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The turning of the tide… 25 years on

Tonight I attended a very interesting event hosted by the Adam Smith Institute which commemorated the 25th anniversary of the abolition of exchange controls. Speaking at this dinner were Lord Howe and Lord Lawson, the people actually responsible for the action which set off a cascade of events not just in Britain but across the world. This in no small measure led to the second age of globalisation in which we live today. The third speaker, acting as the warm up act and comic relief, was yours truly.

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19 comments to The turning of the tide… 25 years on

  • Gus

    What a truly horrific vision – celebrating globalisation with Lord Howe and Nigella Lawsons dad! well the tide is certainly turning isnt it? See the latest reports on global warming, I wonder what is the libertarian capitalists solution to ecological crises? Will the market fix itself?

    What is the evidence for this?

    For a better explanation of the world go here.(Link)

  • craggy_steve

    Congratulations – it’s definitely an honour to be so recognised. Anyway, the entry did what it was supposed to do, and I went off to the ASI website, where I read

    “Douglas Carswell says that we should scrap Council Tax and turn VAT into a genuinely local sales tax. It’s fair because everyone pays, but the rich pay more. It encourages councils to keep service levels high and rates low, so that shoppers don’t defect to neighbouring cities. And with decisions being truly local, it will resurrect voter interest in local affairs.”

    and nearly fainted. The concept that everyone pays in accordance with their means is absurd. It doesn’t cost five times more to collect my refuse than to collect the refuse from the chap next door, and the market recognises this. If I buy a Mars bar I am charged around 35 pence, much the same as everyone else. To read that one of the leading free-trade think tanks is still stuck in the economic dark ages is truly disappointing.

    Mr. Carswell is talking about local taxation, but irrespective of whether it is local or national, if a taxation mechanism has to meet the “fairness” test there are only two viable options a) we pay for what we use, or b) we all pay the same. In the case of the base finances of the state option a) would be unaffordable for many, so option b) is the only practical option.

    But, I hear you cry, we’ve tried that – remember the Poll Tax. Indeed, and it didn’t work. Fair taxation can only be achieved through a tax revolution – anything else is tinkering with the system, so on the basis that someone at the ASI will read this, here’s the plot:-

    Calculate the total tax burden. Divide the tax burden by the number of earners, and that is the amount each will have to pay. Now for the fun bit – Every employer has to calcutale each earners’ net income under the old tax regime, add that to the new tax obligation, and revise each earners’ wages so that the sum of the tax burden and their net income becomes their new paycheck. Nobody is better off, nobody is worse off, but each earner pays the same share of the burden.

    There will be some side effects. Low value enterprises which rely on low-waged staff will become less competitive, high-value enterprises which use expensive staff will become more competitive – sounds rather positive really. Oh, and while I think about it, the next pay rise, obviously a low-paid worker who gets a 3% rise in salary will see a proportionally greater increase in their net income than a highly-paid person, ie: the gap between the poor and the rich will tend to converge rather than diverge as is inevitable under the current system, actually that sounds quite just and good too.

    Crazy, but then I’m not a politician, in the meantime anyone who suggests to me that it is fair for me to be charged significantly more than the next chap for a commodity or service just because I’ve been successful, contributed to the nation, created jobs and wealth etc… will be in my view corrupt, stupid or political.

  • Unfortunately craggy_steve is as economically benighted as Douglas Carswell and scarcely better than poor deluded Gus.

    All taxation creates market distortions and craggy is in error in welcoming the distortions that his system will create. The only correct policy with respect to taxation is that it should be lowered, in every and any respect. Taxation is anti-market because it is a ‘coerced’ exchange the proper name for which is extortion. Craggy’s scheme is just an excuse for continuining extortion dragged up in yet another new frock for the occasion.

  • What drivel, Gus. Moreover we do not tolerate comment spammers here, so your second and utterly off-topic comment has been deleted.

    For some real-world relevent views on ecological issues, look here(Link) rather than the flat-earth absurdities of the Left-Green movement.

  • craggy_steve

    Paul wrote:

    The only correct policy with respect to taxation is that it should be lowered, in every and any respect

    I agree, and that doesn’t negate any of my earlier drivel, however being vaguely realistic I think there are a few reasons why I would like to preserve the concept of “State”, and if the concept is to remain it unfortunately has to be funded, either out of state income, or taxation. The state has proved rather poor at generating wealth through barter, so extortion is likely to continue awhile, irrespective of whether it is high or low in value.

    If you’ve got a scheme whereby we retain the essential benefits of state (defense? law & order? international relations? – most of the rest are probably debatable) funded without the blight of taxation then speak now… I’m not very educated when it comes to ‘economics’, but I’m happy to learn more 🙂

  • Looks like a great event – quite an honour to be the third speaker alongside that duo.

    Nigel Lawson is a Lord, too, BTW.

    Editors note: the article was done under the influence. Yes of course… duly amended.

