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December 01, 2015


nick ford

I believe an interesting legacy policy is the issuing of long dated government bonds. Governments act as if they were companies when they do this, as if there are circumstances in which they would be unable to meet their obligations.
This is a legacy of previous currency arrangements, such as the Gold Standard or Bretton Woods. However, when the currency is freely floating, and issued by its own central bank, the government can always meet its obligations. If the UK government only issued short term debt it could save itself billions over the cycle.
You don't have to believe in the rest of Bill Murray's more dubious assertions (give everyone a job picking up litter, print an infinite amount of money) to see this is true.
Bob is on holiday on the beach in Zimbabwe, so I think I can safely post this today.


Daniel Davies wrote an interesting piece explaining bonuses a bit back, but he lost me when (in subsequent discussion) he talked about bonuses being needed to motivate people whose entry-level salaries had been screwed down to the bare minimum, and it then turned out the bare minimum was £50K. I pointed out that as a time-served academic I was two competitive promotions away from £50K (and will in fact be lucky to be on that kind of money by the time I retire), with nary a bonus in sight. Then the conversation got diverted onto academics being underpaid and London weighting and stuff, and we never got any further with bonuses. But I like your explanation better.

An Alien Visitor

The problem with banking is that no 'decent' person would ever want to work in one. It is on a par with joining ISIS.

In order to get decent people into such an unreputable and undignified business they obviously feel they have to pay way way over the odds.


"I'm old enough to have worked in one, and some of the partners were quite scary."

I've spent most of my working life employed by partnerships. It's pretty much a requirement of being a partner that you should not just be "quite scary", but absolutely terrifying. I have no views on whether that's a good thing. Just saying.

nick ford

An alien visitor may have stumbled and mumbled onto the solution to the problems in Syria. Offer the jihadis jobs in the financial services industry, with the opportunity to trade in financial weapons of mass destruction. On large bonuses that lock them until the conflict is over.


@ Phil - ta. One point where Dan might be right is that there's vast variation in salaries, based on negotiating ability when joining the bank, and bonuses can be a way of rectifying these - levelling out the pay of the guy who's not the "star" you thought he was and the lower-paid one who turns out to be good.

Nicholas Shaxson

Yes to most of this, but one thing:

"Taxing profits or income is less sensible in a globalized world where these can easily shift - or be made to appear to shift! - overseas. Taxing land, which can't move, would be better."

Not so.

1. Why is it an either/or situation? Tax both.
2. Profits can be taxed in a globalised world. E.g. via unitary tax / formulary apportionment system for corporate income taxes.
3. Stop taxing profits, and clever people will soon turn their "income" into profits. whole tax system becomes suppressed.
4. Lots more here: ten reasons to defend the corporate income tax.
5. The Land Value Tax campaign, in my opinion, is done a great disservice by those (whom most people would regard as fanatics, and extremists) who advocate LVT as the only tax, replacing all others. LVT should be part of a comprehensive tax system.

Nicholas Shaxson

'suppressed' should've read 'compressed'

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