Quotulatiousness

December 12, 2019

“Socialism” and “Capitalism” in the United States

Filed under: Economics, Government, Politics, USA — Tags: , , , , , , — Nicholas @ 05:00

Antony Davies and James R. Harrigan look at the supposed conflict between sharing, caring socialism and raw, heartless capitalism in the context of the American political theatre:

These terms were once very clearly defined. Socialism is state control of the means of production. The intent is that these means are to be used for the public good. By contrast, capitalism is simply private ownership of the means of production. The intent is that these means are to be used to advance the interests of those who own them, which will in turn create conditions of general prosperity that can be enjoyed by all.

When polled, Americans express relatively well-defined views on both. And while nowhere near a majority of the American electorate favors a completely socialist system, a recent Gallup poll indicates that more than four in ten Americans think “some form of socialism” is a good thing. But what is “some form of socialism?” A society is either socialist or it isn’t. The state either owns the means of production or it doesn’t. There is no middle ground. Even our openly socialist politicians rarely advocate anything near as drastic as government control of the means of production.

[…]

And just as transferism is not actually socialism, the system against which transferists rail isn’t capitalism, either. When they think of “capitalism,” transferists imagine a monied class that defrauds customers, pollutes the environment, and maintains monopoly power, all because the monied class is in bed with government. But capitalism is simply the private ownership of the means of production. What people are actually describing is something more appropriately called “cronyism,” which can manifest in a socialist system as easily as in a capitalist one. Cronyism isn’t a byproduct of the economic system at all; it is a byproduct of politics.

For current examples, one need look no further than North Korea, Cuba, and Venezuela. Socialists say these aren’t examples of “real socialism,” and they’re not. There was a time when these countries were indeed socialist, just as there was a time when the United States was capitalist. But cronyism has overtaken these countries’ economic systems, just as it did in humanity’s grandest socialist experiment: the Soviet Union. Life was simply different for inner-party members than it was for workers. This is the real danger that all countries face, regardless of the animating principles of their economic and political structures.

[…]

We need to answer the core question: how much transferism do we want?

In order to figure this out, we need to come to terms with the fact that any transfer is a confiscation of wealth from the people who created it. That confiscation will decrease wealth creation in the long term by decreasing an important incentive to take the risks necessary for creating wealth. Second, we have to recognize that transferism is addictive. No matter how much we transfer, people will always want more. The United States’ $23 trillion debt, the largest debt the world has ever seen, has come about because of American voters’ voracious appetite for transfers combined with politicians’ obvious incentive to provide them.

The solution politicians have found is to pass off the cost of the transfers to taxpayers who haven’t yet been born by borrowing the money, thereby leaving to the next generation the problem of repaying the debt or enduring unending interest payments. It’s a house of cards to be sure, but from their perspective, it will be someone else’s house of cards.

In the end, we have polluted our political discourse with two words that no longer have much meaning: socialism and capitalism. In the process, we don’t call the animating principle of modern American politics what it actually is: transferism. The only winners have been the politicians who manage to gather votes by keeping the electorate in a near-constant state of friction. And they keep winning if people keep thinking in categories that ceased to have any real meaning years ago.

December 8, 2019

The “Church of Atheism” doesn’t get charitable status … this time

Filed under: Cancon, Law, Religion — Tags: , , , , , — Nicholas @ 03:00

Colby Cosh on the recent court decision on the Church of Atheism’s attempt to qualify as a church — and receive the tax benefits — under Revenue Canada’s rules:

“The Descent of the Modernists”, by E.J. Pace, first appearing in his book Christian Cartoons, published in 1922.
Public domain via Wikimedia Commons.

Last week the Federal Court of Appeal upheld Revenue Canada’s rejection of an application for charitable status made by a “Church of Atheism” tucked away in Ontario’s Lanark Highlands. The idea of making a gesture like this has probably occurred to every atheist who looks around at a world of tax-exempt churches and wonders why his kind is excluded from the gravy train. (Clergymen pay tax on their income, but they have access to a generous residential deduction, and any professional expenses covered by the church go untaxed.)

