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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British taxpayers it seems, are not very clued up about the upcoming raids on their wallets, according to this article.
A recent survey showed a high number of ordinary investors do not know that dividends paid out on equity ISAs (tax-free plans which are a bit like 401K plans in the US) will be liable for tax from next April. Brilliant. The government launches a tax-free investment scheme to get us folk to save and hey presto! – whacks us for tax a few years’ later!
The background to all this, of course, is the ongoing slow-motion car accident that Gordon Brown’s stewardship of the British economy is beginning to resemble. Brown has enjoyed about four to five years of a relatively muted press, outside of the most partisan ranks, a flourishing economy coming off the back of the 1990s boom and the Tory reforms.
Now it is going horribly pear-shaped. It would of course be grossly unfair to pin all this on the dour-faced Scot, but his reckless jacking up of spending last year, even while stock markets were cratering, has proven a gross folly. His star is waning. My guess is that if PM Tony Blair does fall because of the Iraqi crisis – and I pray he doesn’t – then it is far from certain that Brown will inherit the keys to 10 Downing Street.
But lest I be accused of partisanship (perish that thought), I should add that the Tory Party’s MPs, such as shadow Chancellor Michael Howard, have not exactly raised the decibel count over such matters as the tax on savings or else. The party is still seemingly wedded to the idea that if they mention tax cuts they’ll be accused of letting Granny starve in the streets.
If any Tory party readers off this blog want to correct me on the above, I’d be delighted to see it in the comments section.
The naval might of Switzerland has prevailed. A country with all the maritime traditions of Outer Mongolia, Iowa and Chad has prevailed where 152 years of British endeavour have failed. The America’s Cup, a trophy given by Queen Victoria to promote yachting in the English Channel, and which has never been won by a British team has now changed hands from the USA (1851-1983 [No, that isn’t a typo!], and 1988-1995), Australia (1983-1988), and New Zealand (1995-2003). And now Switzerland.
The main priviledge for the winner, apart from collecting a silver trophy named after its first winner, the schooner America is to get the right to host the next challenge, which is now expected to be in 2007. As this has to be on seawater, there is a little problem. Switzerland is about 450 miles from the nearest coastline. So the defence will probably take place in the Mediterranean or on the Altantic coastline of France.
It’s all very jolly for Ernesto Bertarelli the Swiss owner of the Alinghi team, for Russell Coutts the New Zealander skipper hired to beat his former team mates. So why no British success. Until the 1970s, no one else but the British even challenged the New York Yacht Club. The explanation I offer explains why Italian and now Swiss challengers have emerged, despite no obvious historical tradition for this sort of contest. → Continue reading: “England, a seafaring nation…”
Do economists have much to tell us about war, terrorism, interventionism and the pros and cons? It strikes me that there is a bit of a dearth of stuff on this area from the libertarian-orientated economics camp, though I would be very happy to stand corrected.
After all, if we are going to invade Iraq as part of a grand strategy to bring liberalism, prosperity and free internet access to the Middle East, does this not in a way smack of the kind of hubristic utopianism which the likes of F.A. Hayek warned against when applied to socialism and central planning?. Do issues of defence and foreign policy inhabit seperate intellectual universes from business?
Discuss.
The best known free market economist in Britain after World War II was not F.A. Hayek (who taught mainly in the United States and then Germany), but rather John Jewkes of Oxford.
John Jewkes was the main voice opposing government economic ‘planning’ and the endless taxes, spending programs and regulations of modern Britian.
Jewkes opposed statism in many ways – he tried to show students and fellow academics some of the errors of statist policy in his university work, he sat on official commissions (and tried to make their reports less insane), and he wrote a series of articles and books for the layman. Such books as Ordeal by Planning and The Sources of Invention.
John Jewkes was, in many ways, the best British economics had to offer in the post war world – and he shows that British economics was dying as a serious discipline. How can I say this? Well consider the following.
“It would be idle to deny that the White Paper was a ‘Keynesian’ document. Keynes was, after all, the major prophet of the idea that governments could, by increasing aggregate demand, reduce unemployment. Some of those who collaborated in the preparation of White Paper had been his pupils or had long been his followers. Those who resisted some of his ideas before the war had later gained an enormours respect for and confidence in him as they watched, and collaborated in, his superbly dextrous negotiations with the American Government and its economic officials. Those who had perhaps been most suspicious of the pre-war ideas of Keynes (I was among these) had seen at first hand the horrible consequences of the pre-war high rates of unemployment in the depressed areas, especially among juveniles and were only too ready to concede that, if the doctrine of the White Paper could be made to work, the post-war world might be a safer and more humane place”.
