AAAAAA revisited

26 November, 2011

In 1999, The Economist started to get worried about the proliferation of acronyms, particularly TLAs (three-letter acronyms).

The Economist would like to draw attention to a new shortage: of acronyms and abbreviations. So great is the demand in a world where new organisations spring up almost daily, and firms are increasingly known only by strings of initials, that there are simply not enough to go round….

The nasty truth is that there are only 17,576 different permutations of three letters. That is not enough, when a multi-national organisation such as the ECB requires no fewer than five sets of abbreviations in the languages of the EU. Add one more letter and the permutations number almost 457,000. Yet even this does not solve the dilemma. Is the CBOT the Chicago Board of Trade or the Central Bank of Turkey?

This is a clear market failure. In the market for cabbages or computers, prices would rise, encouraging greater supply or choking off demand. But the supply of abbreviations is fixed—and the price is stuck at zero. Demand cannot be satisfied. Yet multiple use of an abbreviation only creates confusion. The solution is simple. A new organisation is needed to tax and control the proliferation of initials. It might be called AAAAAA (the Association for the Alleviation of Absurd Acronyms and Asinine Abbreviations).

This article prompted a reply which struck a chord.

SIR—I am writing to complain about your misuse of one particular acronym.  AAAAAA is already allocated to the Association for the Abolition of Appalling Arbitrary Application of Apostrophe’s, of which I am an activist.

NICK KAY Derby

And that was in 1999, before the use of redundant apostrophes in plural nouns (the Greengrocer’s Apostrophe) became as prevalent as it is today.  Not to mention the new and horrific variant, the use of an apostrophe in the third person present tense of a verb, which I flagged here,  here and here.

Since 1999, we have seen the establishment of  The Apostrophe Protection Society, a small step towards sanity and integrity in written English. Ans in 2009, there was a fascinating article in the Daily Telegraph on 29th August:  ”Councils issue crib sheets to prevent grammatical howlers on signs”.  Here is a flavour:

Council staff are being issued with an “idiot’s guide” on how to use apostrophes and other punctuation marks correctly in a bid to stem their misuse in street signs and official notices.  Local authorities around the country have now resorted to issuing GCSE-style crib sheets to their staff in a bid to raise standards of grammar in their organisations.  Guidance for staff at Salford council states: “Do not assume that if you don’t know whether to use an apostrophe, then most of your readers won’t either.  Many of your readers will notice, and they will infer that you did not learn to write correctly. If a reader notices that you have used incorrect grammar, you will instantly lose credibility.”

I couldn’t agree more.

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Former Anglo-Irish Bank chief executive David Drumm, in challenging the bank’s lawsuit against him in his US bankruptcy case, said the transferring of Chairman Seán FitzPatrick’s loans of up to €120 million off Anglo’s books was “fully and properly signed off by the bank’s credit committee as well as several non-executive directors” (see for instance this report in the Irish Times).

I have written about this previously, but I continue to be mystified as to how the bank reported its “loans to key management personnel” in its annual reports to  shareholders.  Take, for instance, the 2007 report, which includes the extraordinarily incorrect statement that “Loans to key management personnel are made in the ordinary course of business on normal commercial terms”.

Here we have a bank which gave its former chief executive (a) tens of millions of euros in loans (b) on an interest-only basis, (c) without adequate security, and (d) allowed him the facility to re-draw the loans after temporarily repaying them for concealment purposes at year-end.  And the board were satisfied that this was “in the ordinary course of business on normal commercial terms”?

It seems to me that either the board (including Fitzpatrick) were guilty of a default in their duty to shareholders, and perhaps of a statutory offence, in allowing this to be published, or the management were guilty of concealing from non-executive directors what they knew about Fitzpatrick’s loans.  David Drumm now appears to be saying that the former is the case.  He could, of course, be “mistaken”.

By the way, false accounting is a criminal offence under the Criminal Justice (Theft and Fraud Offences) Act, 2001.   It arises inter alia where somebody, intending to make a gain, or to cause loss to another, “falsifies any account or any document made or required for any accounting purpose” or “in furnishing information for any purpose produces or makes use of any account, or any such document, which to his or her knowledge is or may be misleading, false or deceptive in a material particular.”

The Director of Corporate Enforcement said last week that his office is preparing a fourth file to be sent to the Director of Public Prosecutions in relation to Anglo-Irish Bank.  I would like to think that midnight oil is being burnt in the DPP’s office on this case, but I have a horrible feeling that it just ain’t so.  The DPP tried to defend his lack of speed earlier this year, but the points he made seemed to me to be less than convincing.