The fact is that the “Church’s” efforts were a bit amateurish and confused. But they may, like a doomed military reconnaissance, have revealed weaknesses in the anomalous exclusion of atheists from religious tax exemptions.

These weaknesses cannot be any big secret. You probably remember the Supreme Court’s Mouvement laïque québécois v. Saguenay decision of 2015 — that’s the case in which the Quebec Court of Appeal had ruled that a statue of Christ with an electrically illuminated Sacred Heart was “devoid of religious connotation.” The Supreme Court, perhaps suppressing a chuckle or two, proceeded to unanimously overturn the Quebec ruling and expound the concept that the Canadian state has a Charter-based “duty of religious neutrality” (except, of course, where the constitution explicitly specifies otherwise, as with Catholic schools). Government, the SCC insisted, “must neither favour nor hinder any particular belief, and the same holds true for non-belief.”

Given that this is our law, what can be the problem with a “Church of Atheism”? Good question! Justice Marianne Rivoalen, writing on behalf of a three-judge Federal Court panel, confirmed the general point that there is a state duty of religious neutrality; in fact, even Revenue Canada, acting as the respondent, conceded this.

But the court simply ruled, without any logical elucidation, that “the Minister (of Revenue)’s refusal to register the appellant as a charitable organization does not interfere in a manner that is more than trivial or insubstantial with the appellant’s members’ ability to practise their atheistic beliefs. The appellant can continue to carry out its purpose and its activities without charitable registration.”

November 25, 2019

QotD: The origins of the state

Filed under: Government, History, Quotations — Tags: , , — Nicholas @ 01:00

Taxation most likely began ten thousand years ago, when nomadic hunter-gatherers gave up their wandering ways — and the tools associated with them — settled down, and started growing crops and herding livestock, which requires an entirely different suite of tools than hunting. The hunter-gatherers’ tools could be used as weapons because that’s essentially what they were — ask any mastodon — the farmers’ could not. As a result, anti-productive marauders who had been held off by the hunters’ tools (or the ability of the hunters and their families to escape and evade) took advantage of those who were stuck to the plots of land they had learned to farm with clumsy agricultural implements (which could not be wielded as easily by females, relegating them to a subordinate role for fifty centuries), and forced to to pay tribute to the bandits. Go take another look at the 1960 movie masterpiece The Magnificent Seven for illustration. The thieves eventually learned to call themselves “government” and the goods they stole, “your fair share”.

L. Neil Smith, “What Would Real Tax Reform Look Like?”, Libertarian Enterprise, 2017-10-29.

November 3, 2019

Colby Cosh on the origins of carbon taxes

Filed under: Economics, Environment, Government — Tags: , , , , — Nicholas @ 05:00

In response to a column by Andrew Coyne in the National Post, Colby Cosh outlines the intellectual origins of carbon pricing:

As Andrew knows, the intellectual origins of carbon pricing are purely classical-liberal. Maybe you have to belong to our club to spot that he has carefully not called it an invention of the “left.” When I was an undergraduate, it was the unfashionable libertarian and Hayekian zanies, not the despondent post-Cold-War Marxists, who were preaching what would become mainstream environmental economics. The left has been slow rather than fast to accept the idea of putting a mere price on what they regard as an inherent evil.

British economist Arthur C. Pigou (1877-1959).
Photo via Wikimedia Commons.

All of the foundations of carbon pricing were developed by economists that the left, in all varieties, now regards as cartoonish modern-day demonoids. The gentle Arthur Pigou, who developed the concept of economic externalities and the idea of taxing them, might still pass muster. But Pigou’s reformer-reviser Ronald Coase is deeply suspect, having pioneered an amoral analysis of externalities that tackles social-cost problems like environmental pollution without assigning blame to, or even necessarily acting against, the polluters.

In his paragraph Andrew almost explicitly outlines the theory of the “double dividend” from replacing bad, economically distorting taxes (like the one we impose on incomes) with taxes laid directly on externalities like carbon. The double dividend is pure Gordon Tullock, who is now a hate figure on the left for his role in creating public choice economics.

