Tax Fairness

Tax Fairness

Over the weekend, John McDonnell promised that Income Tax would not rise for most of the country but that a higher rate would be levied on those earning more than £80,000. Tax reform can be pretty technical; and so one needs to look at one or two things without losing sight of the idea that the richer should pay their share. Each tax payer has a personal allowance of £11,500 i.e. the first £11,500 of earnings is not taxed; this is clawed back if one’s income is £100,00 or more by levying a 60% marginal rate on those earning between £100,000 and £121,200. There is probably enough room for a new additional rate between the 40% levied at £42,000 and 60% levied at £100,000 and £80,000 p.a. is a lot of money; only 3% of income earners get that much. It will remain necessary to increase the amount paid by those earning more than £145,000 and redress the regressive nature of National Insurance, which negates much of the 20% band, converting it into a 32% tax burden. Labour’s promise is also that there will be no increase in employee NICs nor in VAT, although again that’s not enough … VAT has to come down from 20%. …

Greiner?

I re-read Greiner’s Evolution and Revolutions as Organisations grow. He argues that the growth of companies meet crises, the resolution of which change and shape the next stage of development and that companies go through creativity, direction, delegation, co-ordination and collaboration stages. As ever, I fail to see the compulsion and inexorability of each succeeding stage but the causes of potential stagnation and the need to respond by changing the management style and tools are insightful.

I wonder where today’s exemplar corporates are on this curve, or is software different? …

Hacker’s Guide to Economics

Hacker’s Guide to Economics

I went over to Hackney to attend the People’s PPE. This, their second event was called the Hitch Hiker’s Guide to Economics and I originally produced a storify, which is now here which is a collection of tweets and other social media comments about the event. The rest of this blog is based on my notes and the thoughts it provoked, on debt, banking regulation and Islamic finance, a bit less about the class war.

Ann Pettifor, Director of PRIME, opened the session, stating that the problem was debt and the banks, which create debt.  …

Looking forward, looking back, fintech.

In my linkedin article on Banks & Customers, I started by talking about the workshops at Citihub’s World Conference which had posed a 10 year time horizon. Medium term horizons such as this are both liberating and challenging when considering the future of banking and business it is certain there will be massive change and since finance has been the first business to digitise, the future of ICT is a key influencer. I also received a post from Chris Skinner’s blog, “Banks face more change in the next 10 years than in the last 200”; my response on banking is encapsulated in the linkedin article, but what makes Chris’s blog article so interesting is the illustrations about how hard it is to predict the future. For instance he posts a Jetson’s style picture, created in 1966 forecasting the state of science/life in 1999.  While we have some moving walkways, they are hardly ubiquitous and much of what they suggest might come to pass has not. We do not have rocket belts, city wide domes, hovering vehicles, nor flying saucers. Looking at these forecasts provoked me to look at “Blade Runner” and its inspiration, Philip K Dick’s 1968 book, “Do Androids dream of Electric Sheep?”. “Blade Runner” was made in 1982, and set in 2019, Dick wrote the story two decades earlier and set the story in 1992.

PRATIK ‘ S LAWS, CC BY-SA 4.0 https://creativecommons.org/licenses/by-sa/4.0, via Wikimedia Commons

The film makes much of the existence of space flight, off world colonies and perfect humanoid (and other animal robots) which all seem to be unlikely within the next four years, but even so we are still missing the guns and flying cars but not the prevalence of rain and sushi. One of the reasons these changes are so far from the mark, is that the big bet on space travel was wrong; humanity built the internet instead. I have missed, of course, that the film is set in LA and so the rain must be symptomatic of climate change; LA Story it’s not.

Further interest around forecasting from Skinner’s article is found by his pointing at Long Bets and his selection of a number of IT predictions. Long Bets is itself a betting exchange, and some of its predictions are fairly ordinary, many are either financial or political. (I quite like the idea that exec{“helloworld”} will take a gigabyte of space and that Chelsea Clinton will become Queen of England and the USA). Skinner chooses to comment on six bets, and the score is two right, and four wrong. Netflix exists, and so does the Panoptican and that is 10 years early. We are not printing books on demand, we are streaming them, Russia is still not the world’s foremost software development centre, there is no consumer travel to the Moon, and we are some way from the prediction that there will only be three significant currencies used in the world. (US Dollar, Bitcoin and Spacemiles). However since the forecaster predicts this will occur by 2063, we have some time to go, but the dollar’s survival to 2063 would seem an evens bet today if you are a fan of Zero Hedge.