Incidentally, the current DPP, James Hamilton, takes early retirement this month, and the Government have appointed Claire Loftus as his successor.  She has been promoted from her role as the Head of the Directing Division in the DPP’s office, and before that she was the DPP’s chief prosecution solicitor from 2001 to 2009.  I hope she can move things forward at a faster rate than her predecessor, but unfortunately I can find no reason to believe that a long and successful career in our DPP’s office is an indicator of a dynamic and energetic character.  Maybe I will be proved wrong.  For the sake of the morale of the general populace, I hope so.

With all the fuss about the release of the Government’s budgetary plan to German politicians, one aspect of the plan seems to have escaped with little or no comment.  There is apparently a statement that €100 million would be raised from a reform of capital gains tax (CGT).  For “reform”, presumably we can assume an increase is planned, probably a large one.

I’m puzzled as to how the Government expects to generate additional tax revenue by increasing the rate of CGT from its current rate of 25%.  The opposite effect is in fact likely.  (Increasing Capital Acquisitions Tax on legacies would no doubt increase the yield from capital taxes somewhat, although there would be significant leakage as estate planning strategies would become more cost effective, and thus more prevalent – more fees for lawyers and accountants).  CGT is largely a voluntary tax which very often can be avoided by the simple expedient of deferring the sale of the asset in question.  If the gain is large enough, one has the option of leaving the country to legitimately avoid the associated tax (as Denis O’Brien did when he sold Esat).

A Joint Economic Committee of the United States Congress in 1999 said this in the foreword to their report “Cutting Capital Gains Tax Rates: The Right Policy for The 21st Century“:

Proper taxation of capital gains is a complex issue. Capital gains differ from ordinary income in several respects. Because capital gains occur over time, their size is influenced by inflation. And, unlike most ordinary income, the realization of capital gains is largely a matter of choice.

In addition, there is a concentration issue – most people realize sizeable capital gains on only a few occasions such as when they sell a business or farm. As a result of these factors, capital gains are more sensitive to the rate of taxation than ordinary income.

The tax treatment of capital gains is particularly important since they are derived from entrepreneurial ventures. In modern high-tech economies, these activities are the engine that propels economic growth.

The report concluded (see its executive summary) that:

The optimal tax rate is the rate that is best for the economy, and it is lower than the rate that provides the government with the most tax revenue. The current top statutory rate of 20 percent significantly exceeds the optimal tax rate.

Here in Ireland, the 1997 Budget reduced the rate of CGT from 40% to 20%. The then Minister for Finance, Charlie McCreevy, was heavily criticized on the grounds that this would reduce revenues. He argued that revenues would rise substantially as a result of the lower rate. McCreevy was proved right (for once!) and revenues almost trebled , greatly exceeded official predictions.

Increasing the rate of CGT to 30% (as Fine Gael have proposed), or even higher, is unlikely to raise additional tax revenue in the medium term, and will reduce it in the long term. It would be a purely optical change, designed for political reasons to pacify left-wingers and give a spurious impression of greater fairness.

President Michael D. Higgins, in his inaugural address said: “… it is time to turn to an older wisdom that, while respecting material comfort and security as a basic right of all, also recognises that many of the most valuable things in life cannot be measured.”

Hang on a minute: does everybody have a basic right to material comfort, to be provided by the state if one’s own resources or efforts fail to deliver? What about the incurably indolent member of society?

The provision for needy citizens of basic shelter, and the avoidance of real hunger, admittedly seem reasonable demands on the State in any civilised country. But actual comfort?

I can probably live with Higgins’s assertion that “security” is a basic right, on the grounds that security is ill-defined and can mean different things to different people.

But comfort? This is just careless waffle, surely?

Did I miss a United Nations Declaration to the effect that everybody has a right not to be uncomfortable?  (The nearest the Universal Declaration of Human Rights comes is in Article 25, which says “Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.”)

It’s simple really.  As John Maudlin says: “… the money to solve the crisis does not exist. The only way to find it is for the ECB to print money and print in size, enough to lower the value of the euro and make exports cheaper (which gives southern Europe a chance to grow out of its problems).”

That’s step one.  But there would remain the problem of the relative uncompetitiveness of the peripheral countries, especially Greece.  So here is my cunning plan, worthy of Baldrick at his best: all German workers would be required to be given a 30% wage increase by their employers.  (Same would happen in quasi-German satellites such as Finland, Austria, Netherlands.)

