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.
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I wrote these thoughts on my Facebook page yesterday, and I have taken a few elements out and added others. Anyway, let me know what you think:
The State’s share of the total economy continues to rise, putting even more pressure on those who are still here, working, building business, etc. There are one or two decent elements in it (stamp duty suspended on new share listings in London) but the general direction is bad. Unfortunately, given the reluctance of backbench Labour MPs to accept any meaningful welfare reforms, the total public spending bill will continue to rise. So next year we could have more of the same. That means more emigration of young, ambitious people to lower-tax places such as Dubai, Australia (relatively), etc. The tax base will contract.
One element in particular – the so-called “mansion tax” levy on high-value properties – bothers me not just because of the specifics (it will gum up the real estate market, and thresholds are bound to be frozen, drawing in more over time), but because of a principle.
If I own something that is valuable, why should I pay tax on it purely for that reason? Does the imposition of such a levy equate to the State acting as a landlord, demanding a rent? I can understand the point that a property that is valuable partly because of state action should therefore bear some tax (this is the argument for land value taxes or even council taxes, although LVT is problematic); there is also some sense in taxing property owners to pay for local services (back in the 19th C, only freeholders could vote in elections, which meant they had a vested interest in frugal government).
But taxing something that is worth X, and purely for that reason, is punitive. It also means that the asset-rich/cash-poor issue arises. Some people will need to sell, or at least downsize earlier than they perhaps wanted. Some folk might rent out a room to a tenant, or take out a second mortgage to find the cash. That could have a cascade impact on property prices, perhaps undermining the point of the tax. But maybe that is the point of this tax: it is designed to push property values down. And ironically, that will mean that on death of the owner (s), the haul in inheritance tax will be lower than otherwise.
If you own your home – you have paid for it fair and square, then it is yours. Period. A tax puts the State in the position of a sort of supreme landlord.
I realise that some people will say that there is a generational wealth injustice issue here, because lots of younger adults cannot afford to buy or even rent a decent place. That’s a genuine issue. The solution, broadly, is to free up the planning system, and control net immigration. Another factor is that we must stop artificially holding down interest rates, which has enriched some people with large homes, particularly if they are leveraged.
In some ways, the situation today is the long-drawn out consequence of the 2008 financial bust and a decade-plus of very low interest rates.
I saw a few people on other social media forums saying that objectors should stop bellyaching and pay up. Apart from the oafishness of this sort of response (“do what you are told!”), it ignores the principle of absolute property ownership. Another objection I’ve seen is that lots of people have to downsize, so those affected can do so. However, this is not that easy. Who’s going to buy, particularly when stamp duties are high and taxes in general are crimping growth? Underlying liquidity in the UK housing market is weak and unlikely to improve fast, although it might pick up a bit. Some owners might rent out part of their home to make a bit of cash to cover the tax, but not all such homes are easily changeable for that purpose, and rental income is now taxed anyway. Even so, I would expect some of this to happen in the years before the measure is hopefully repealed. The new tax will not come in immediately – and might get snarled up as the general election nears (it must be held by July 2029).
Of course, people downsize their property for various reasons: their children flee the nest; people want a smaller place to look after, unlock value and buy a holiday home, travel, invest in a business or hobby, etc. it’s natural and normal. But it’s not the State’s role to force the pace on this, to create a sense of duress.
The levy on high-value homes is a form of wealth tax. Even someone who is generally favourable towards the UK government, Dan Neidle, says they are a really bad idea.
Of course, I don’t need to spell it out to the sensible Samizdata regulars that what is wanted are taxes that are as low, flat and simple as possible.
Final random thought: property taxes could be defended in the past when only freeholders could vote in elections, and they tended to have an incentive to vote for stuff that would protect the value of what they had, such as sewage, water supply, electrification, parks, amenities, law enforcement of various kinds, and so on. I sometimes hope, however, naively, that we could bring such an approach back. Voting ought to involve some beneficial ownership “buy-in” to one’s neighbourhood.
Magatte Wade is an African anti-poverty activist. No, not like you’re thinking – she’s an actual anti-poverty activist. In fact her chosen term to describe what she does is “prosperity activist”.
In a tweet made yesterday, she wrote,
https://x.com/magattew/status/1986537994984058913
The best way to keep people poor:
Convince them their poverty is someone else’s fault and only the government can save them.
