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Do not mutate the state at too great a rate

Via Guido, I found a good article on evolution and billionaire-bashing written from a mildly left-wing perspective by the science writer Tom Chivers:

There’s a principle in evolution, which is that a gene mutation with a small effect can sometimes be good, but mutations with large effects are almost always bad. Imagine you have a species of deer. It’s a quite successful deer, pretty good at running away from cheetahs. But its legs are fractionally too short for optimal running. If it has a mutation that changes the length of its legs by half an inch, there’s about a 50/50 chance that it’ll be in the right direction, and even if it’s in the wrong direction it might not be fatal. But if it has a mutation that lengthens its legs by two feet, it’ll almost certainly render it incapable of running at all.

And later,

By analogy, the economic system sort of works. It is making people better off and healthier and longer-lived (and, it seems, happier). We could improve it; make its legs a little longer. Making billionaires pay significantly more tax (Gates said he was happy to pay double, remember) seems a making-legs-half-an-inch-longer sort of idea. It might make a few of them move to Grand Cayman, but it should increase tax revenues, and not increase the unemployment rate or damage the economy too badly. If it doesn’t work out like that, at least you haven’t irretrievably screwed a global economy that is slowly lifting people out of poverty, and you can change it back. As McDonnell said on Today, there’s plenty of room for a flatter, more equal society, without getting rid of billionaires entirely.

But “making it impossible for there to be billionaires any more” seems more like a making-legs-two-feet-longer sort of idea. The economic system creates very rich people, often but not always as a reward for creating or selling things that people want, such as Harry Potter or Microsoft Windows or petroleum. I don’t know exactly how you’d change the system to stop it doing that (and Corbyn hasn’t, I think, been specific), but it’d have to be something pretty radical and profound. And then you really do run the risk of doing terrible damage to the workings of the economy. Maybe Corbyn, Russell-Moyle and McDonnell are sufficiently farsighted and brilliant to be able to do it without screwing it all up, but I am unconvinced.

32 comments to Do not mutate the state at too great a rate

  • Flubber

    Its the second order effects that Corbyn will unleash that will destroy us.

    Inward investment, corporate investment; anything that requires a long term commitment will be shelved or abandoned simply on the basis that Corbyn makes policy on a whim and on the back of a fag packet.

    Putting Corbyn and the rest of his band of 70’s throwback morons in charge would be akin to giving a child a flamethrower inside a Japanese home, and expecting good outcome.

  • Fred the Fourth

    Even at a slow rate things can go wrong…
    About 6 years ago I was in an investor diligence meeting, reviewing a “green energy” business. After a close look at their financial projections, noting their dependence on state tax favors, someone said “we are not really investing in this company. We are really investing in the stability and rationality of the California legistature.”
    Cue thoughtful faces.
    Exeunt all, checkbooks still in pockets.

  • lucklucky

    Is this mildly left-wing? i wonder what would be left-wing then.

  • Julie near Chicago

    Fred, +1 to y’all for brains. Doubleplusgood to the guy who made the comment, and to you for submitting the story. :>)

  • Stonyground

    I would regard it as being slightly left due to the suggestion that putting taxes up is a good idea. However billionaires choose to spend or invest their money, it will certainly benefit society more than putting it in the hands of the state to be squandered by idiots.

  • Runcie Balspune

    but it should increase tax revenues

    Of course it _should_, but then again, maybe lowering tax rates could increase tax revenue and overall long-term investment, which would be better ?

    The economic system creates very rich people, often but not always as a reward for creating or selling things that people want

    It also creates some mildly well-off people and can also lift people out of poverty, a rising tide lifts all boats, having any kind of success punishing policy is a tsunami that sinks them all.

    I note this is another Sanderesque article that has moved from millionaires to billionaires, presumably because Corbyn himself, and all his entourage are now multi-millionaires.

  • Mary Contrary

    I note this is another Sanderesque article that has moved from millionaires to billionaires

    And yet somehow the point at which punitive new taxes is to bite is upon the eight-five-thousandiares.

  • Paul Marks

    Higher taxes and more government spending will make the economy worse than it otherwise would have been – and that will especially hit the poor (regardless of whether the taxes are “targeted on the rich” or not).

    This is true whether it is the Roman Empire after Diocletian massively increased government spending and taxation. Or Ireland in the late 1840’s under the demented slogan “Irish property must pay for Irish poverty” where a crises (the Potato Blight disease) was turned into a catastrophe by the massive increase of “Poor Law” taxation which helped crush the Irish economy – leading to a million deaths and millions mor people fleeing the land, and all in the name of HELPING THE POOR.

    And it is true of any other time or place – as economic law is universal (not bound by an “historic period”) – if there is a major increase in government spending and taxation the economy will be worse than it otherwise would be.

