per kg will come down. Currently, at least with the pieces I've seen, it's about the shape and size of the sort of candle you might put on a dinner table. In the coming years we all expect it to get wider and wider, as silicon has done, fattening to the girth of a fat candle carried in the church parade all the way up to the "elephant's tampon girth" of current silicon ingots. We would also expect production costs to come down as they have with silicon: perhaps not a 10x reduction, but no one can see why a 3x or 4x wouldn't be achievable."

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EU probe into Apple's taxes: It's NOT to do with double-Dutch-Irish anything sandwiches

Tim Worstal
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Re: Ireland is not even the middle man

What Ireland gets is the income tax on the people being employed to do all of this. They think that's a good enough deal.

Obviously, other people can weigh in on whether that is a good deal or not but that's the way that the Irish state thinks about it.

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Tim Worstal
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Re: Selling apple kit is a loss leader, almost

That's roughly what I thought but I wanted to hear it from within the industry to be sure.

So thanks.

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Tim Worstal
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Re: So is this similar to what Starbucks do?

This one has always amused me.

Starbucks paid that Swiss subsidiary the original price of the coffee plus 20%. The actual cost of coffee beans is trivial. Perhaps 5 p of the retail price of a latte, something of that sort of order. So they certainly weren't moving much profit to Switzerland. And even when you add that back in (and all the other stuff) to the UK accounts, Starbucks were *still* making a loss.

But what's much more fun is that if Starbucks didn't pay some margin to Switzerland then that would be illegal. Because of these transfer pricing rules again. The Swiss subsidiary must sell to the UK one at something close to free market prices, as if the two companies were not related. So which broker of coffee beans does not add some margin to cover its costs? What should that margin be? 20% over cost price seems fair enough. So would 30 or 10%.

But a margin of 0% would very definitely be not an arms length transaction price and thus illegal.

So in this particular instance everyone's shouting at Starbucks for the manner in which they obeyed tax law.

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Apple's Irish tax lair to be probed by European Commission

Tim Worstal
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Re: Really simple way of dealing with this....

It's illegal to tax royalties flowing from one EU corporation to another.

No, really, EU law does say that.

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Piketty thinks the 1% should cough up 80%. Discuss

Tim Worstal
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Re: data source

OECD's probably the right place. Certainly it is for income inequality. They do much better with the US for example than the World Bank (or, amusingly, the CIA Handbook) does.

On wealth inequality one of our problems in this entire debate is that there's no agreed to be correct data set. That's half of what the argument over Piketty is all about.

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Tim Worstal
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Re: Simple Question

Fair enough. If we look at government consumption (NHS, schools, defence, courts, prisons etc) then 20% of GDP is still just a little too small.

....I think so, at least....

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Tim Worstal
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Re: Simple Question

" If say, all of one's income above the tax-free base rate was taxed at, say, 20%, would this be enough to fund government?"

No, not nearly enough. All incomes do, by definition, equal GDP (everything eventually becomes someone's income. Might be rent, profits, interest, straight income, but everything is, in one way of measuring it, an income to someone).

And currently government takes 45 or so percent of GDP. So, if we have just the one simple tax it would have to be 45% of everyone's incomes with no allowance at all.

That really is how large government is.

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Tim Worstal
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Re: Some well made points

"in the case of both state education and the NHS, the economic input of those benefits is equal for every member of society. "

Indeed. But that changes the wealth ratio.

Back a while one report said that the wealth ratio (90/10) was 100 to 1 in the UK. Top 10% families had £800k of wealth, bottom 10% £8k.

Now add in the welfare state. The under market tenancy, the state old age pension (deliberately excluded from those figures), the system of social insurance itself (the existence of unemployment pay has some option and capital value to all). Sure, OK, let's say this is all worth £100k to all (just a made up number). Our wealth ratio is now £900k to £108k. Or, by eyeball, more like 10:1 than the original 100:1. Keep going with state supplied services (health and education) and it falls again.

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How about printing your electricity?

Tim Worstal
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umm, no

dropped a zero. 60 cents in materials costs. We want 2 kW at any one time for the average household: call it 5 for peak?

I must have something wrong here, it can't be a $120 materials cost for a household sized SOFC.

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Tim Worstal
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Hmm

Doing some (probably wrong) envelope back of stuff I get to around $6 for the materials cost of a 25 W SOFC with this method. And that's using scandium as well.

Which is really pretty cheap.....

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Tim Worstal
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Bring it on!

I've long argued that SOFCs are going to become blindingly cheap. Admittedly, I'm very biased on this. The very finest material to use is scandia/yttria stabilised zirconia (9 mole % Sc, 2 mole % Y for those keeping score at home) and, as regular readers around here will know, I supply scandium to peeps.

And if you can just print them out on ink jets then there's really not going to be anything very expensive about them. And given these thicknesses they're achieving the materials cost will be pretty low too.

And here's the thing about making these cells cheap. If you can do the same with solar cells (I would be willing to wager a price in a decade of 10 to 20 cents a W, as opposed to 80 cents to a $ now) then you've got the building blocks of a hydrogen economy. Sure, it's wasteful to electrolyse water with the solar power, then run it back through the cell. But if it's all cheap enough then that doesn't matter: you've now transformed unreliably available renewables into on demand power.

Which does rather solve that climate change problem, doesn't it?

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Tesla's TOP SECRET gigafactories: Lithium to power world's vehicles? Let's do the sums

Tim Worstal
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Re: Extracting almost everything?

Things are rather moving that way. Slowly, but they are. I know of a process (two different ones actually) to bolt onto the Bayer one for alumina. First take the Fe out of the red mud, then the silica, then in what remains the Ti is of sufficient concentration to be worth extracting, and from the remains of that the Ge, Ga, rare earths all look economically extractable.

But the mining industry is very wary indeed of anything that requires more than a couple of steps or target metals to be economic. Simply because too many people have gone bust trying to make such processes work.

For Cu, often do extract Au and Ag, yes. But also Te from the slimes in the cathode tanks as well.

And with Sn, the Ta and Nb end up in the slags, those are then processed for those. Ge and In tend to come from the wastes of zinc processing. And so on. So it is done but really only when there's no other convenient source.

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Tim Worstal
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Re: Reworking

There's all sorts of stuff in those wastes. At least one company has investigated extracting the tantalum (it's definitely there, maybe not economic at present) and I had a quick look at the scandium. Certainly possible to extract it, didn't take it far enough to check if economic.

If your Dad's still in contact with the people at that research plant I'd love to have a chat with them actually.

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