I think that is true.
“Victims petrify politicians”, writes “Bagehot” in the Economist. (Alternative link here.) “They are apex stakeholders. Normal rules for decisions—risk, cost, proportionality—are thrown away when they are involved. What if a headline suggests ministers snubbed victims? Write the cheque. Civil servants, always cautious, become cowards. Campaigners know this. The unedifying spectacle of a grieving parent wheeled in front of cameras to push a particular policy, whether limits on smartphones or ninja swords, has become a political trump card.”
“Has become”? One of my few criticisms of this admirably unaccommodating article is that it talks as if this development were new. That voters and hence governments cannot bear to disagree with a victim was already old news in the days when the cheques being written really were cheques. It was an established political pattern in 2001 when I wrote a piece for the Libertarian Alliance about the reaction to the gun massacre at Dunblane.
. . . nowadays we give the bereaved parents at Dunblane, the survivors of rail crashes, and similar groups both the license to say anything due to the distraught and the intellectual consideration due to experts. They can’t have both. Not because I’m too mean to give it to them, but because the two are logically incompatible. The press and public have handed power to those least able to exercise it well.
(Alternative link here.)
Bagehot continues:
Trade-offs are ignored when victims campaign. Martyn’s law, named after a victim of a suicide-bombing at a concert in Manchester in 2017, requires any venue that can hold more than 200 people to have an anti-terror plan, even if it is a village hall. It is likely to cost businesses about £170m ($225m) a year to comply and bring about £2m of benefits, mainly from lower crime. A careful balancing of interests is close to impossible if a victim’s mother is involved. “This would not have happened without your campaigning,” said Sir Keir at a meeting with Martyn’s mother, rightly.
The word “rightly” is not here a term of praise. “Martyn’s Law”, like nearly every law named after a victim, is a bad law that should never have been passed. But the blame for it should not fall on Martyn’s mother. God knows she never wanted to be labelled “Victim’s Mother” on the chyron. She never wanted to be in a position such that her opinions on measures to take against terrorism were of interest to anyone. She never sought to be a lawmaker; never claimed she would be any good at it. The man who should be blamed did.
In the US the time elapsed between ‘Defund the Police’ Actually Means Defunding the Police, Yes, We Mean Literally Abolish the Police until Ha Ha, Of Course We Didn’t Really Mean It Like It Sounded was about a year.
The Green Party of England and Wales leaves lumbering American lefties standing. PoliticsHome reports,
The Green Party has voted to make party policy a motion that seeks to “abolish landlords”.
The motion titled ‘Abolish Landlords’ was supported by a large majority of members at the party’s conference in Bournemouth on Sunday.
The motion has now become party policy, though leader Zack Polanski is not obliged to adopt the specific wording.
On Friday, PoliticsHome reported that the policy motion was being put forward, which sets out five steps the Greens would take to outlaw landlords.
Starting with rent controls and abolishing Right to Buy, a future Green Party-led government would also tax landlords via business rates on Airbnbs and double taxation on empty properties.
Under the proposals, the party would also end Buy to Let mortgages and give councils the Right to Buy when landlords sell properties, when the property doesn’t meet insulation standards, or when a property has been vacant for more than six months.
Carla Denyer, Green MP for Bristol Central, sought to stress that despite the motions “eye-catching” title, “it does not actually ‘abolish’ landlords”.
Neat. If the Greens get into coalition with Labour, they can say while introducing this policy, “Too late to complain now. It was clearly stated to be our policy back in 2025.” And when the policy goes the same way as every other attempt at rent control (as even they have some inkling it will), they can say “Doesn’t count, ‘coz we had our fingers crossed.”
“The legitimacy of altering social institutions to achieve greater equality of material condition is, though often assumed, rarely argued for. Writers note than in a given country the wealthiest n percent of the population holds more than that percentage of the wealth, and the poorest n percent hold less; that to get to the wealth of the top n percent from the poorest, one must look at the bottom p per cent (where p is greater than n) and so forth. They then proceed immediately to discuss how this might be altered. On the entitlement conception of justice in holdings, one cannot decide whether the state must do something to alter the situation merely by looking at the distributional profile or at facts such as these. It depends upon how the distribution came about.” (page 232)
– Anarchy, State, and Utopia. Robert Nozick, First published in 1974.
