We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.
Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]
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For part of what passes for the chattering class in the UK, the idea that having “too much” wealth is so ingrained that it comes as a shock when the right to own as much property as one can in a free society is asserted. For example, I’d be willing to bet that most “liberals” these days (I use that word in its corrupted, American sense) take it as a given that the “rich” (chose your definition) should be taxed far more heavily, proportionately, than everyone else, in order to redistribute gains that, they assume, are in some way unjustly acquired. (The fixed wealth fallacy, as our own Brian Micklethwait pointed out many years ago.)
Recently, there have been signs of dissent at the idea of heavy tax burdens on the rich. London Mayor Boris Johnson recently had a pop at high tax rates, and others have done so. This appears to have got up the nose of Richard Godwin, who writes a column for London’s Evening Standard newspaper. In a model of superciliousness, bad logic and general asshattery, Godwin lets rip:
I’m considering jacking it all in to become an entrepreneur. I reckon I’ve got what it takes. Most of my thinking falls into the blue sky category. Box-wise, I’m generally outside. People ask me to give 100 per cent, I’m like: “How about 110 per cent?” They say it’s mathematically impossible to give 110 per cent. I say: “Impossible is not in my vocabulary.”
Okay matey, we get it. You are good at taking the piss. I’m impressed.
The only barrier between “me” and “entrepreneurship” is my salary. It’s currently under £150,000. I’m working on that, 110 per cent! But I wouldn’t be affected by Labour’s proposed 50p tax rate and, as I understand it, it’s only “entrepreneurs” who come in for such persecution.
You wouldn’t be affected by the tax rate. Maybe not directly; but the point is, if you generally let it be known that anyone who has the effrontery to be paid “too much” gets at least half his/her earnings confiscated at source, that has an impact. Look beyond your own little mental universe, Mr Godwin.
No sooner did Ed Balls announce his plans to increase the levy on the richest percentile than a familiar chorus began. “What did the wealth creators do to deserve this?” pleaded the CEOs of FTSE-listed companies and the inheritors of family wealth. “Won’t someone think of the entrepreneurs?” thundered Boris Johnson, calling for the top rate to be cut to 40p. For it seems the word “entrepreneur” has changed its definition. Even the Duke of York outed himself as one recently. Before the crash, it meant someone who started an enterprise, deriving from the French verb “to undertake”. It has come to mean something like “deserving rich”. It’s how the over-£150,000s reassure themselves that their wealth is the product of their genius and graft as opposed to a specific set of social and economic conditions.
Okay, sometimes terms get used loosely, but the underlying logic is nonetheless sound: if you hit high earners with high taxes, it means the point of taking big risks is blunted. Maybe not extinguished, but nonetheless, the impact is real. Mr Godwin might as well deny that as deny that the Earth orbits the Sun.
Now, I know quite a few people who fit the old definition of entrepreneur, who have “dreamt of a new product, or a new market, and then struggled to make it happen,” as Johnson put it. When they started their businesses, they had neither the means nor the inclination to withdraw a six-figure salary for themselves. They preferred to reinvest. Some of their companies have since become very successful. However, of all the complaints I have ever heard, income tax is not one of them. The banks’ reluctance to lend is a far more pressing concern.
Nope. First, a lot of businessmen and women don’t draw a big annual salary; their income stream is highly volatile: famine one year, feast the next. If, after several lean years of building up a business, they suddenly come good, and say, half of the rewards are confiscated in tax, then the preceding risk-taking and general graft looks less worthwhile than it might have done in a lower tax environment. Time-horizons come in to play here. To increase the willingess of people to invest long term, not just in financial terms, but in terms of time and effort, the logical approach is to reduce taxes overall.
By definition, those who pay the top rate are life’s winners already.
He’s got it the wrong way round. If you have high taxes, then the chances of becoming a winner are made worse; the point of taking risks to be a winner is blunted. In any event, people who earn high salaries typically make a lot of sacrifices to get there, in my experience.
That great enemy of entrepreneurship, Margaret Thatcher, set the top rate at 60p. As successive governments have cut that, the economy hasn’t magically grown. All that has happened is that fewer people have benefited from the growth. That’s not entrepreneurship — it’s self-interest.
She set it at 60 after cutting it from a crazy level of almost outright confiscation; towards the end of her time in office, it fell further to 40 per cent, as Mr Godwin should know. He’s trying to imply that Maggie was quite happy to see the top rate at 60p in the pound. She plainly wasn’t. And the economy has grown as the top rate came down; nothing magic about it. Despite the problems of the past few years, Britain is in many ways a more entrepreneurial country than it was when Mrs Thatcher gained power in 1979.
Ok, it is Friday, so how about this item on “How Technology Is Transforming the Wine Trade”.
Tech has not, yet, transformed the subsequent hangovers from excess, however.