This would, at a stroke, level the competitiveness playing field within the Eurozone while, at the same time, putting lots of new Euros into the hands of Germans to spend on Greek holidays, Spanish wine and Italian shoes.

You may think that I am on occasion anti-public sector in my pronouncements (actually I’m not; I just think that Irish public sector management is lazy and inefficient and provides poor leadership).  Anyway, compared to the guy quoted below, I am a pussycat.

Dr J C Lester argues that only (net) taxpayers should be allowed to vote, thus ruling out state sector employees!

Why should people who are not taxpayers be allowed to vote money away from those who are? If we must have state services, it should at least be for those who pay for them to vote for which services they want and how much they wish to pay. To allow those providing, or living off, the services to vote is like allowing a shopkeeper to vote on what you must buy from him, or a beggar to vote on what you must give him….

… Consider state distribution of tax-money. We can see that this must create two social categories: those who are net taxpayers and those who are net tax recipients. Only the net taxpayers can be said to provide the state with tax-funds. The net tax recipients are paid out of taxation, plus any payments in newly created state-currency (which effectively taxes those who hold money). So to the extent that people are in the pay of the state they cannot be genuine taxpayers. A proof of this is that if their jobs were abolished the state would have more money to spend elsewhere, unlike those jobs in the genuinely taxpaying sector.

The writer, Jan Lester, is a leading member of the Libertarian Alliance.  The public sector seems to be a prevalent theme of writing on the LA website.  Its home page currently has a lead article by D.J. Webb called “Living off our Taxes”, of which the introduction gives a flavour:

There is nothing more frustrating than having to pay tax and national insurance so that public-sectors workers can earn more than you. People in the private sector face greater job insecurity and have less lavishly funded pension arrangements, where such arrangements even exist, and yet they are the golden goose that has to be repeated slaughtered in order that state workers can have secure and higher-paid jobs with astonishingly generous pension provision.

In case you were wondering, Webb was writing about the United Kingdom, not Ireland.  But, let’s be honest, he could have been writing about Ireland.

So, coincidentally or otherwise, we have elected as President the only candidate who actually can converse in our first official language (that’s the Irish language by the way).

From Irish Times on 19th October, reporting on the televised presidential debate held on our national Irish-language TV station, TG4.:

Only one of the seven, Mr [Michael D.] Higgins, is fluent in Irish. The format of the debate had each of the candidates read a short prepared statement in Irish. The debate, chaired by current affairs presenter Páidí Ó Lionáird, was conducted mostly in English, with Mr Higgins speaking in Irish.

The other candidates (surprise, surprise) all spoke of their desire to be fluent in the language, and promised to promote Irish if elected.  Translation: more coercion for the plebs, more taxpayers’ money to be wasted, but I can’t be bothered myself to learn the language.  Such hypocrisy.

This is both revealing and embarrassing.  We are the only EU country whose first official language is not spoken by the general  population.  6 out of 7 candidates for the highest office in our country never thought it necessary or important enough, throughout their entire career, to be sufficiently familiar with the Irish language to carry on a conversation.  And yet we spend tens of millions of euros annually in maintaining the fiction that Irish is a living language.

Fewer than 1% of Dáil and Senate debates are conducted in Irish, but Fianna Fáil succeeded (sic) in getting Irish recognised as a working language in the European Union.  So taxpayers have to pay for a small army of translators to be available just in case an MEP wants to use a cúpla focal.

Bad as that is, the cost is probably small compared to the millions wasted as a result of the Official Languages Act 2003.  For instance, Section 9(3) says that “The public has the right to expect that public bodies will send information …. to the public in general or to a class of the public in general in Irish or bilingually”.  So every piece of official bumph is 100% larger than it needs to be because it’s printed in both English and Irish.  You don’t get to choose which language you want your copy of a particular booklet to be written in; instead you get a jumbo version printed in both languages, which is wasteful beyond belief.

Our new President claims credit for establishing TG4 fifteen years ago.  It costs €33 million annually to run, and has an audience share of under 3%, basically a rounding error.  Indeed I suspect many of those viewers are watching subtitled programming in the second national language, or catching up on televised sport (for instance, Wimbledon tennis,  which bizarrely is transmitted live by TG4 with an Irish language commentary).

Previous Puckstownlane posts on this topic:  here and here.  And Michael Lewis exposed the folly of our Irish language posturing in his Vanity fair article, referenced here.  Ouch.