    Policies meant (at least supposedly meant) to “help the poor” end up HURTING the poor – look at high tax California today, only a few decades ago California was the most prosperous society on Earth, now it has the worst poverty (when one takes into account the cost of living) in the United States – and ordinary people are fleeing the State.

    “But the taxes in California only hit rich people” – just like the taxes in Ireland in the 1840’s “only hit property owners” – all taxes hit the ENTIRE economy, they hit EVERYONE (directly – or indirectly).

    Economic law matters – and it is universal (regardless of country or “historic period”) – higher government spending and taxes mean that people (the general population) will be worse off than they otherwise would have been.

  • Paul Marks

    As far as I know the first time that it was shown in practice (although it had long been known in theory) that a cut in tax rates would lead to more (not less) revenue – was when the Grand Duke Leopold (later Holy Roman Emperor) cut tax rates in Tuscany in the late 18th century. Contrary to the lies of the “mainstream media” and the education system (from the local school up to and including Harvard, Oxford and Cambridge) the cuts in the HIGHER RATES of tax by Kennedy, Reagan and Trump have produced more (not less) revenue.

    But there is a limit to this – it is cuts in the higher rates that produce more revenue, as Arthur Laffer pointed out (although he would admit that many economists had known before him) tax revenue is a curve – at lower rates additional cuts in tax will NOT (at least in the short term) produce more revenue – and “taking people out of tax” clearly does not produce more revenue.

    There is no magic wand – one can not just carry on wild government spending and expect lower tax rates to carry on the economy. The wildly high government spending will cripple the economy over time – REGARDLESS of what the tax rates are.

    As both the American and British governments will discover.

  • bobby b

    “There is no magic wand – one can not just carry on wild government spending and expect lower tax rates to carry on the economy. The wildly high government spending will cripple the economy over time – REGARDLESS of what the tax rates are.”

    As designed by those who would tax. They just don’t know how to adjust it.

    You’ve seen those small gasoline engines that are throttle-governed by a lever that attaches to a “sail” that sits in the blown airstream of a finned flywheel? When the engine speeds up, the air blows harder, which pushes the sail out and levers the throttle more closed, which slows the engine, causing the air to blow weaker, which allows the sail and lever to be pulled back in by the spring, which pushes the throttle more open, which speeds up the engine . . . . over and over?

    Poorly adjusted feedback loops cause cycling and surging of an engine – it speeds up and slows down, over and over. You try to adjust it so that the engine speed remains fairly constant while generating efficient power.

    Our economy heats up a bit, with unemployment dropping and GDP rising, presenting to the tax-em crowd an opportunity to harvest more money from that economy. Loath to allow that money to escape, they raise taxes. This creates a drag on the economy, the excess dwindles, taxpayers end up with less takehome, taxes are lowered, the economy heats up again . . . over and over.

    You* try to adjust it so that the economy speed remains fairly constant while harvesting the most tax dollars. So far, they’ve not figured out how to dampen the surging.

    (The royal “you,” I mean.)

  • Paul Marks

    I am sorry bobby b – but I do not follow your comment. That is certainly NOT your fault – it is my fault, I am tired.

    I am also a bit confused by the post – it is not the “rate” of the expansion of government that is the real problem, it is the expansion of the government that is the problem. The increase in taxes and government spending relative to the size of the economy – ditto regulations.

    I am reminded of those “Conservatives” who say that the point of Edmund Burke was to not engage in “reform” at too fast a speech (to do it at a steady pace and in an orderly way).

    Such “Conservatives” (who are not really Conservative at all) do not know what they talking about – as they define “reform” as the expansion of the government (spending and regulations) which is the OPPOSITE of what Edmund Burke wanted – he wanted less government spending (not more) and less regulations (not more).

    Nor was Burke really that worried about “reforming too fast” – as, for example, he supported getting rid of all the “Engrossing and Forstalling” laws in a single Act of Parliament, and wanted to get rid of all the economic Penal Laws in Ireland.

    It is not the speed of change that really matters – what really matters is what DIRECTION the change is in. More statism or less statism.

  • Alan Peakall

    Bobby B: Indeed, your analogy leads on to the lesson of the risks of attempting to adjust a complex system with its own endogenous negative feedback mechanisms. It is all too easy for the self-appointed external manager of such a system to adjust too hard, too late thereby amplifying, rather than damping, instabilities.

    A classic example is the UK (March) 1990 Budget for Savings. Motivated by a fall in the saings ratio which had emerged in the course of 1989 when the economy was expanding strongly, John Major announced new tax-privileged savings accounts to come on the market from the start of 1991. By that time the economy was in recession, inflation was falling while interest rates were prevented from following it down by ERM membership. Significant cash was locked up in the accounts for five years, only to be released at the start of 1996 when the economy was growing strongly and building society (thrift) demutualizations were also releasing significant amounts of tax-free capital into the hands of savers too.