Whenever you hear of businesses or others carping about the lack of financing for this or that preferred cause, and demand that the State (ie, you, the taxpayer) steps in to fill the gap, it is worth bearing in mind that one of the glories of capitalism is in coming up with ever more inventive ways of putting those who want capital in touch with those who have it. This is the thrust of an article in the magazine Reason by Greg Beato (February 2014 edition):
Traditionally, the wealthiest members of society have had little trouble leveraging their resources. Those resources are highly concentrated and thus easy to strategically deploy when necessary. For the 99 percent, government provided a way to accomplish this too. Everyone pays taxes, and as a result, we get streetlights and Yellowstone National Park.
But taxation is a pretty crude form of crowdfunding. You don’t get to choose the size of your contribution. You can’t directly specify its intended use. And even though our tax system lacks the functionality of Kickstarter, participation is mandatory. When some senator-of-a-friend-of-a-friend decides he wants to follow his bliss and finally build that $2.2 billion dream dam he’s been talking about all these years, you’ve got to chip in whether you like it or not.
Crowdfunding, in contrast, privileges hands-on, voluntary democracy. If you think the United States needs more solar infrastructure sooner rather than later, crowdfund it. If you think that service-sector jobs that pay livable wages are the key to widespread prosperity, crowdfund businesses that pay such wages.
For the allegedly disenfranchised 99 percent, it has never been easier to seek common cause with like-minded souls, to pool your resources, and to exert influence in strategic and tangible ways. You might even call this a shining age of middle-class empowerment. If anyone ever decides to make a documentary about it, the financing should be fairly easy to swing.
As I sometimes note, while Hollywood, for instance, often produces films that slag off capitalism, (Michael Moore being the most egregious case) or smaller independent film producers do the same, the irony is that they make use of the innovation in fund-raising that modern capitalism constantly throws up.
A related area of capital provision that bypasses banks – and their current, often stringent capital rules – is what is known as “peer-to-peer” lending. And needless to say, the UK financial regulator is getting concerned about this, fearful that people who lend money might make mistakes or, horrors, those who borrow might not fully understand the risks. Rob Fisher of this blog wrote on the topic last year.
All this flowering of capital-raising is not really all that new, if you think about it. The idea of equities and other securities has been around for a long time; what is new is that the internet has put both sides to the transaction in touch much more easily, reducing barriers and the frictional costs associated with it. That’s surely an example of the “long tail” effect at work.
A colleague of mine sent me this item, from the BBC:
Some HSBC customers have been prevented from withdrawing large amounts of cash because they could not provide evidence of why they wanted it, the BBC has learnt. Listeners have told Radio 4’s Money Box they were stopped from withdrawing amounts ranging from £5,000 to £10,000. HSBC admitted it has not informed customers of the change in policy, which was implemented in November. The bank says it has now changed its guidance to staff.
How jolly decent of them.
Mr Cotton cannot understand HSBC’s attitude: “I’ve been banking in that bank for 28 years. They all know me in there. You shouldn’t have to explain to your bank why you want that money. It’s not theirs, it’s yours.”
Well, he now knows differently. A person with a bank account does not own the cash contained by the bank and has total control over it. (I am not aware of any line in my bank contract saying as such.) A deposit is a credit to the bank, and under modern banking laws, with the system as it operates, a bank is not obliged to instantly hand that over, no questions asked. (Under fractional reserve banking, the only kind of guarantee is by deposit protection, but that is usually only up to a certain limit.) In a full free market of course, people could make whatever kind of agreements with banks that they wanted, even consenting in some cases, perhaps, to having to give information to a banker to prevent fraud. However, government regulations in the UK (and certain other nations) being what they are (such as controls to stop money laundering and tax dodging), banks are increasingly operating as proxies for government agencies.
According to HSBC, the issue is to combat financial crime. Maybe that is true but this is not the whole picture:
HSBC has said that following customer feedback, it was changing its policy: “We ask our customers about the purpose of large cash withdrawals when they are unusual and out of keeping with the normal running of their account. Since last November, in some instances we may have also asked these customers to show us evidence of what the cash is required for.”
“The reason being we have an obligation to protect our customers, and to minimise the opportunity for financial crime. However, following feedback, we are immediately updating guidance to our customer facing staff to reiterate that it is not mandatory for customers to provide documentary evidence for large cash withdrawals, and on its own, failure to show evidence is not a reason to refuse a withdrawal. We are writing to apologise to any customer who has been given incorrect information and inconvenienced.”
One of the ironies of the situation is that HSBC last year was hit by a massive fine for anti-money laundering offences (stuff to do with Iranian sanctions and drugs); hitting long-standing clients with this sort of intrusive crap will not do much for that bank’s brand reputation. It is right to stop fraudsters taking money out of accounts of clients, but perhaps the bank should be more frank with clients on why it makes these kind of demands and what is driving this situation. To a considerable extent, banks are no longer really part of any free market, capitalist system.