You can see that this analysis gets pretty complicated in a hurry. The idea of carbon taxation isn’t really of the right or the left. The best term for it might be “neoliberal,” although some people think there is no useful place for that word. To the degree that the left has accepted carbon pricing, they have done so as a (perhaps mostly unwitting) compromise with otherwise abominable thinkers like Coase and Tullock. Total state command-and-control of the economy isn’t an option in today’s Western world, and since there’s a neo-Malthusian crisis in the atmosphere around us, we had better try to solve it without having to execute a global socialist revolution first.

But if instinctive suspicion of the state is a feature of the conservative mind, carbon pricing doesn’t solve the problem completely. Canadian carbon tax designs have been given redistributive features, which makes them more acceptable politically to people who aren’t instinctive or innate conservatives, but creates confusion and distaste for those who are. And to the degree conservatives are inclined to doubt that the state will cut other taxes to make carbon prices revenue-neutral, they have been partly justified, so far, by the history of Alberta and B.C. The “double dividend” is a good idea: can governments be trusted to actually let us collect it?

In a nutshell, that lack of trust is why I’m generally opposed to the federal carbon tax system, even though the idea of carbon taxes (when properly implemented) are far less distorting to the economy than the hodge-podge of taxes and regulations we have now.

October 9, 2019

Election 2019 is “the most miserable, dishonest, venomous, pandering and altogether trivial exercise in multi-partisan misdirection since the last one”

Filed under: Cancon, Economics, Politics — Tags: , , , , , — Nicholas @ 03:00

Andrew Coyne curses both houses in his comparison between the Milk Dud’s Conservatives and Blackface Justin’s Liberals:

Justin Trudeau with dark makeup on his face, neck and hands at a 2001 “Arabian Nights”-themed party at the West Point Grey Academy, the private school where he taught.
Photo from the West Point Grey Academy yearbook, via Time

The platforms the parties have seen fit to put on public display — those of them that have deigned to present a platform — range from the absurdly unambitious (free museum passes, anyone?) micro-baubles of the Liberals and Conservatives to the utopian free-for-alls of the NDP and the Greens.

If the latter may be discounted as the fantasies of the unelectable, the former are scarcely to be taken more seriously, such is the record of broken promises of both parties once in office — of which the most damning evidence is surely the Liberals’ trumpeting of a book by two dozen academics, published shortly before the election, that found they kept roughly half of their promises from 2015. As defences of integrity go, “what about all the promises that weren’t broken” is not among the more convincing.

That credibility gap — the Liberal platform has the gall to include forecasts for the deficit — may explain why the parties have been less concerned with telling Canadians what they would do in power than with making up stories about what their opponents would do. The Liberals have spent much of the first part of the campaign suggesting a Conservative government would legislate on abortion; the Tories seem bent on spending the rest pretending the Liberals would tax the capital gains on people’s homes.

Or never mind the future. The parties seem unable to tell the truth even about the recent past. Conservative Leader Andrew Scheer has falsely claimed that British Columbia’s carbon tax “isn’t working” (studies estimate the province’s emissions are five to 15 per cent lower than they would be without the tax), that Canada gives $2.2 billion annually in foreign aid to “middle- and upper-income countries” (the correct figure is closer to $22 million) or that 95 per cent of Canadians already have prescription drug insurance (10 per cent have none, according to a report by the Commons health committee, while another 10 per cent are under-insured).

As for Justin Trudeau, he and his spokespersons have confined themselves to misleading the public about the Conservatives’ tax cuts (a cut in the 15 per cent base rate is hardly “for the wealthy,” even if the wealthy woulds get some benefit from it), or their record on health care transfers (transfers under the Harper government were not “cut” or “frozen,” but increased by nearly six per cent per annum). Oh, and about his part in the SNC-Lavalin affair, up to and including his muzzling of witnesses who might wish to tell their stories to the RCMP.

The Liberals, then, have failed to make a case for their re-election, while the Tories have failed to make the case for why they should replace them. To say this — or to note that their platforms have more in common than they have serious differences — is to risk the ire of partisans of both, who are heavily invested in the idea that this is an election of great import, as they are generally in the idea that politics is a noble calling filled with honourable men and women who keep at least half their promises.