At the conference I tried to sum up, in my mind, the technical change over the last 10 years. 10 years ago having a customer portal was a big deal, distributed computing was hard and mainly in the hands of academics, and of course, the military. Google undertook its IPO in 2004, Apple launched the iPod, the most pervasive computer operating system in the world was the 32 bit Windows XP and the most current CPU chip was the Pentium M also 32 bit, although Intel/HP had launched Itanium and other RISC chip vendors had had 64 bit computing for a while. Today the most pervasive operating system/UI is Android, the most pervasive CPU architecture is ARM. The standard system architecture was shared memory, uni- or multi-processor, Compuserve/AOL was the biggest social network, today it’s gone and dwarfed by Facebook, Twitter and iTunes, consumer connection to the internet was via dialup and isdn was only just becoming available in 2004, LAN speeds have grown from 10 GBE to 100 GBE.

2004Technology2014
CompuServe/AOLSocial NetworkFacebook
BespokePortalsUbiquitous
NicheDistributed ComputingUbiquitous
Shared Memory (UMA)System ArchitectureCloud Grid
Client ServerServer Collaboration ArchitectureCloud Grid
Windows XPOSAndroid
Pentium M (32 bit)CPUARM
Storage NetworksStorageHadoop
9.6 baud dialupInternet Connection100 Mbs
10 GBELAN Speed100 GBE
SearchGoogleMobile Phone
iPodAppleiPhone/iCloud/iTunes
Private ($54)Google$350 bn ($510)
$1.52Apple$115
Table 1: Technical Change since 2004

The last 10 years has been a story of miniaturisation, consumerisation and collaborative computing.

I.T is now much cheaper and distributed i.e. multi-system solutions are replacing the shared memory SMP systems. Software architectures are post client-server. Given this, maybe it’s right to summarise the recent history of I.T. as the evolution of Netflix and its competitors; it is a distributed network attached system using modern scale out storage and massive scale.  They are exemplars in the practice and development of distributed, open-source and cloud computing and the ultimate network consumers. They at least have innovated their markets and thus brought value to their customers. They are also massively inhibited by competition from their supply chain; which is one reason they are diversifying into content creation.

When looking at the corporate landscape, as Simon Phipps observed the IT vendors are all changing up, “IBM is becoming GE, Microsoft will become IBM, Apple is becoming Microsoft, Google will become Apple”. While it depends on your views about corporate consolidation, this all leaves room at the bottom of the scale for software and social innovation. The barrier to entry for software production is relatively cheap but only if soviet style cloud or the alternative p2p models allow access to cheap IT; someone still has to pay for the chip fabs and power.

I personally think the next 10 years for IT will be about adoption not dramatic change.

I am unclear if the IPO activity last year confirms or agrees with me. In an article published on Forbes, called Technology:Is there an IPO Boom? 2014 IPO Statistics, by Sahir Surmeli, it is shown that 7 of the top 10 US IPOs were Financial Services firms.

They were all dwarfed by Alibaba and the chart above is derived from the Forbes article. Is this further evidence that innovation is no longer in Technology?


This article was written over 2015; I didn’t publish it because I wasn’t sure it said anything useful. In 2021, I went to a seminar that asked for a 20 year forecast and it reminded me how I felt that little had changed in the 10 years up to 2014. I have backdated the article to about the date I finished it.  …

The next evolution of capitalism

The next evolution of capitalism

How much is Capitalism changing due to the silicon revolution in the means of production. A bunch of books, articles and reviews have been released over the last few months considering the short and long term future of the techno-economy. We are on the cusp of Silicon Revolution’s “Golden Age”, when the people rein in the excesses of the capital market’s hypergrowth excesses. This story was originally created in the Summer of 2015, my hope was to read both “Post Capitalism” and “The 2nd Machine Age” and write a blog on my views as to the nature of the changes coming; but life got in the way. …