I wonder if any of the leaders of today’s political parties in the UK have read it, still less understood the profound way that the late Harvard professor eviscerated egalitarian “patterned” ideas of justice more incisively than arguably anyone else, before or since. Somehow, I doubt they have. In this day and age of talk about wealth taxes and other horrors, Nozick is well worth reading again.
“…there is surely no doubt that politics has a bitter tone, a harsher edge, a public unpleasantness that occasionally spills over into crisis or just onto the streets. Why is this so? It’s nothing to do with social media. It’s nothing to do with “populism”. It’s none of the fashionable solutions. It’s simple. Politics is more polarised than ever before because more is at stake in politics than ever before. When is a lot is at stake, people argue more loudly. They are less willing to accept defeat. They want their views pressed hard.”
– David Frost, Daily Telegraph (£)
His article is entitled “Blame the Big State For Our Polarisation Crisis.”
The Guardian has up a panel discussion with the title “Labour is in a mess. Is there anything Starmer can do to turn things around? Our panel responds”. One of the panellists is Ann Pettifor. She writes,
The Bank lacks tools and legitimacy to tackle inflation. Labour should transfer that role to a new Inflation Control Office, which could use taxes, price controls and even rationing to lower inflation. Then Reeves should change the Bank’s mandate, radically: to support the economic policy of the government, not the City.
As a means to “save” Keir Starmer’s government, I am not convinced by the rationing bit. True, price controls are nearly always popular – until tried. But the people’s cry of “We want an Inflation Control Office to stop us buying things!” is heard only in Ann Pettifor’s dreams. I would advise less rich food late at night.
I came across this interview with US academic Cass Sunstein, whose views on behaviouralism – including the area known as “behavioural economics”, have been immensely influential on governments in the past 25 years or so.
The idea of “nudging” people via policies to doing certain things (auto-enrolment in savings for retirement, messaging about the dangers of certain lifestyles, etc) has become a default piece of wisdom. It accords with the tendency of a managerialist political class that sees the wider population as only partially rationally self-interested. Sunstein, as shown in this video (conducted by the Hoover Institution in the US) notes how he disagreed with the Chicago-based economics folk such as Nobel Prize winner George Stigler and others about the idea of rational expectations. The behavioural school thinks that human motivation is not like that; in the financial services space, for instance, there is a school of thought known as behavioural finance that looks at crowd behaviour in times of stock market booms, busts, etc. And there are temptations to try and “fix” these behaviours.
I see a few dangers, and maybe Sunstein does too now (it is worth seeing the whole video). For example, it is easy to see how a government, even if democratic and accountable, can grow into a monster if driven by even well-meaning people that think that people aren’t necessarily fully rational, and need to be nudged, or guided, into doing the “right thing”.
This helps explain, in some ways, why the “administrative state” is what it is. It would not have got so big had it been a clearly evil project. Most people who drive all these changes and programmes think they are doing the right thing. Some might be bad but most aren’t. And yet here we are, with a bloated set of governments in the West, with skyrocketing debt and all the rest of it.
I think a major flaw in behavioural economics is the hubris of the “nudge” advocates about how they think they can handle all this. And as we have seen, politicians who lean towards tax-and-spend policies love some of these ideas because they can sit alongside what they want to do anyway. I am not even sure it makes sense to describe these as “liberal” because some of this “nudge” stuff does not seem to accord with ideas about treating people as individuals who need to be held accountable for their actions.
It is arguable that the “nudge” crowd hew to a form of soft determinism, or maybe “soft paternalism” – the notion that we are not really volitional creatures with agency, but buffeted by internal and external forces, and often emotional first, rational second. But even if that latter point is true, a rational person with choice-making capacity can realise that he or she is prone to making unwise/foolish choices, and like Odysseus who lashed himself to a mast to avoid being tempted by the Sirens, adopt rules and protocols to not screw up. (I know an alcoholic who avoids parties and certain events to avoid getting into trouble, to give one example. Another might be a stockbroker who turns off the noise of the daily news and makes better investment decisions over the long run.)
Self-knowledge is the beginning of wisdom, and all that.
“Mr. Merz is doing what no one else in the top ranks of Western politics seems willing to do, which is broach the fundamental dilemma of the modern West. Nations have built welfare and entitlement states that are so large they have outstripped the ability of slow-growing economies to pay for them. Yet because the entitlement cushion is so broad and reaches deep into the middle class, it has become nearly impossible to reform.