Andrew Scheer meets British Prime Minister Theresa May
Photo via Wikimedia Commons

October 2, 2019

In a crowded field, Election 2019 may be the worst we’ve seen so far

Chris Selley makes the case that this year’s federal election is the worst of all:

It has been widely suggested that this might be Canada’s Worst Election. Certainly it is dreary as all get-out. We began with interminable back-and-forth about abortion, which all party leaders pledge to do absolutely nothing about. If one or more of them are lying, it seems very unlikely they would admit to it at a press conference. The next mania was over Justin Trudeau’s blackface revues, which were radioactively damaging to whatever was left of his Most Enlightened Gentleman brand, but which mostly served as an opportunity for exhibitionist partisan insanity and cringeworthy journalism.

[…]

By rights the Conservatives should be mopping the floor. But they can hardly attack Trudeau’s social-engineer budgeting when they’re relaunching their flotilla of boutique tax credits for kids’ sports and arts programs and public transit. Why not just make their tax cut even bigger and let people spend their money how they please?

Similarly, the Conservatives would be on much firmer ground criticizing Trudeau’s housing-market interventions if they weren’t promising to review the mortgage stress test and bring back 30-year mortgages — something Stephen Harper’s government eliminated in 2012. Having decided carbon pricing was evil almost entirely because Justin Trudeau supports it, the Tories still struggle to defend any effective or efficient policy against climate change.

Any hope that Maxime Bernier might hold Scheer’s feet to the fire on free minds and free markets went up in flames ages ago as his People’s Party attracted far more authoritarian/nativist refugees from the Conservative Party of Canada than libertarian ones. Jagmeet Singh is bargaining hard to sell the NDP’s credibility down the river to appease all-but-totally uninterested Quebec nationalists — shamefully promising not to intervene against Bill 21, as if he would ever get the chance. Elizabeth May and her Green Party constantly remind us that they’re really quite odd: May insisting Longueuil candidate Pierre Nantel isn’t a separatist while Nantel shouts “I’m a separatist!” through a bullhorn is the weirdest thing she has done since the last weird thing.

The debates have worked out as badly as conceivably possible: The Leaders’ Debate Commission, created by the Liberals to solve a problem that didn’t exist — aieeee! Too many debates! — has reinvented the wheel, crushing both Maclean’s debate (which Trudeau declined to attend) and the Munk debate on foreign affairs (which has been cancelled due to Trudeau’s lack of interest) beneath it.

September 23, 2019

The “Global Climate Strike”

The big “let’s all play hooky from school” event’s Toronto organizers have been getting positive coverage from some of the local media, because of course they have. Here’s Tanya Mok for BlogTO, listing the totally reasonable and not in any way unrealistic “demands” of the movement:

FridaysForFuture Demonstration, 25 January 2018 in Berlin.
Photo by C. Suthorn via Wikimedia Commons.

The coalition has made a list of seven demands, which “reflect the rallying cries of the intersectional movements” they belong to. Some of those demands include:

  • Indigenous rights and sovereignty.
  • The protection of forests, land, and water sources.
  • A shift to publicly-owned renewable energy, and reducing national carbon emission by 65% by 203, reaching zero emissions by 2040.
  • A $15 minimum wage for all, and higher taxation on the rich.
  • Universal public services like health care and dental care, free university and college, housing as a human right, and free public transit.
  • Justice for migrants and refugees, allowing status for all. That includes putting an end to deportations and allowing for the full access to public services.

There will be a concert at Queen’s Park after the rally, as well as a follow-up benefit concert at the Tranzac Club in the evening. A giant street mural project run by Greenpeace will also be taking place prior to the rally, around 10 a.m., at the southern point of Queen’s Park.

September 20, 2019

The reason we don’t have – and will never have – an Economists Party

Filed under: Cancon, Economics, Politics — Tags: , , — Nicholas @ 03:00

Andrew Coyne points out that the study of economics probably disqualifies you from being an effective politician, because achieving success in the sausage factory of politics requires you to ignore or even work against economic facts:

A Mises Institute graphic of some of the key economists in the Austrian tradition (Carl Menger, Ludwig von Mises, Friedrich Hayek, Murray Rothbard, and Hans-Hermann Hoppe.
Mises Institute via Wikimedia Commons.