“But please, let’s not now pile hypocrisy on top of our grotesque abdication of responsibility. No more hand-wringing. No further calls for “something to be done”. Nothing is going to be done. Because we don’t actually want it to be done. Yes, we want the horrors of Syria to disappear. We want Assad to disappear. But we want someone else to make them disappear for us, so we can go back to congratulating ourselves about how we stood tall for peace.”
– Dan Hodges
He raises the uncomfortable fact that, while non-interventionists can clearly state, with a lot of hard evidence to back them up, that intervening by military means can just make things worse, lead to a quagmire, etc, doing nothing also can have its costs. And he’s right to say that anyone who complains about Assad, and the other side, has no real credibility without at least stating what could or should have been done about it instead. Of course, if Western politicians say, “The situation is terrible, both if we get involved and if we don’t. Life is a bitch sometimes but there it is,” they are not going to be very popular.
Via Tim Worstall, this is far too good not to share:
Cuba for me is a bright flame in a dark world. I am fully aware that it is no utopia and that there are many shortages and imperfections but they have learnt many interesting lessons during the special period after the USSR collapse and so are building from a self sufficient standpoint. When one looks at the madness of the US and the EU where freeloader bankers run and ruin the economy, where corrupt central banks print more debt onto future generations and where all rationality and sustainability has left the room… Cuba is a beacon in front of all of this. I think the most humiliating lesson they have thought the world (And more importantly the US) is that you can provide free and excellent healthcare despite being bullied by exterior forces. Cuba is particularly interesting in the case of Greece with a similarly (but with no embargo!!!) crippled economy, they could really learn alot from Cuba who is also blighted by a heavy civil service.
I love the final sentence.
“I probably shouldn’t say this, since I have some good friends who are film critics, but I don’t think movie reviewing is a very high calling.”
Roger Simon, screenwriter and novelist. He’s writing about the Oscars, and the whole jamboree around films that seems to take place around this time of year. The focus of his article is about the film Lone Survivor, which he believes is likely to be overlooked on account of its celebration of US military bravery, which is unlikely to connect with the sort of folk that run Hollywood.
For what it’s worth, the films I have seen and enjoyed over the last 12 months or so in an actual cinema are Skyfall, Rush, Margin Call, Gravity and Les Miserables. Daniel Bruhl’s portrayal of Formula 1 racing driver in Rush is the best acting I have seen in years.
I wonder what Roger Simon makes of restaurant reviewing?
A recent essay by Heather Macdonald in City Journal is getting lots of attention. Her piece was on the narrowing horizons of those who seek to teach the humanities in our places of higher learning. She ruffled feathers, and wrote this zinger of a response to one of her critics. Here is an excerpt:
…in contrast to the narcissism of today’s identity studies, the humanist tradition was founded “on the all-consuming desire to engage with the genius and radical difference of the past.” The Renaissance humanists were attracted to Classical Rome precisely because it differed so much from their contemporary Rome, with its papal intrigues and corrupted Latin; they were acutely aware of historical change and developed the seminal methods of textual scholarship to overcome the effects of time on historical and literary sources. It is instead the contemporary identity theorist who lacks an appreciation for the specificity of the past, determined as he is to expound on his own or others’ victimhood rather than lose himself in a world that may not mirror his narrow obsessions.
And that surely is the point. Western civilisation was reinvigorated when the lessons and musings of the Ancients were rediscovered. So much so that the “Grand Tour” was considered part of an educated person’s life, albeit only one that the rich could then afford. True progressives should want, and have wanted, this sort of grand tour of the intellect to be made available to all. No educated person would pass through life ignorant of Cicero; Aristotle, Marcus Aurelius or Lucretius. Instead, however, some of today’s educators would happily Balkanize us all inside narrow, self-regarding “victim groups”. (This is not just a fault of the academic Left, by the way – there are variants of this on the hard right, as far as I can see, when such folk fret about the impact of “alien cultures”).
Tim Sandefur also has comments on this topic:
This is true in other arts, too. There’s good poetry, sculpture, painting, and music out there, but the artistic elite—indoctrinated in postmodernism and identity politics—largely ignore those who produce it, on the grounds that it appeals to the common man and is therefore “commercial” (i.e., capitalist; i.e., evil) or “irrelevant” because it does not express the identity-politics agenda that is acceptable within that elite. This might at first seem paradoxical, since the political roots of this movement are in Marxism, which claimed to reject class divisions and to create a universal-humanity state. But just as Marxist societies become rigidly hierarchical—with a privileged nomenklatura on top and the faceless mass of disposable proles below—so in the art world, there is an elite of aesthetic correctness…and the consumers and consumer-friendly artists who are ignored when they are not ridiculed. Marxism was and remains a disease of the elite. Based on contempt for bourgeois society and bourgeois virtues, it has never recognized that these virtues are actually the desires of all mankind. Beauty is the most fragile of bourgeois virtues. It is always thought the most disposable by leaders with more militant goals.