The Government and Economic Policy: A Defence of the White Paper on Employment Policy 1944, page 42.
Essay Three of John Jewkes’ A Return to Free Market Economics (Macmillan Press 1978).
My first concern here is not with the the idea that ‘increasing aggregate demand” (government issuing more funny money) is a good idea (absurd though that is), but the total lack of interest in basic economic theory that John Jewkes shows. → Continue reading: The death of economics in Britain
I want to know what happened to ‘going overland to India’ to seek spiritual fulfilment and alternative lifestyles? Perhaps the Indians have decided to put a stop to all that. Can’t say as I blame them.
However, that means that the Anti-Everything Brigade has been unleashed in droves all over the rest of the planet like deranged locusts. The Swarm du jour has now descended upon Porto Alegre in Brazil where this hotch-potch of losers, whiners, nutjobs and assorted marxoids, and which now dubs itself the (snigger) ‘World Social Forum’ is in a gigantic snit about not being taken seriously.
Mercifully, they are not taken seriously. Except by the BBC (sorry, the ‘World Media Forum’) which has published a glowing full-page tribute:
“As soon as you arrive your senses are overloaded with colourful causes and campaigns all competing for attention.”
Especially your sense of smell.
“It does not aim to promote one view but celebrate diversity.”
Great can we come along to sing the praises of capitalism, then?
“If the businessmen and political heavyweights from Davos were transported to Porto Alegre – slogan “another world is possible” – they really would believe they were on a different planet.”
Yup.
“Where else would a gay rights march be followed moments afterwards by a pro-Palestinian protest?”
Not in Palestine that’s for sure.
“Or landless people’s movements from Latin American, Asia and Africa be able to sit round a table and compare notes?”
Landless but not flightless apparently. Exactly where do these starving peons get their travel money? And precisely what ‘notes’ do they compare?
“Hey, Miguel, do you have any land”?
“No”
“Neither do I. Okay, meeting adjourned.”
“Of course, conflict and disagreement are inevitable but that is half the fun.”
What’s the other half of the fun?
“On the first day of the Forum the people took to the streets for an anti-war march.
As Brazilian government ministers walked with protesters there was an air of great hope spreading to campaigners from all across the globe.”
Another feature of the reporting of all these events is this kind of semi-messianic euphoria. They’re forever telling the world how excited and happy they are. Is it jet-lag, I wonder?
President Bush has announced a proposal to abolish the Federal tax on dividend payments.
This proposal is defended partly on the grounds that reducing taxation (i.e. letting people keep more more of their own money) is generally a good thing, and partly because taxing dividends is ‘double taxation’ (the money that companies make already being taxed via Federal Corporation tax – which is actually quite high in the United States).
However, there is another factor to be considered. Financial institutions such as Pension Funds do not tend to be taxed as highly on their share holdings as individuals are (if indeed such trusts are taxed at all), so the effect of taxing individuals on their share holdings (not just the dividend tax but capital gains tax) is to concentrate a higher and higher percentage of stock into the ownership of financial institutions.
In short a group of hired managers in financial instructions ‘owning’ corporations managed by another group of hired managers. This may well be unhealthy (with a ‘magic circle’ of managers having developed, who tend to sit on each other’s ‘remuneration committees’ and lobby for State and Federal laws to make takeovers [if they are a threat to managers] more difficult and …)
In Britain the government also considered the difference between the regime of personal and financial institution taxation a problem. However, here the government responded by increasing the taxes that the pension funds (etc) had to pay – thus undermining further people’s incentive to save.
For all its many problems the United States is still a better country than Britain.
The dependably clueless Prince Charles wants the state to require tax funded institutions like Britain’s nationalised public health service and state schools to add insult to injury by not even attempting to get ‘best value for your stolen money’… which is to say he wants such arms of the state to be required to buy British farm products even if foreign products are cheaper/better… not only does he say they ‘should’ buy British, but that the government should force them to.
Like most people with socialist & fascist understandings of economics, producers are all and consumers are nothing to Charles. Why will people like him not be more honest and just admit directly that they want productive taxpayers to be compelled by force to prop-up less efficient areas of the economy and they should not be given any choice in the matter.
The Royal Family usefully occupy the same seriocomical niche as the Flag and ‘Hand-on-heart’ pledge of allegiance do in the USA… and like that inanimate object and rote chant, are largely empty of real meaning beyond their warm-fuzzy-glow value. If only we could devise some means of permanently depriving Charles of speech, leaving him only with earnest looks and poses, then the British monarchy could have another couple centuries of seriocomical semi-usefulness ahead of them.