This is true among conventional politicians of the left and right. But it’s also true of the supposed radicals of the populist right. From Marine Le Pen in France to the U.K.’s Nigel Farage, the AfD in Germany and Donald Trump, the populists dodge difficult reforms of the broken welfare state.”
– Wall Street Journal ($) editorial, reflecting on the recent statements on the German welfare state by the country’s Chancellor, Friedrich Merz.
Following from my post of yesterday about the attacks on inheritance, and attitudes around equality more generally, I took another look at the Lewis Goodall attack on inheritance. Goodall, a journalist, argues that he is in favour of capitalism – he wants to cut income taxes – and therefore he is not just some malcontent Leftie who wants to hit people on the head with tax.
There is also a sort of intergenerational justice argument going on here. Quantitative easing and other forces have inflated asset values; Boomers have, to some extent, enjoyed final-salary pensions and been able to retire in their early 60s, if not before. Most Gen X (that includes me), Millennials and the Zs will have to work for longer. (Given hopefully rising healthspans, that might not be a bad thing, however.) True, those who were young adults in the 50s, such as my Dad, had to do military service, and there were other nasties to deal with that we younger adults did not have to handle. But still, there’s a sense of grievance that those who had “never had it so good” got to have the best of times, and their offspring have got the dirtier end of the stick. That’s certainly part of what is driving some of this anti-wealth/inheritance narrative.
Switching gears here, there are structures that people have, over the centuries, sought to form to stop inheritors becoming obnoxious and lazy, and also to hold families together so that they don’t fall out, as in the HBO series, Succession.)
For years, in my day job, I have wrestled with the trend of a multi-trillion dollar/equivalent transfer of wealth from the Baby Boomer generation. In the wealth management sector, particularly in the US, there’s a whole field of advisory work that goes on to help guide ultra-wealthy families about how not to spoil their children. The debate is often framed in the question of “how much is too much?” in transferring wealth.
We have seen the rise, in their thousands, of what are called family offices. These are structures – operating around the world – that act as a sort of trusted point of control for a family’s private wealth. FOs operate in North America, continental Europe, the UK, Singapore, United Arab Emirates, Australia, and other developed countries. (I predict a big expansion in India, as many businesses there are family-owned.)
Sometimes FOs emerge from the executive suite of a family-run firm; they run the liquid wealth of a family, and that becomes a sole focus once a firm is sold or floated on a market. FOs are designed to hold families together – they even have their own “constitutions” and governing procedures – and create a sort of structure through which families handle payments to different members, run investments, deal with philanthropy, personal and cybersecurity, bill payments, and more. Once obscure, the family office industry is a large, multi-trillion sector. The original FO was, arguably, founded by J D Rockefeller, the oil tycoon. Today, the likes of Michael Dell and Bill Gates have them, as do the founders of Google, the governing family of Walmart, Home Depot, shipping dynasties in Denmark, Mittlestand firms in Germany, and many more. (Germany has many family offices, most of which are obscure.) Families that are far less wealthy than the foregoing can create family offices, although they aren’t economically efficient to run if assets under management go under $100 million.
Another structure for we lesser mortals is the trust. These are creatures of the English Common Law, and are extensive in the UK, Australia, New Zealand, Singapore, and biggest of all, the US.
Trusts remain an incredibly useful tool for ensuring orderly transfer/control of assets by families. If people such as Lewis Goodall are worried that inheritors become spoiled brats and lose a work ethic (if that is his genuine concern, it is a fair one to have), then trusts can, or could, be structured so that a beneficiary only receives payouts from it if certain terms and conditions are met.
Governments sometimes try and clip the wings of trusts. In 2006, UK Chancellor of the Exchequer Gordon Brown moved against the trusts sector, on the specific issue of inheritance. The use of trusts in the UK has, on balance, shrunk, but they retain their uses.
If people fear that inheritance saps the ambition and energy of inheritors, then trusts and other structures can be set up by parents and others to avoid that from happening. In a way, this sort of discussion is not so different from those that come with Universal Basic Income – what happens if we turn the entire working-age public into a bunch of loafers?
To some extent, considering the impact of inheritance on inheritors – or UBI recipients – are empirical questions, based on an understanding of incentives, behavioural issues, values and so on. The morality of it is a different one. UBI is funded via tax – a coercive move of money from the individual to the State. Inheritors of legitimately acquired wealth are receiving something that was legitimately held and transferred by consent of the transferrer.