  • Craggy,

    There are no ‘essential benefits’ of the state. But one does not have to see the truth of anarchism in order to see the faults in your scheme which is highly invasive of the market process.

    However my main point is that, for radical advocates of the free market, dreaming up new and useless taxation schemes only adds confusion and clouds the issue. Instead one should demand tax cuts at every opportunity, which might have some effect, and not worry about moving the deckchairs on the Titanic. Both you and Carswell are wasting your time on your schemes. Click on the link in my name for a fuller explanation why.

  • 1327

    OK then I’m intrigued just how much money can you fit in a babies nappy ? Was this with the old large banknotes (were they still around in the 50’s ?) or smaller ones.

    Also what precautions were taken to prevent accidents ?
    Or did your parents not feed you before the trips 🙂

    1327

  • Good for you Perry. Rather impressive you got to speak with such luminaries. Douglas Carswell is an ole’ fellow YC/NACG er and is a bright bloke. It is a pity he goes for the “rich have to pay more line”. If he wanted to be really radical he should suggest there be a flat tax.

  • Johnathan Pearce

    Good for you Perry. Did you tell any naughty gags and will you pass them on at your forthcoming bash?

    Gus, what makes you think that capitalism is solely to blame for global warming? Collectivist, centrally planned economies of the old Soviet era had appalling levels of pollution, for instance. In any event, the profit motive can be harnessed to promote things like cleaner air, given the right incentives. You need to broaden your reading and stop thinking in dull Guardianista cliches.

  • craggy_steve

    Paul, OK, I’ll bite.

    Libertarianism is commonly defined as: “one who believes in the doctrine of free will”, or politically, “One who advocates maximizing individual rights and minimizing the role of the state”. Both of these describe me, but I note that the political definition does not exclude or deny the concept of the state, it merely dictates thath the state should have the most minimal role in the life of the individual that is achieveable while still having a “State”.

    Anarcho-libertarianism is a new concept to me, which I find hard to distinguish from classical anarchism, I assume it is basically “I can do what I want and I respect your right to do what you want”, a sort of anarchism with empathy. I can see that if you subscribe to such a philosophy then you wouldn’t believe in the need for a “State” and ergo there would be no need to pay for the State.

    Not being an anarchist, or a student of anything vaguely political, I have a question (a simple one that will have been answered before, but I don’t know what that answer is):- on the basis that the classical libertarian would roll back the state to the bare minimum required for statehood and civil protection, and that the anarcho-libertarian would go the whole hog and remove the state apparatus entirely, if I achieve my desire as a libertarian and get a minimalist state then when I am robbed, assaulted etc. I will still have a basic Police and Court service to call upon; if you, as an anarcho-libertarian, achieve your end of no state aparatus, how will you obtain justice or retribution when your “rights” are similarly infringed?

    Ta,

    craggy_steve

  • Craggy,

    Libertarianism is, as you say, the view that maximising individual rights and minimising the role of the state is the best social policy. Anarcho-libertarianism is simply the view that the minimum state need be nothing at all. I am slightly surprized that you have not come across anarcho-libertarianism before as it is often discussed. The answer to your question is that police, courts and justice services can all be supplied on the free market without any need for a state or taxation and that such free market provision will in fact be superior to state provision. There are many books which explain how this will work but three of the more notable are:

    Power and Market by Murray Rothbard
    The Machinery of Freedom by David Friedman
    The Enterprise of Law by Bruce Benson

    But the case for anarchism was not my main point which was that coming up with new schemes for taxation is, at best, a futile distraction from the important work of demanding that taxes be lowered and state spending drastically cut. Your scheme, in particular, would entail huge dislocation of market forces causing great damage to the economy. Why bother advocating it when a simple and clear call for tax cuts is the better course of action.

  • craggy_steve

    >> Why bother advocating it when a simple and clear call for tax cuts is the better course of action.

    Because the issue of “fairness” is entirely separate to the issue of amount. We need tax cuts for a variety of reasons, and if for instance we reduced the demands of the state to say 20% of GDP, and all paid 20% of our income as a “flat rate tax”, it would still be unfair, and it would still need correcting to achieve a just society. There are millions of us yelling for tax cuts, and we must not stop, but until we destroy the attitude that it is fair for the wealthy to pay more for the same service, we are not going to quash the core socialist propaganda that everyone can have everything because the rich can pay for it, and that therefore taxes are good because the rich pay more than the less fortunate. If we all pay the same and it is understood that this is fair, I think we’ll ultimately see a situation where the huge majority prefer lower taxes, popular demand will be for lower taxes, a smaller state and more self-reliance, and we’ll have achieved a very significant swing towards libertarianism as the accepted political philosophy.

  • Craggy,

    You are making all the errors that I warn against in my little essay. ‘Fairness’ and ‘a just society’ are indeed separate issues to amount. They are also irrelevant alien socialist ideologies which only serve as distractions clouding the genuine objectives of liberty and prosperity.

    Justice consists in trying to eliminate or at best minimise the amount of extortion and robbery going on in society, not that people should all be extorted from or robbed in some allegedly ‘fair’ way.