Brian asked if Japan was only pretending to do badly. He seemed to think that there were some grounds for doubting the news of Japanese economic stagnation.
Looking at the World Economic Freedom report I discovered the following interesting figures.
- Income Tax top rates as percentages:
(1st figure 1990), (2nd 1995), 3rd 2000.
Japan 65, 65, 50
USA 33, 42, 42
UK 40, 40, 40
Ireland 58, 48, 42
Sweden 72, 58, 51
OECD average 53, 50, 47
- Corporate Taxes (including regiuonal, state, local etc),
also top rates as percentages: 1990, 1995, 2000
Japan 42, 42, 42
USA 40, 40, 40
UK 30, 30, 30
Ireland 24, 20, 16
Sweden 28, 28, 28
OECD average 34, 33, 31
Note that Japan is consistently higher than the OECD average. Note also that Sweden’s business taxation always was low. The US corporate taxes may be close to Japan’s, but the US economy hasn’t needed tax cuts for the past ten years to stimulate growth.
My conclusion is that Japanese “stimulus packages” are clearly not addressing incentives to produce.
Finally, the overall ranking between 1990 and 2000 is highly revealing:
USA 3rd in 2000, 4th in 1990
UK 4th (2000), 6th (1990)
Ireland 7th (2000), 20th (1990)
Sweden 19th (2000), 26th (1990)
JAPAN 24th (2000), 7th (1990)
Before David Carr wonders how the heck a Labour government pushed the UK up 2 places: 1) independent Bank of England, 2) you should have seen what other governments were like…
A case example of (relative) economic freedom being a precondition for (relative) economic prosperity.
As I have previously, ‘poverty’ is a measure of envy and class hatred Here are some measures that could make poverty worse or better.
One might imagine that importing wealthy people into a country would help reduce poverty: Bill Gates turning up in the United Kingdom with £40,000,000 would increase the average wealth of British inhabitants. In fact this makes “poverty” worse according to poverty-campaigner logic.
Let us imagine a country with nine inhabitants: a, b, c, d, e, f, g, h and i. If a, b, and c have incomes of 100 per year, d has 90, e and f have 50, h has 30 and i has 20, then total income is 540, average income is 60 and the poverty line is 30 if calculated as 50 per cent of average, or 36 if calculated as 60 per cent of average.
The next year Bill Gates arrives with an income of 500. He employs h and i for an extra 20 per year (more than they were getting before). The result is: Bill Gates 460, a, b and c 100 each, d has 90, e and f have 50, h now also has 50 and i has 40. So everyone is out of the poverty level of the year before.
But this is where relativism kicks in: the new poverty line is 52 or 57.2 (depending on the 50 or 60 percent definition). So Bill Gates has not only ‘failed’ to lift h and i out of poverty by giving them jobs that paid better, he has impoverished e and f, who were previously not poor, even though neither e nor f has lost any income.
This tells us the first lesson of tackling “poverty”: no wealthy immigrants must be allowed. In fact all inward investment is bad according to this reasoning. Now imagine that the 1,000 million poorest people in the world (average income 0.01) were to come and live in this country instead of Bill Gates. Also imagine that none of them become billionaires but remain objectively poor.
Total income becomes 10,000,540. Average income drops to 0.01000054 per year. So h with 30 and i with 20 are 3,000 and 2,000 times wealthier than the average, despite no increase in objective income. Also the billion paupers have incomes of 0.01 which is over 99.99 percent of the average, so none of them are “poor”, even though they can’t afford to buy a bread roll.
Note that if half of the billion paupers were to raise their income to the previous average (60), they would be “evil exploiters” of the poor, so would h and i, even if they were to lose 90 percent of their incomes (to 3 and 2 respectively). This means that immigrants who are below the poverty line must be kept there for the sake of “social justice”!
Therefore although all the billion immigrants will starve, they will not die in vain: they will have brought about social justice. A believer in immortal souls who suggested this policy, would be insane but sincere. The problem is that most socialists and social democrats are atheists…
In the British case executing all elderly people aged over 60 who live alone on less than average household incomes would statistically eliminate poverty: either they would be dead, or more likely they would choose to live in groups of two or three and therefore rise towards average household income levels. Executing all students would also have a similar effect. Slaughtering everyone who lives alone would be a guaranteed success in a “War on Want”.
