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]

How to solve the debt crisis

As most of us are aware the almost all Western governments are living beyond their means. Every year they spend more than they raise and their debts spiral ever upwards. But there is a solution: ask the voters. Here is how it would work:

  1. On his birthday the voter is asked what he would like the government to spend its money – sorry ill-gotten gains – on.
  2. The voter gets to select from the departments of state: defence, interior, health, education etc.
  3. At the end of the month the selections of all the voters who have responded are totted up and government revenues for that moth are divided amongst government deportments in proportion to how many voters have selected them.

At a stroke:

  1. Spending and revenues are brought into line.
  2. Voters cannot complain that the government isn’t spending enough on such and such because it is in their power to do something about it.
  3. If it becomes apparent that a department has too much money (or too little) then that will (one hopes) become public knowledge and voters will change their selections accordingly.
  4. There will no longer be interdepartmental rows over spending. It is taken out of the hands of politicians.
  5. Departments would have a strong incentive to keep waste to a minimum. If it becomes known that they are being wasteful, voters are likely to move their money to a different department.

I can see some objections/issues:

  1. How should voters make their preferences known? In person? By mail? Should the voters get one vote or several? 90% of me wants to spend on defence but 10% wants the money spent on prisons.
  2. War. If a war starts it could take a while for the state to get on a war-footing. About a month but I would guess there would be provision for such an emergency.
  3. Publicity. Humans being humans and politicians being politicians, there will be great competition between departments for voters’ favour. Would there be a danger of advertising budgets getting out of hand? If advertising was banned what else might politicians get up to?
  4. Revenue is lumpy as are birthdays. The government does not raise the same amount every month and birthdays are not evenly distributed throughout the year. This could have some interesting effects.

Down with the hoarders!

Will Hutton: “Farmers have hoarded land for too long. Inheritance tax will bring new life to rural Britain”.

“Inheritance tax springs from the universally held belief that society has the right to share when wealth is transferred on death as a matter of justice.”

It is not universal.

“This is not confiscation, especially if the lion’s share of the bequest is left intact.”

It is confiscation.

“It is asking for a share.”

It is not asking.

When they say the type of future they want, believe them

Someone tweeting under the name of “Lyndon Baines Johnson”, a supporter of Kamala Harris, explains how he would like a Harris administration to deal with technological innovators:

Lyndon Baines Johnson
@lyndonbajohnson
If Harris wins, fairly high on the agenda should be finding new federal contractors so that SpaceX and Starlink are shown the door. -OS
8:05 PM · Nov 3, 2024

For all his grievous faults, the actual LBJ would have known how to describe that proposal in a few choice words. He wanted the Apollo program to succeed.

Samizdata quote of the day – what we “deserve” in our working lives edition

“The necessity of finding a sphere of usefulness, an appropriate job, ourselves is the hardest discipline that a free society imposes on us. It is, however, inseparable from freedom, since nobody can assure each man that his gifts will be properly used unless he has the power to coerce others to use them. Only by depriving somebody else of the choice as to who should serve him, whose capacities or which products he is to use, could we guarantee to any man that his gifts will be used in the matter he feels he deserves. It is of the essence of a free society that a man’s value and remuneration depend not on capacity in the abstract but on success in turning it into concrete service which is useful to others who can reciprocate. And the chief aim of freedom is to provide both the opportunity and the inducement to insure the maximum use of the knowledge that an individual can acquire. What makes the individual unique in this respect is not his generic but his concrete knowledge, his knowledge of particular circumstances and conditions.”

– F. A. Hayek, The Constitution of Liberty, pages 80-81.

With yesterday’s revolting annual Budget statement from the Labour government still ringing in my ears, I thought a bit about how this lot treats ideas of “merit” and what is considered “unearned” wealth. For instance, one aspect of yesterday’s measures from Chancellor Rachel Reeves is to add a deceased spouse’s pension pot to inheritance tax (threshold starts at £325,000); IHT is 40 per cent. Any money paid out from the pension will be hit, subject to certain conditions, at 45 per cent for top-rate taxpayers – an effective rate of 67 per cent. This sort of move stems from the idea that certain people don’t “deserve” to inherit X or Y, and must pay their “fair” share to the Moloch of the State. I urge people to read Hayek’s masterpiece, not least for its dissection, and demolition, of much of the argument put forward about why certain wealth is “unearned”, and why we should be paid according to some social formula of merit. That way totalitarianism lies.

