Cash only businesses

In my local neighbourhood there are half a dozen businesses that operate on a complete cash basis, mostly dry cleaners (some restaurants too). They do not accept cards and when purchasing their services, you won’t receive an official receipt. If you do get a receipt, it doesn’t contain the VAT number, company number or any other identifying piece of information.

Initially it may be perceived that is to avoid the inconvenience and overhead, however Square in the UK only charges 1.75% for contact less for transactions and is very easy to setup.

Perhaps a greater reason is the avoidance of 20% VAT*, Income Tax and National Insurance contributions. These may eat up to 30% or more of a dry cleaner/restaurants takings. * A business with revenue over £85,000/year is required to register and collect VAT.  By operating cash only, it’s easy to report being under this threshold. My average dry cleaning bill is about £22-25, which would mean about 11 customers a day would take you over the legal VAT exempt threshold. The cash only restaurant in the area has roughly 6 employees, it seems safe to assume the business exceeds £85,000 a year.

Once a dry cleaner in the area decides to cut corners on tax, they can undercut all other local dry cleaners on price. The end result of this in my area, all dry cleaners operate on a cash only basis. Any tax compliant dry cleaner would be out competed.

How can this be reformed? The Government could mandate that all retail businesses capable of sustaining a retail premise (ie a shopfront), must accept card based payments.

This would pull more of the business into a medium that leaves an evidence trail behind. These transactions would be far more likely to result in taxes being paid.

And about that 1.75% fee for card payments — the payments space needs to be reformed to bring the cost down. There are simple things the government could do, which I will write about next week.


City Math – Part I

Let’s see what we can learn about a city of 100,000 people.

Let’s start with the basic inputs using the averages for the USA population as a whole. In subsequent articles this information will be used to model the economy in greater detail.


Total Population = 100,000
Working Age People = 63,400
Retired = 15,500
Population 0-18 years old = 21,000


Population per household = 2.5
Households = 40,000
Mean household Income = US$72,641
Total Household Economy (minus retiree income) = US$2,425,140,000
Average Wage = US$48,130


Wages as a % of Economy = 42%
Total Economy Size = US$5,774,142,000
Capital Stock per capita = US$182,926 (Total value of houses, roads, factories, vehicles, machinery, buildings, airports, bridges etc per capita)


Civilian Population = 84,400
Employment to Population Ration = 59.70
Jobs = 50,386


Avg Retiree Income = 31,000
Retiree Economy = 480,500,000

Federal Spending Per Capita

Defence Per capita = 2,200
Medicare = 1,792
Medicaid = 1,200
Social Security = 2,800
non defence (housing, vet affairs, transport) = 1,800
Federal Retirement benefits, SNAP = 1,710
Interest = 734
Total = 12,036
Total Federal Spending = US$1,203,600,000

State & Local Gov Tax Per Capita

Property = 1,000
Income = 1250
Sales & Excise = 1250
Total = 3,500
Total = 350,000,000


School age Total = 16,768
Cost per student = 12,300
Schooling Cost per Year = 206,246,400

Effect of Commute Mode and Distance on Earnings per hour at Minimum Wage

Net Compensation per hour factoring in commute time and cost

What is the net compensation per hour, when factoring commute time and subtracting the cost of different commutes?

Screenshot 2018-02-24 at 16.46.07

Commute time by distance and mode

How does each commuting method compare over a variety of different commuting distances? Walking is practical up to 2 km, bicycle up to 5km, and electric-bicycle up to 10km.

Screenshot 2018-02-24 at 16.44.29

Cost of commute (time only)

How much does the commute cost when the time is priced at a wage of $11/hour?

Screenshot 2018-02-24 at 16.45.51

Cost of commute (mode only)

How much does each commute cost, excluding the lost time?

Screenshot 2018-02-24 at 16.44.52

Time saved vs walking

How much time is saved on each of these commutes compared to walking?

Screenshot 2018-02-24 at 16.45.26

For each commute type, how much wealth leaves the city?

For each commute type, how dependent is it on external resources imported into the city? Assuming the city produces no oil, makes no vehicles or vehicle parts these items must all be imported into the city. The value of labour is not imported and is not included in these figures below.

If a city has 100,000 people and a working population ratio of 52%, there are 52,000 jobs. Let’s calculate the imported value of these commutes based on average commute modes and distances in the USA. (mode breakdown)(distance factor)

UK Interest Rate/Inflation rolling 5 year correlation

Steady decline of correlation between inflation and BOE overnight rates.

In 1980 the five year correlation of interest rate movements with inflation was 0.75, quite a strong correlation. Over time that correlation has significantly weakened.

The implication is that the Bank Of England is no longer using Inflation as it’s primary determinant of interest rates. Rather some other factor (be it employment, asset prices, exchange rates) is now the determining factor of UK interest rates.

Screenshot 2018-01-27 at 17.34.13

Solar Centipede – Part III – Aerodynamic Modelling


In Solar Centipede – Part I, a guesstimate was made to calculate the aerodynamic drag of the lead carriage and subsequent cargo carriages.

The aerodynamic properties of the vehicle have now been modelled more accurately.

Unfortunately, the aerodrag is greater than the earlier estimate. Even at 30km/h the vehicle would run an energy deficit of 14.5kw/h over 24 hours.

In order to maintain a constant speed on available energy, the vehicle would only be able to average a speed of 10.5km/h over a 24 hour period.

With such low power available for movement and considerable energy consumed by rolling friction an extremely aerodynamic shape is necessary to make this design viable.

Updated analysis here -> Updated Energy Spreadsheet