All posts by Ian Angell

Piketty: Ideology masquerading as Theory

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Thomas Piketty’s book Capitalism in the Twenty-First Century has become a bestseller. It bemoans the fact that he sees the rich get richer, and the poor poorer. His answer: tax the rich until the pips squeak. Turn taxation into confiscation … set income tax rates at 80% or more. It’s unfair that money begets money, so the state must redistribute. The problem is that if there are no rich, there is no money to be-gotten.

Piketty is clearly only interested in developed countries – where he sees the inequality. Wealth is pouring out of the arrogant West, and is ending up elsewhere in the world. Living standards are improving there, at the price of those in the West. What right do we have to keep it all for ourselves, and to distribute it among people who do nothing to generate wealth? We are already seeing a redistribution of wealth. From the US, Western Europe and Japan to China, India, Russia, and who knows maybe some parts of Africa will also get the snouts in the trough. And if the wealthy can hold on to their money, then paying for the exodus of wealth will fall on the middle and lower classes in the developed world.

Even if the wealthy can’t prevent confiscation, then as we say in the Flight of the Golden Geese, much of their wealth will flee grasping jurisdictions, and anyway there simply aren’t enough rich around to fill the money pit that is emerging. A consequence will be less investment, a drop in entrepreneurship, and the centre of gravity of the world’s economy will move on to more welcoming climes.

Piketty claims to have a theoretical justification for his theories, but this is just politics of envy masquerading as the dismal science of Economics. This is ideology donning the mask of theory.

The Fall of the House of Deneuve

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The bottom has fallen out of top of the housing market in France. Falls of as much as 40% have been reported. Film star Catherine Deneuve has failed to sell her magnificent 18th century mansion, complete with lake, moat, and exquisite garden, despite lowering the price. And when the top falls, prices of regular housing are necessarily squeezed downward.

Because of the “we hate the rich” policies of Hollande’s government the market is being hit by a double whammy. French high net worth individuals are leaving the country, and the global rich think twice before investing in France.

Of course if France still had the Franc, the result would be a sharp drop in it’s value. Stuck with the Euro, France will now how to absorb the pressure elsewhere in its economy.

Flight of the Golden Geese

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David Lesperance and I are about to sign the contract for The Flight of the Golden Geese, our book about how the world’s high net worth individuals are fleeing taxation. I’ll let you know when we have finally put pen to paper, and about the publication dates.

Meanwhile, some of you have asked me about the cartoon video that David produced, summarising the attitude of the Golden Geese. In response I have posted it on the video page of this website, or you can find it on YouTube:
http://www.youtube.com/watch?v=u69VNU4pJ4I

Government bank robbers

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Hidden deep among the small print of Sections 1.208, 1.200 and 1.201 of the UK’s April 2014 Budget lie hidden some hideous governmental dirty tricks. If tax officials merely think you owe the state money they can grab it directly from your bank account. No legal proceedings, just a couple of letters and a phone call – generously they must leave £5000 in your accounts.

Worse, if you are in dispute with the state, they can assume they will win the case, and will take the money IN ADVANCE of any proceedings. They can confiscate the sum directly from your bank account even before a judge has decided whether or not you have broken the law.

Mansion Tax madness

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Hardly a month goes by without some new tax being floated by politicians idea for ripping off the wealthy in the UK; a mansion tax, presently a pipe dream of greedy politicians, is gaining support in both Labour and Liberal Democrat parties. The Liberals are even taking a person’s full property portfolio into account to levy a tax on total assets worth more that £2 million. Knight Frank, the up-market estate agents/realtors, has interesting points to make. “If the £2m threshold were adopted and not increased in line with house price inflation, over the next 25 years a total of 775,500 properties would be dragged into the mansion tax net, including all properties with a current value of £540,000 or more. This means that some first time buyers buying through the government’s help to buy scheme (upper limit £600,000) would be paying a mansion tax before they finished their mortgage term.” Some politicians are even considering taxing jewellery. No surprise then that the rich, the people I call Golden Geese, are running for cover. The politics of envy is making Britain unattractive to the worlds rich. And when they fly away, they take their spending with them.

However, the situation is far worse than the rich leaving. The Knight Frank report is being wildly optimistic. Once a new tax has settled in place, two things happen. Both the threshold level will go down, and the rate being levied goes up. We won’t have to wait a quarter of a century for £2 million to be down to $500,000 (in today’s money), which will drag in many ‘ordinary’ houses in the South-East of England into the net. And expect 1% to become 1.5% and then 2%, and up and up. In order to pay it many householders will have to sell up – the simple fact is that many people living in ‘mansions’ do not have income sufficient to pay the tax demands. The result is a ‘fire sale’ of property, trickling down to a crash in house prices.

A Blast from the Past

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RHCrugbyteam1969

Memories are made of this. A photograph of the Royal Holloway College Rugby team, 1969-1970. It was sent to me by team member Bob Shafee – front row, third from the left. I’m the short-arse in the back row, fourth from the left. In those days I had a lot more hair, and I was about six-stone lighter. Bob was an undergraduate studying Maths and Computer Science, I was a post-grad in the Computing and Statistics Department.

Aspiring to Krakow

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Kay & AndrewTuesday 18th March. Visited my good friends Andrew and Kay Hallam for an excellent lunch at their home in Tadley. Ostensibly we were meeting to arrange my presentation at the upcoming Aspire conference in Krakow in May. In reality it was a great opportunity for a friendly chat and to catch up. We hadn’t met since Christmas dinner in the Beijing Restaurant in Addlestone … I don’t count Skype calls as meeting.
Andrew is a founding member and President of Aspire – the Association of IT and Business Process Services Companies in Poland. Kay of course is the President of Andrew.

Costa Rica

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P220-20131209_080751-1 OLYMPUS DIGITAL CAMERAMarch 1st 2014. Just returned from a fabulous three weeks in Costa Rica with my wife Mary. We travelled to five different lodges: El Silencio, Arenal Nayara, Hotel Borinquen, Dantica Lodge, Lapa Rios. All were of the highest quality, the rooms palatial, the food fantastic, and the staff polite, efficient and extremely helpful. Nothing was too much trouble. I can recommend this country as a great place for a break. I shall be going back at the first opportunity.

We went with a list of ‘must see’ wildlife. Toucans, Scarlet Macaws, Humming Birds, Tanagers, Kingfishers, Woodpeckers, Motmots, Jacamars, Iguanas, Armadillos, Tree frogs, Howler Monkeys, Spider Monkeys, Coatis, Caiman, bats. On and on. We saw them all. On a three hour boat trip on Caño Negro we saw more wildlife than on a three week cruise up the Amazon.

Top of my list was the Quetzal. I’ve known about this fabulous bird since my schooldays. That was why we choose to spend three days at Dantica Lodge. We got up at 4.45am and were on the road at 5.50am with our brilliant guide Carlos. Dashing up and down the valley we, and about thirty other ‘twitchers’, were lucky enough to catch a ten minute sighting.