    You are right that many people are confused and in error and in thrall to socialist propaganda but in your call for ‘fair’ rather than simply ‘lower’ taxation you are only exacerbating their confusion and perpetuating their, and your own, misery.

  • sark

    Nice one! That add a whole new meaning to the term ‘dirty money’ 🙂

  • craggy_steve

    Time for the weekend, so I’ll shut down after this. We can lower tax significantly, but unless it is reduced to 0% then any disproportionate allocation of the tax burden will be to the advantage of some and the distress of others. Until this imbalance is removed it will perpetuate a social divide which is probably the single prime inhibitor to widespread libertarianism, so please don’t confuse my concepts of fair and just with those promoted by socialism!

    Also, please consider that lowering tax is of itself a minor goal, the objective is a small State, reducing tax is a means to this objective, or a by-product of achieving it by other means.

    One might argue that the low-tax message is an easier sell to the naive than libertarianism, and promote it as a step along the way, but ultimately it is incidental. If we have a small State we have a small tax burden, and we would be more likely to achieve this if we all had the same liability to pay for the bloated monster that we have created.

  • Chris Goodman

    Justice reduces robbery and extortion; it does not pursue robbery and extortion in some “allegedly” fair way.
    Or more broadly

    Justice upholds natural rights; it does not seek to violate them in some “allegedly” fair way.

    If I may say so Paul this is a brilliantly lucid formulation. Somebody ought to print it on a note – suitably accredited – and place it in every university library copy of John Rawls “A Theory of Justice”.

    It explains why the Left talk about justice so much – while of course behaving in an unjust manner. They like talking about justice because to exercise of justice you have to exercise power. So what they do is re-define justice so that it means, that which justifies you behaving unjustly.

    The same goes for rights – which the Left re-define as that which justifies them taking away your rights.

    The reason why the Left talk about power so much is that they want some of it. In fact they want all of it. What happens when you give Leftists absolute power is of course a matter of historical record.

    If the State (or the Church) sees itself as the source of justice (or truth or goodness) rather than as a framework the independent pursuit of these ends the result is totalitarianism.

    The Left is to justice what the Catholic Church is to freedom of speech. Indeed the Catholic Church and the International Left and the European Union are all versions of the same project – a universal government that imposes a definite conception of the good, rather than the essentially Protestant conception of a plurality of different ways of pursuing transcendent ends. Or should I say the English Protestant conception of religious freedom.

    Needless to add intellectuals are prone to having dreams about becoming philosopher kings. Hence the distrust of intellectuals in England – the State in which the modern world was founded. Which is why English conservatives (unlike continental conservatives] believe in liberty – because it is the English tradition – exported to the world as modernity.

    It just makes me realise why there is a profound divide between English and Continental philosophies – of which the historical division between English [Anti-Scholastic] Empiricism and Continental [Pro-Scholastic] Rationalism is a vulgar version.

    There is a fundamental incompatibility between our conceptions of government – unless you are a Leftist and see the EU as a vehicle for imposing a Leftist vision of the world.

    Opps! Just thinking aloud.

  • kamil

    If we are to have any state that provides courts, police and armed forces we will need taxes to pay for it.

    If you are richer you often use more services, live lower density housing were providing those services is more expensive.

    While any tax system interferes with property and other rights different tax systems have different unequal effects. A list from least damaging to most damaging taxes:

    Inherence + gift taxes have the smallest effects on economy and individual rights.

    Consumption Sales taxes (goods and services) encourage conservation and investment, discourage consumption.

    Income Tax – discourages income growth and production!!!! (This is perverted)

    Flat everyone pays the same rate
    Less paperwork need (may not need to file a tax return at all if the tax is automatically deducted at source).

    Progressive (richer people pay higher % of income)
    Of all the types of income taxes has the most destructive effects on growth production and income.
    The most intrusive into individual life
    Most paperwork needed filing returns.

    Regressive (poorer people pay higher % of income)
    Less incentive to cheat on taxes then progressive.
    Very intrusive into individual life
    Lost of paperwork needed
    Unfair to poorer people.

    Value Added Taxes effects like consumption tax but designed to favor big vertically integrated business over smaller business

    Kamil

  • craggy_steve

    Kamil, I take issue with the following:-

    If you are richer you often use more services, live lower density housing were providing those services is more expensive.

    I think the wealthy commonly use less state resources. In buying private schooling and private health services the wealthy unburden the state of its’ two most onerous commitments, as well as having a reduced dependency on “social services”, and causing less social disruption that might need the attention of the police and Courts. If I only had to pay the state for the services I receive from it I wouldn’t be paying very much 🙂

    I accept that the cost of providing services in rural areas is higher, but rural Britain houses a significant proportion of the lowest waged people in the country. Despite the impression that one might get when visiting the rural commuter belt around a major city, most of rural Britain is not yet a parkland playground for the wealthy ex-urban professional, and there are still far more poor people in rural areas than wealthy.