On a friend’s Facebook page I left the following comment about the claim of the writer Abi Wilkinson (in the Guardian!) that inheritance should be confiscated by government to fund the UK’s welfare state. What could possibly go wrong?
I wrote:
The hostility to inheritance also comes from a mistaken sense of fairness. As Robert Nozick argued in Anarchy, State and Utopia (I quote from memory), people wrongly think life resembles an athletics race, where the racers compete to hit the finishing line. As a result, those “lucky” athletes endowed by nature/god whatever with stronger muscles etc must be handicapped by having weights in their shoes, for example. Just as a child of rich parents must be deliberately held back to give poor kids a more “fair” chance of winning. But as Nozick said, life isn’t like that. It is about people exchanging goods, services and ideas with one another. There’s no fixed end-point to which we are all racing.
Also, the idea that there is some “prize” that humans compete for implies that someone or some entity has created that “prize” in the first place. But that’s smuggling in a sort of communitarian assumption into the actions of individuals. In an open society, the prizes on offer are varied and multiply constantly.
I should add that the second section of Nozick’s renowned book dissects and ultimately rejects forced redistribution for egalitarian or other forms of “patterned” notions of justice, and he robustly defends what he calls an “entitlement” concept of justice.
One of the approaches that the late Prof. Nozick used was the thought experiment, such as the example referenced above about a fictitious athletics race in which the entrants are hampered/favoured to make the race more “even”, and then assuming that society in general should be like this. A race, held by people who know the rules and seek to abide by them, is not like an open society. “Open” is the key word here: there is no single end to which persons are heading, such as winning the race.
And yet a lot of the metaphors one comes across around discussions around equality, including equality of opportunity as well as outcome, seem to borrow, perhaps unwittingly, from this “race competition” worldview. To give another example, I remember reading some months ago about a university professor (Warwick) who suggested that when parents read stories to their children, this is a form of privilege. This also plays to the idea that life has a fixed end-measure of success, so that anyone giving a value to someone else is giving the latter an unfair “head start” on someone else. It would require a State to exercise totalitarian control of our actions from the moment we wake up to go to sleep lest our actions unfairly advantage/hamper someone in the “race” they are considered, by this worldview, to be on. (It also, by the way, shows that today’s Higher Ed. is full of certifiable fools and worse.)
On a related note, Thomas Sowell is good on this sort of topic. His book, A Conflict Of Visions, is an example.
Update: The UK journalist Lewis Goodall – he appeared on LBC the other day – says inheritance should be confiscated. No ifs, no buts. His argument is that no-one should have any wealth they haven’t “earned”. But that takes one down some very murky philosophical paths. We did not “earn” the good fortune to have been born in the current era, with its modern healthcare, high-speed travel and technical marvels. We could have been born in the Dark Ages, for instance. We did not “earn” this or that. We haven’t “earned” our genes, or for that matter, been “punished” for them, either. They just are. An inheritor is entitled in the narrowest sense of that word to X that is handed down because the person handing it down was the legitimate owner of it.
As Andrew Lilico in the Spectator argues (paywall, sorry), taxes on inheritance are attempts to block people from using their property as they choose. But what’s the point for many people in amassing significant wealth if they cannot transfer it to their nearest and dearest? Also, if the likes of Goodall claim that they are for capitalism, they cannot decide that this or that form of wealth is “unearned” and have the State seize it. The acquisition and transfer of property is an embedded feature of a free society.
As ever, F A Hayek was excellent on this sort of topic. See “Equality, Value and Merit”.
News comes to me that an advert, a video in the style of a musical, for something called Coinbase, which I understand is some form of crypto set up, which is why the advert has been banned, and about which I know nothing more, (and this is not advice or recommendation on financial matters) is not permitted in the UK by the regulator, OFCOM. Not that I doubt that OFCOM are interpreting the regulations correctly. That the advert might be termed mildly satirical would be a fair description, and take a look at the shop names. It’s almost an updated Oliver Twist. Has it been made by people familiar with modern Britain? I would say so.
As Burns said in his ode ‘To a louse’:’O wad some Power the giftie gie us / To see oursels as ithers see us!’.
Thanks to comedian Andrew Lawrence for the tip.
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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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