I corrected the name of the publication to City Journal. My goof.
“…you’d have to have a heart as cold and unmovable as Commonwealth Bay ice not to be howling with laughter at the exquisite symbolic perfection of the Australasian Antarctic Expedition ‘stuck in our own experiment’, as they put it. I confess I was hoping it might all drag on a bit longer and the cultists of the ecopalypse would find themselves drawing straws as to which of their number would be first on the roasting spit. On Douglas Mawson’s original voyage, he and his surviving comrade wound up having to eat their dogs. I’m not sure there were any on this expedition, so they’d probably have to make do with the Guardian reporters. Forced to wait a year to be rescued, Sir Douglas later recalled, ‘Several of my toes commenced to blacken and fester near the tips.’ Now there’s a man who’s serious about reducing his footprint.”
And this:
Big Climate is slowly being crushed by a hard, icy reality: if you’re heading off to university this year, there has been no global warming since before you were in kindergarten. That’s to say, the story of the early 21st century is that the climate declined to follow the climate ‘models’. (Full disclosure: I’m currently being sued by Dr Michael Mann, creator of the most famously alarming graph, the ‘hockey stick’.) You would think that might occasion a little circumspection. But instead the cultists up the ante: having evolved from ‘global warming’ to the more flexible ‘climate change’, they’re now moving on to ‘climate collapse’. Total collapse. No climate at all. No sun, no ice. No warm fronts, except for the heaving bosoms in Rajendra Pachauri’s bodice-rippers. Nothing except the graphs and charts of ‘settled science’. In the Antarctic wastes of your mind, it’s easier just to ice yourself in.
Mark Steyn, who, I am glad to see, is back at the Spectator. The whole article is glorious. I must admit when I first read about this group of folk who, no doubt hoping to confirm their AGW warnings, got trapped in the Antarctic ice in that region’s “summer”, I thought of the expression “Ship of Fools”. It has been used quite a lot. Talking of that title, there’s a great article under that title about a trip by Leftists to the Soviet Union by the great P J O’Rourke. Reprinted in his book, Republican Party Reptile.
“A decade or more ago, I used to have conversations with journalists who reflected that their industry’s business model was collapsing, but who somewhat sheepishly hoped the collapse wouldn’t come until they reached retirement age. Now I have the same kind of conversation with academics.”
– Glenn Reynolds, Mr Instapundit himself.
“With legal property, the advanced nations of the West had the key to modern development; their citizens now had the means to discover, with great facility and on an ongoing basis, the most potentially productive qualities of their resources. As Aristotle discovered 2,3000 years ago, what you can do with things increases infinitely when you focus your thinking on their potential.”
– Hernando de Soto, The Mystery of Capital, page 50.
Tax evasion does not, of course, whatever Ritchie says, cost the world anything. We are still a closed system. That less money goes to governments does not mean that that money ceases to exist. It still gets spent or invested somewhere or other. Indeed, dependent upon what happens to that money, and how badly the government that didn’t get it would have spent it, tax evasion could, conceivably, result in an improvement in the human condition. But even leaving aside such an extreme (for example, someone takes the loot from tax evasion and invests it in a malaria vaccine, as opposed to the British Government which would have used £10 billion to build an NHS computer system that does nothing at all) it’s still true that tax evasion does not mean a loss for the world. Only a different distribution of the cash.
– Tim Worstall
The “Richie” he refers to is Richard Murphy, a self-styled campaigner against offshore financial centres, state-supporting socialist and champion of a fascistic-sounding concept, the “courageous state”.
One of his standard lines is attacking firms for obeying the letter of the law by registering in low-tax locations, such as, say, Luxembourg (a member of the European Union) and claiming that this is wicked, thereby demonstrating a strangely elastic concept of what is considered legitimate business practice. He is taken quite seriously on parts of the left, so I hear, and if we have another Labour-led government, he might be influential. Come to that, some of his ideas are even taken quite seriously by the Tories, so the partisan point should not be pressed too far.
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Who Are We? The Samizdata people are a bunch of sinister and heavily armed globalist illuminati who seek to infect the entire world with the values of personal liberty and several property. Amongst our many crimes is a sense of humour and the intermittent use of British spelling.
We are also a varied group made up of social individualists, classical liberals, whigs, libertarians, extropians, futurists, ‘Porcupines’, Karl Popper fetishists, recovering neo-conservatives, crazed Ayn Rand worshipers, over-caffeinated Virginia Postrel devotees, witty Frédéric Bastiat wannabes, cypherpunks, minarchists, kritarchists and wild-eyed anarcho-capitalists from Britain, North America, Australia and Europe.
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