“In many parts of the country the graduate earnings premium is negative”

“In many parts of the country the graduate earnings premium is negative – these local economies are unable to absorb or properly use higher qualified people because of the structure of the local economy.”

– From this essay, “Levelling up: against just “cities and skills”, by Neil O’Brien, who I think is the Conservative MP of that name. I found the link via the trade unionist Joe Allen.

Though I salute Mr Allen’s open-mindedness in linking across the political aisle, I would like to make one observation with which he probably – and his employer the TUC certainly – disagrees: to whit, the fact that there are parts of the country where going to university on average makes a young person poorer is yet another argument against rent control.

Again and again I see the argument that, far from it being a problem that landlords are being driven out of the rental market, it is a fine thing, because landlords selling up will make more homes available. “Home” is a beautiful word, but there are and always will be people who are not looking for a permanent home. Some of this group are students, obviously, alongside those in temporary jobs, those whose work requires them to move frequently – and those who have a choice between staying at home where their degree is useless or moving to some place where it isn’t. A strong rental market allows rural people to try out life in the city, and vice versa for city people. In a society where landlordism is banished and every house is a home, you had better pray that the waiting list to leave your quaint village is exactly equal in length to the waiting list to join it.

As Hurricane Milton makes landfall, a reminder about price-gouging

Price gouging during disasters is good. It saves lives.

Think of it this way. When the hurricane is on its way do you want people to panic-buy double what they need “just in case”, causing the shops to run out? Why wouldn’t they do that if prices are artificially stopped from rising? Wouldn’t it be better if people limited the amount they bought because “it’s so expensive right now”, leaving more available for others?

When the disaster strikes, would you like businesses and individuals from hundreds of miles away to drop whatever they were doing previously and start transporting emergency supplies into the area affected – and keep doing it until there are no more shortages? Would you like factories hundreds of miles away to shift production to whatever the people in the afflicted area need most? You would? Then let them sell their stuff at a higher price than usual.

Samizdata quote of the day – newsflash: George Monbiot is an ignoramus

Why does it work? Because, as it turns out, the profitable level of a fish stock is above the sustainable level. More fish around, less diesel and time used to catch enough to feed the market. Profits are thus maximised at stock levels substantially above sustainable levels. That means more fish to gawp at while maximising profits.

Or, alternatively, George Monbiot has got the neoliberal capitalist attitude to fisheries entirely and wholly the wrong way around. The reproductive rate of money, within that neoliberal capitalism, is more fish in the sea than there are currently. Therefore, having neoliberal capitalism running the fisheries (some to many fisheries perhaps not all) would increase the number of fish to gawp at. Exactly and precisely the opposite of what George is claiming.

The problem is about George. For someone who keeps insisting that he’s just critiquing the neolberal capitalist attitide to the environment he knows fuck all about the neoliberal capitalist attitude toward the environment.

But then that’s such a strange thing in public intellectuals, isn’t it? Ignorance?

Tim Worstall

Samizdata quote of the day – government displacement activity edition

“We have not built a reservoir since 1992 or a nuclear power station since 1995, but we have raised the age of using sunbeds to 18.”

Daniel Hannan, Sunday Telegraph.

On the enduring awfulness of inheritance taxes

Politicians of all stripes like to talk about “sustainability” – although I’ve noticed that some of the enthusiasm for this when it comes to the “green” angle has been dented by rising energy costs and worries about how we keep the lights on when the wind does not blow and sun does not shine. The realities of how to produce energy when fossil fuels are off the table and nuclear is not taken seriously are going to bite us, and hard, in the years to come.

Even so, sustainability is a useful word, and it is a shame that it gets tainted as the word “liberal” does by association with bad ideas. (The same goes for “progressive”, while we are at it.)