  • Nullius in Verba

    “Making billionaires pay significantly more tax (Gates said he was happy to pay double, remember) seems a making-legs-half-an-inch-longer sort of idea.”

    Seems to me that it’s a case of identifying the deer that can run the fastest, and then cutting two inches at a time off their feet, until they’re as slow as the rest of the herd.

  • Antelope legs are the average length they are because of an already ongoing tension between those who are born average, those born a little shorter and those born a little longer. The OP quote is right about the absurdity of expecting large mutations to be anything but disastrous, but if he clung closer to his analogy, he’d have to note that the overwhelming majority of small ones have negative, if slighter, impacts.

    However we have no reason to expect current tax policy to be as well-evolved as antelope legs – and every reason to know in which direction it errs. The writer’s leftism may be mild compared to Corbyn’s but it is almost certainly gross enough to let him utter idiocies like “Reagan and Thatcher cut taxes” without a hesitating thought. Maggie and the Gipper cut tax rates but did not reduce the amount taken from the economy by the government. Reagan raised more taxes (in real terms) every year, while Maggie raised so much that in her final year – in what was IIRC the only major occasion of her not spending all the tax she got – she paid off a third of the national debt rather than spend that money on administration.

    And these were the PMs and presidents that were pushing the right way. 🙂

  • John B

    ‘ As McDonnell said on Today, there’s plenty of room for a flatter, more equal society, without getting rid of billionaires entirely..

    Things are made flatter by hammering them down to the same thickness.

    And ‘more equal’… ‘more’ compared to what? Who decides ‘more’ and based on what criteria?

  • Nullius in Verba

    “Things are made flatter by hammering them down to the same thickness.”

    Things can be made flatter not just by hammering down the most productive, but also by raising up the least productive.

  • Itellyounothing

    Socialists are happy if the poor get poorer so long as the rich don’t get richer.

    I would love up vote for policies that would do as you describe, but they are rarely on offer…

    In part cause some of the rich and well off middle hate the idea of being caught up.

  • Snorri Godhi

    Paul wrote:

    Such “Conservatives” (who are not really Conservative at all) do not know what they talking about – as they define “reform” as the expansion of the government (spending and regulations) which is the OPPOSITE of what Edmund Burke wanted – he wanted less government spending (not more) and less regulations (not more).

    Would it be fair to say, though, that Disraeli was such a “conservative”, not really a conservative at all? At least, not the sort of conservative that people on this site tend to like.

    It is not the speed of change that really matters – what really matters is what DIRECTION the change is in. More statism or less statism.

    See also Hayek’s essay: Why I am Not a Conservative, in which Hayek assumes that a ‘conservative’ is indeed someone who is mostly concerned with speed, not so much with direction. Unfortunately, Hayek, as usual, did not name & shame the ‘conservatives’ that he had in mind.

  • lucklucky

    Stonyground
    November 24, 2019 at 7:59 am

    I would regard it as being slightly left due to the suggestion that putting taxes up is a good idea. However billionaires choose to spend or invest their money, it will certainly benefit society more than putting it in the hands of the state to be squandered by idiots.

    So the taxes aren’t already very lefty?

    And i am not even talking about the political reeducation camps in Britain of today..

  • Fred the Fourth

    Alan, bobby,
    Among old time analog electronics folks, there’s a well known saying about design:
    Amplifiers will oscillate, and oscillators will amplify.

    I’ve noticed this has applications outside of electronics.

    Among the many basic courses missing from the contemporary educational scheme (e.g. Statistics) I’d add Control Theory.

  • Fred the Fourth

    Back in the 60s when high marginal tax rates were starting to be reduced in the US, I learned just how fictional they were. In reality, nobody paid 90% or anything like it.
    It’s all about how Taxable Income is defined.
    The medium of exchange for legislative horse-trading moved from water projects to highway projects to tax breaks. Hence the size and incoherence of the tax code.

  • neonsnake

    And yet somehow the point at which punitive new taxes is to bite is upon the eight-five-thousandiares.

    There’s plenty about the Labour Manifesto to be concerned about. For me, I think I’ll have to pay another £26-ish quid per month in tax. That’s hardly “punitive”. Slightly tongue in cheek, but gimme free broadband and I’m £15 per month better off.

    I’ve read through most of the (relevant to my voting area) manifestos, with about as open a mind as I can muster, and Labour’s is utterly boring. Raise taxes on those of us who can afford it, spend more money on public services. Nothing very radical or interesting, frankly.

    I’m not seeing anything different that date that those extra taxes will be spent more efficiently, but I’m also disinclined to kick up a fuss. I’m not about to strap on my Doc Martens and man the barricades because of it, and I’m not about to flee the country over twenty fucking quid per month.

    I’m hearing nothing from the Tories to get me to even half mast, let alone a raging full-flag hard-on. It just seems like more of the same neo-liberal corporatist bullshit.