Beyond People’s QE

Beyond People’s QE

A day or two ago, Alex Little, published a blog post called ‘Lessons for Corbyn in “Lerner’s Law”’. Lerner’s law suggests that using your opponents language limits your ability to make the argument. Little quotes Bill Mitchell, the inventor of Modern Monetary Theory (MMT) as to how Labour’s leadership in articulating the Darling Plan and its successors talk about balancing the budget and fixing the deficit concede the argument to the Tories. Little’s article also points at Lerner’s economic theories, described as “functional finance” and points at the wikipedia article on it. He argues that by describing the proposed pump priming as PQE, and accepting that when growth takes off, the government may transition to bond financing, by even accepting that we need to live within our means, the theory and benefits from the a more overt radical financing will be lost. …

About Shadow Chancellors

While this looks like a technical spat over issues of macroeconomic monetary policy, with Chris Leslie, Labour’s stand in Shadow Chancellor arguing classical monetarist i.e. Thatcherite economics, its also about who benefits in terms of policy and for three people, about career advancement.

Leslie said: “Printing money and ending Bank of England independence would push up inflation, lending rates, squeeze out money for schools and hospitals and mean spending more on debt servicing. Higher inflation and a higher cost of living would hit those on the lowest incomes, the poorest people who couldn’t afford those goods and services. The very people we should be standing up for would pay the price – the poor and vulnerable.”

In an interview with The Independent, Mr Leslie issued a wake-up call to Labour members to reject what he called a “starry-eyed, hard left” economic strategy, amid growing signs that Mr Corbyn could pull off a shock victory next month. Notice – no model of cause… the huge discovery over the last seven years is that printing money doesn’t cause inflation and with interest rates at an all time historic low, now is the time to borrow long term to invest in the future. Leslie is as on most of his economics very wrong on this.

He got another bite of the cherry in the New Statesman, where he focuses on QE, and it’s consequent interest payments (there aren’t any) and the independence of the Bank of the Bank of England which for some reason he holds up as a great reform. There’s no doubt about it – the Labour Party has reached a fork in the road and on 12 September the fate of the progressive centre-left in Britain will be sealed. There are millions whose living standards and working conditions depend on Labour winning government in 2020 to fight for power, wealth and opportunity in the hands of the many not the few. The independence of the Bank and the foundation of the Office of Budget Responsibility are both anti-democratic reforms, reducing the power of the elected Chancellor and the House of Commons. The ideology behind these reforms is that these decisions are too important to be taken by politicians, and I’d like to remind Leslie of Mervyn King, the then Governor of the Bank’s behaviour in both 2008 and 2010.

Chris Dillow performs a technical analysis of the proposition, critically pointing out that with the current levels of unemployment and underemployment, it’s highly unlikely that anything would be inflationary. It’s widely agreed that Jeremy Corbyn’s popularity is due in large part to the mediocrity of the alternatives. As if to demonstrate this, Chris Leslie – Shadow Chancellor – claims that Corbynomics would be inflationary. This isn’t wholly unreasonable. A money-financed fiscal expansion – which is all “people’s QE” is – would increase employment and aggregate demand.

Richard Murphy, a Corbyn advisor and author of taxresearch.org.uk opposes Leslie in the most robust terms, in this press version of his radio interview, The author of the economic plan set out by Labour leadership contender Jeremy Corbyn has defended “Corbynomics” in the face of an attack by the shadow chancellor, Chris Leslie. Richard Murphy, the fair tax expert recruited by Corbyn to draft his economic policy, deepened divisions on the left by saying “Leslie has got this completely wrong.” The article states that when challenged on Leslie’s point about high inflation, Murphy said: “Any system of people’s QE would be turned off if we got to a situation of high wages and full employment, but we are so far from that at the moment that we have to tackle the low-wage economy and the lack of productivity in the UK by creating new investment, which is the foundation for new prosperity.”

I have heard Chris Leslie speak, and these issues are at the crux of the debate, but it still surprises me to find Labour people using the economics of the ’80s to understand today’s problems; this isn’t the first time he’s spoken this way. QE clearly doesn’t cause inflation, because we have one and not the other. He’s another of Harriet Harman’s partisan decisions taken as interim leader, the job’s beyond him, and he’ll be gone if they reintroduce elections to the shadow cabinet.

Finally if the choice of Shadow Chancellor is between Murphy, Leslie and Rachel Reeves, it’s just another reason for voting for Jeremy Corbyn.

Mind you, Murphy is not an MP and so cannot serve as Shadow Chancellor, Chief Commissioner of HMRC anyone?

ooOOOoo

This was originally published as a storify and reposted in Oct 2018 as this blog article. …