Well, one point I come across in my day job in covering business and finance is how family-owned/run firms can often show superior returns, when compounded over time, and be more robust, and more sustainable, than those that don’t have a family connection. That’s not cheesy sentimentality about how a business is better when Grandad, Mum and the cousins are around. (There can be very tricky succession and control issues with families; wealth advisors often earn big bucks advising families in how to resolve conflicts. And we’ve all seen Dallas.) Even so, for all the caveats, family businesses are important. They employ millions of people. In countries such as Germany and Italy, family-run firms have been the norm; the fashion houses, specialist sportscar firms, and many others, have deep and long family connections. Same goes for agriculture and food, for example. Here is some UK family business data that shows how big these firms are, in aggregate.

Well, it seems that one thing that the UK government is thinking of is ending the business property and agriculture reliefs from inheritance tax. At present, the tax – 40 per cent above a “nil-rate” threshold of £325,000 – does not hit if you inherit a family business, including a farm. In the US, such tax is called Estate Tax, and thresholds are far higher than in the UK.

But apparently, Rachel Reeves, the UK Chancellor of the Exchequer, is considering sweeping some of these reliefs away. It means family businesses where the stake in a business are high might get broken up and sold, such as to corporations and private equity firms, when a founder or business holder dies. Family-run farms will be a one-generation gig. And corporates, sovereign wealth funds and big groups such as pension funds will consolidate their ownership of business, including the land. Wealth becomes more centrally concentrated, not more dispersed. This seems a very paradoxical outcome from a supposedly egalitarian government. Maybe Ms Reeves does not understand this point or is indifferent to it.

However, ignorance is only part of it, I think. There’s a general hostility towards inheritance of any kind in our culture today, from my impression. There is a lot of the “tall poppy” mindset around. Years of central bank QE also inflated asset prices, and certain groups did well, but that’s not really what is going on, in my view, because things such as QE are too abstract for the average voter.

I think resentments are given more respect today, when in fact they should be called out. I think we allow jealousy of others’ good fortune to be given the time of day, when in the past that would be seen as a bad thing.

There are many good, consequentialist reasons why this dislike has bad outcomes when used as a motor for public policy, but there are important moral arguments against this attack on inheritance: the rights of those of those who own the property and want to give it to this or that cause are being violated. If I want to give my sons and daughters a business, or a 400-acre farm, for example, that’s my affair, period. Whether those persons “deserve” what I give them, in the eyes of some sort of social justice advocate, is irrelevant. If economics is not a zero-sum game, such demands for redistribution are just thieving.

What inheritance taxes do, at root, is make it clear that ownership of wealth and control of it is at the sufferance of the State. The justifications of insisting on this servile relationship may vary – sometimes by reference to the flawed ideas such as those of a Thomas Piketty – but the underlying position remains.
The argument seems to say that you don’t really ever own anything absolutely and control it. You have to defer to the crowd if it, and its elected representatives, wants your stuff, however virtuously you acquired it in the first place. It is only one step from saying that because we don’t “deserve” our brains or bodies, that we don’t have grounds for objecting to other coercive measures to take the fruits of our mental and physical labour, either at source, or when we die. (The dystopian novel, Facial Justice, by LP Hartley, shows where this leads when it comes to beauty and physical appearance.)

I see little by way of fundamental critiques of this assault on inheritance of honestly acquired wealth. The Tories, now in opposition, don’t really take the discussion to this level; neither do other supposedly more conservative parties in other parts of the world. But the monstrosity of what attacks on inheritance amount to needs to be more widely remarked on than it is.

On the subject of the family and why protecting it is subversive of overweening authority, I can recommend this book, The Subversive Family, by former Downing Street policy unit figure and journalist/novelist Ferdinand Mount. He’s deeply influenced by the Origins of English Individualism, by Alan Macfarlane, for example.

On a more prosaic level, the ever-widening burden of tax in much of the developed world, and particularly in the UK, means that even people who are not by any means well off are going to learn about the joys of inheritance tax and all that goes with it. That might ultimately shift the needle against the tax. But a lot of hard work in changing attitudes is also needed.

Dutch job disease

Shocking news from today’s Sunday Telegraph:

Dutch job disease: how labour rights have undermined the Netherlands

Sacking an employee in the Netherlands is no easy feat.