    I’d rather Corbyn.

    There. I said it.

    I’d rather an opponent who telegraphs his attacks than a two-faced pretend ally. I can predict Corbyn, and plan for it. I can’t predict “Boris”.

    I don’t know who to vote for. I really don’t. The only manifesto that caught my eye was the f-ing Greens, for Christ’s sake, and that’s because they’re the only ones talking about UBI and LVT. Everyone else is just the same old same old.

    Maybe the next move is left-libertarian. I don’t know, and then to the right. I don’t think it’s consistently right-authoritarian, anyway, I can’t see how we go from there downwards into right-lib.

  • bobby b

    You’re making decisions based on pre-election campaign materials? They’re aimed at the low-functioning set who read them and derive their total understanding of the parties through them, with no historical analysis. Do you really believe that a Labour government means only “an extra 20 quid per month?”

    😕

  • Nullius in Verba

    “Raise taxes on those of us who can afford it, spend more money on public services.”

    Bear in mind that Labour don’t acknowledge the implications of ‘Tax Incidence’. Taxes charged to the rich are paid for mostly by the poor.

  • neonsnake

    Bear in mind that Labour don’t acknowledge the implications of ‘Tax Incidence’. Taxes charged to the rich are paid for mostly by the poor.

    The corporation tax hike bothers me along those lines more than the income tax rise, since that’s the one I can see really hurting people. I know people are defending it with comparisons to other countries, but I don’t think that’s a reasonable defense; it’s only the before and after comparison that I think is relevant (I think, anyway)

    Is Tax Incidence relevant to income tax? I’m familiar with it mainly in regards to VAT, taxes on things like petrol and cigarettes, and Corporation Tax, but I’m unsure how it relates to Income Tax.

    Also noticed that they’re planning to remove Married Couples Allowance, which I hadn’t noticed before. That one will surely hurt lower earners unless I’m missing something.

  • Marshall

    I am reminded of the words of Flanders and Swann, from the late 50s/early 60s:

    > We went to Canada, and we were in Switzerland, which was quite interesting too. They didn’t understand a word, but they loved it. It was very interesting to see the homeland of so many great English actors.

  • Jim

    “Back in the 60s when high marginal tax rates were starting to be reduced in the US, I learned just how fictional they were. In reality, nobody paid 90% or anything like it.”

    Oh they did in the UK, as the Beatles (among many other pop stars of the time) famously discovered.

    https://www.youtube.com/watch?v=l0zaebtU-CA

  • Another principle of evolution that might well be considered in economics is that evolution depends on changes at the margins. It adds a layer of changes to what’s already there.
    A change, even a small one, to something several layers down, can be disastrous because it winds up impacting everything in the layers above it.

    So just because something works well in one economic system, don’t assume it can be ported over to another economic system, unless you’re willing to port over the antecedents that support it, and the systems that depend on it as a basis. So a wealth tax may work well someplace, but that doesn’t mean it will work here, without tearing down large pieces of the economy and rebuilding them from scratch.

  • CaptDMO

    “There’s a principle in evolution,…”
    In economics/ Poli Sci, I believe it’s called boiling a frog.

  • Fred the Fourth

    Jim,
    But did the Beatles go on year after year, earning high taxable income and paying 90% on it?
    Or did they manage to make adjustments?
    I’m actually not trying to be snarky here. I’m genuinely curious about this issue from the perspective of a UK taxpayer.

  • Paul Marks

    I am sorry for not replying for so long Snorri – my laptop was damaged on Sunday and I am trying to get an old laptop to work.

    You are quite correct – I do despise the FAKE Conservatism of Disraeli – which is all style and the opposite of Edmund Burke in actual substance. Disraeli was all about more regulations and more government spending – the opposite of what Edmund Burke believed in. Disraeli settled in the same town that Burke had lived in and wrapped himself in Conservative trappings, but he was no “Old Whig” and really no Tory either.

    “Social Reform” is collectivism by the instalment plan. Those people who think it “reduces social problems” and thus “cuts the ground from under the feet of the socialists” have got things exactly backwards – it actually makes social problems worse than they otherwise would have been, and also stimulates the growth of socialism.

    Where are socialist ideas now strongest in the United States? Places such as New York City and California. Which areas of the United States have had the most Social Reform? Places such as New York City and California.

    This is no coincidence.

  • Snorri Godhi

    Thank you Paul for feedback about Disraeli!

    As for “social reform”, in most cases the reform that is needed is getting the State out of the way.
    Every time there is a social problem, the question that should be asked is: How is the State causing this?
    The question “Is the State causing this?” should be asked only after serious attempts to answer the previous question have failed.

    In Italy, “reforms” had become shorthand for “free-market reforms”, last time i checked. Which is an encouraging sign.

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