This may appear insanely evil. Yet I have just described the policies of the Cambodian holocaust: Pol Pot really was ‘tackling poverty’.
…about people living in miserable material conditions. It is a measure of relative poverty, or a difference in material goods. This is obviously most useful for the promotion of envy and class hatred. It also allows the glossing over of the twin Marxist errors of the “pauperization of the proletariat” in advanced capitalist economies, and the notion that people have no identity outside their membership of an economically determined class.
It is handy for promoters of class hatred to use ‘poverty’ as an issue. First the relative measure is easy to falsify. It is notorious that in the UK, satellite television dishes appeared disproportionately (in the late 1980s early 1990s) among low-income families before spreading to higher income brackets. On the other hand the only people I’ve ever met who didn’t own television sets in the UK were both in the top 20 per cent of incomes.
What value does one put on television ownership? The price of the set? How does one measure the value of the service provided by broadcasting? What about foreign holidays? If a low-income family travels to Spain for the same relative price as their parents once went to Morecombe on the British coast, are they really no better off?
Taking the measure of a household 60 per cent below the average household I once discovered a cute fraud in the British Household Survey (I’m sorry I don’t recall the year but it was in the early 1990s). “Household” is not the same thing as a house full of people. The bottom fifteen per cent households in the UK in the early 1990s had an average of 1.1 people living in them. The top fifteen percent had over four people living in them. The age distribution was equally revealing. I forget the exact figures, but elderly people and students were the bulk of the bottom fifteen percent of the population. This of course fits with what we know of individual people’s incomes over a lifetime: low-income as a youth, rising income until retirement and a drop in income except where large capital savings have been made.
I calculated that the income per person of the top fifteen percent households was about five times that of the bottom fifteen percent per person households, after taxes and cash benefits were taken into account. Considering that students and elderly people aren’t generally earning salaries, or of they are, these would often be part-time or seasonal, British “poverty” isn’t all its cranked out to be by campaigners for class hatred.
This has intriguing consequences for ways of “tackling poverty”…
More on this subject tomorrow
David Goldstone has discovered that ‘voodoo economics’ is alive and well and living in Broadcasting House in Portland Place, London
Yesterday I discovered that:
The UK has the second highest rate of poverty in the European Union, with 22% in poverty compared to the EU average of 15%. Only Greece is higher. The Scandinavian countries and the Netherlands, with their highly-developed welfare states, have the lowest poverty rates.
Even worse…
The number of people living below the poverty line… is twice as high as it was 20 years ago.
How can this be? Have real incomes not risen in the last 20 years? Has trickle-down failed? Is capitalism not producing more capital? Should I take up socialism?
Well, it turns out that “poverty” BBC-style means anybody with an income below 60% of the median, regardless of the fact the purchasing power of that median has been almost constantly rising. How does the fact some people get richer (in fact most people over the last 20 years) actually make other people somehow poorer?
David Goldstone
Paul Marks points out that it is the spending rather than the taxing which is the root of governments woe
People (not just us evil libertarians) often complain about taxation and there have been many attempts to reduce or at least limit it – these attempts have mostly been unsuccessful.
Few governments tax in order to create piles of money in their store houses – governments normally tax to spend. If we are to limit (let alone reduce) taxation it is government spending that we must fight. Limit one tax and the government will increase another – limit them all and government will borrow, ban borrowing and the fight come back to spending – i.e. (in the end) the fight is about government spending.
As far as I know there is only one State in the U.S. which shows (in its’ laws) a clear understanding of this and that State is Colorado. Colorado has many problems and I would not claim it is the most free market State (although it is one of the smaller government States), but I think that its spending based version of a “Taxpayers Bill of Rights” has, over the few years of its’ history, proved to be useful thing.
In Colorado government spending can only be increased in line with an increase in population or an increase in prices (yes I know there are all sorts of problems with the idea of a price index – but I will not go into that here). This would seem to a be a very moderate limitation – but (as far as I know) there is not another State in the Union that has such a limitations. Over the last few years Colorado has reduced the burden of taxation (i.e total taxes as a percentage of income – not reduced one tax and increased another) and balanced the budget.
The key really is government spending. To convince people that if they want some special benefit from government another benefit will have to be abolished (not just the total spending of the government increased).
In the end the fight has to be about spending. Whatever waffle either side comes out with about the “institutions of a just society” what matters is where the money goes. If we allow people to convince others that government spending is a “good thing” then all the anti tax and anti borrowing campaigns in the world will not save us.
Paul Marks
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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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