Ask many managers and they will explain to you the nuisance of having to apply to the courts to obtain a “dismissal permit” for an underperforming employee.

Even if a worker has agreed to leave, they then have a two-week cooling-off period to possibly change their mind.

The process is so arduous that the Dutch are deemed by the OECD to have one of the strictest worker protection regimes in the developed world.

This might sound unambiguously progressive for the Netherlands, and a potential inspiration for Deputy Prime Minister Angela Rayner as she seeks to enhance workers’ rights in the UK.

However, for plenty of workers, the Dutch system has backfired.

Underpinning the problem is the fact that many bosses are increasingly reluctant to hire workers given the difficulties they later encounter when trying to sack them.

The result is that more than one quarter of Dutch workers are employed only on temporary contracts, far more than any other rich country.

The Guardian discovers the dead hand of the state

‘The system is the problem, not people’: how a radical food group spread round the world

Incredible Edible’s guerrilla gardening movement encourages people to take food-growing – and more – into their own hands

Pam Warhurst insists she’s no anarchist. Nevertheless, the founder of Incredible Edible, a food-focused guerrilla gardening movement, wants the state to get out of people’s way.

“The biggest obstacle is the inability of people in elected positions to cede power to the grassroots,” she says.

[…]

Her big idea is guerrilla gardening – with a twist. Where guerrilla gardeners subvert urban spaces by reintroducing nature, Incredible Edible’s growers go one step further: planting food on public land and then inviting all-comers to take it and eat.

I doubt this idea would scale up, but if growing food to give to others gives people pleasure, go for it. I cannot bring myself to feel outraged about the odd unauthorised carrot in a municipal flowerbed. And long have I waited to see lines like those I have put in bold type appear in the pages of the Guardian:

But as much as Warhurst’s idea has simplicity and wholesomeness, it also has a radical streak. At its heart, Incredible Edible is about hijacking public spaces – spaces nominally owned by communities, and paid for through their taxes, but administered and jealously guarded by public authorities.

And that is where Incredible Edible meets its biggest challenge: the dead hand of the state.

“How Rent Controls Are Deepening the [Insert Region Here] Housing Crisis”

I have read that in the days when newspapers still used metal type, the compositors used to keep commonly used headlines ready-formed. The Bloomberg headline below would require only the substitution of the appropriate country name to work for anywhere in the world in any decade since governments came to vex mankind:

How Rent Controls Are Deepening the Dutch Housing Crisis

A law designed to make homes more affordable ended up aggravating an apartment shortage.

Two years ago, Nine Moraal and her two children moved into a one-bedroom flat near the Dutch city of Utrecht, a comfortable spot close to family and friends. Although she had only a two-year lease, she expected to be able to extend it and stay until she could get one of the Netherlands’ many rent-controlled apartments.

But last spring, her landlord told her she’d have to move out in November, because renting the flat was no longer profitable. Despite “frantic efforts on social media, phone calls, visits to realtors and housing agencies,” the 33-year-old educator says she hasn’t found anything. “The cost isn’t the problem, but a real shortage of housing is.”

Moraal is among the growing number of Dutch people struggling to find a rental property after a new law designed to make homes more affordable ended up aggravating a housing shortage. Aiming to protect low-income tenants, the government in July imposed rent controls on thousands of homes, introducing a system of rating properties based on factors such as condition, size and energy efficiency. The Affordable Rent Act introduced rent controls on 300,000 units, moving them out of the unregulated market.

[…]

ASR Nederland NV, which owns about 15,000 apartments across the country, has called on the government to rethink the measure. Almost its entire portfolio was shifted into the regulated segment on July 1, spurring it to abandon plans to purchase more rental properties, says Jos Baeten, ASR’s chief executive officer. “There are other investment categories that are more appropriate,” he says.

One provision of the law bars short-term leases, instead requiring all contracts to be open-ended. Some in the industry suggest the change will encourage landlords to prioritize foreigners, who are more likely to move away after a few years, giving owners more flexibility.

Emphasis added. That’ll go down well with the PVV, currently the largest party in the Dutch House of Representatives.