I believe I was the first to propose the creation of an Economists Party, a political movement that would advocate for the sorts of policies favoured by people who study economics for a living, based on the principles at its core.

It could not happen, of course, any more than the existing parties are likely to suddenly embrace the teachings of economists they have so cheerfully ignored until now, and for the same reason: because politics is, at its core, the opposite of economics.

The basic principle of economics is that everything is scarce. The basic principle of politics is that nothing is scarce. Economics teaches that more of one thing can only be had at the expense of less of another. Politics teaches that we can have more of both things, and of everything else besides.

Since more of one thing means less of another, economics tells us there is no point in favouring one part of the economy over another: the resources diverted to one firm, industry or region are simply resources denied to all the rest. Whereas politics is all about such transfers: a perpetual merry-go-round of redistribution, not from rich to poor, which is appropriate, but from everybody to everybody, which is impossible.

And if, for some reason, a politician were to resist this impulse, he would shortly find himself out of work. For whereas the benefits of a given intervention are typically concentrated on this or that group, the costs are spread widely; its beneficiaries, accordingly, have every incentive to organize and agitate on its behalf, while those footing the bill — consumers, taxpayers, or both — have comparatively little at stake as individuals. They may not even know who they are.

Thus it is that politics inclines, more or less inevitably, to prefer the narrow interest over the broad; producers over consumers; the present over the future. The only difference between the parties is whether this bias to the expedient is dressed up as a philosophy and celebrated as a positive good, or merely yielded to.

September 13, 2019

NDP leader Jagmeet Singh gets his tax plans vetted by the Parliamentary Budget Office

Filed under: Cancon, Economics, Politics — Tags: , , , , , — Nicholas @ 03:00

A recent innovation for political campaigns is that they can ask the Parliamentary Budget Office to provide an estimate for the impact of any taxation proposals, and NDP leader Jagmeet Singh was the first out of the gate to have his “super-wealth tax” evaluated. The PBO estimates that the levy would net out some $6 billion in the first full year of implementation. Sounds like a lot of money! Colby Cosh explains why it’s not quite what it might seem:

Federal NDP leader Jagmeet Singh taking part in a Pride Parade in June 2017 (during the leadership campaign).
Photo via Wikimedia.

Alas, the bean-counters always swoop in to spoil things. Singh’s wealth-tax scheme is instructive not only because he availed himself of PBO costing, but because it usefully reveals the limits of what the PBO or any other economic modeller can do. Look, in other words, at the fine print.

The PBO’s job was to estimate what you can extract from “an annual net wealth tax on Canadian resident economic families equal to one per cent of net wealth above $20 million.” In the PBO model this is a simple multiplication, but the roughly $6 billion take is arrived at only by reducing the revenue by 35 per cent to correct for “behavioural response” — that is, lawful (and unlawful) tricks employed to avoid the new tax by the rich targets. The net revenue is what’s left after you deduct another two per cent to cover administrative costs.

And, as the PBO immediately insists, “the estimate has high uncertainty” on both counts. This means they’re educated guesses. Jennifer Robson, a social policy prof at Carleton University’s Arthur Kroeger College, pointed out on Twitter that right now we don’t tax economic families per se and we don’t report assets and debts routinely to Revenue Canada. Ideas for pure wealth taxation (which is rare in practice) are predicated on the creation of, essentially, a new tax system — one which would have to detect and perpetually update how much, for example, the furniture in your house costs. The 35 per cent loss from behavioural response is at the high end of historic estimates from real-world examples. Even within our current tax system, Robson observes, we only get two extra dollars for every one we spend on expanding collections and compliance against the existing tax base.

As a practical matter, a wealth tax would mostly be, or would act most efficiently as, a tax on bank balances and investment accounts. Of course, there is always real estate. The super-rich seem to have a lot of that, and it is relatively easy to tax, and the resentment of Torontonians and Vancouverites who don’t own some is, for better or worse, a major reason the NDP is trying to weaponize envy.

But this reminds us that property taxes and taxes on property transfers perform a similar function, although they are not used primarily for income redistribution as such here — and in Canada ours are relatively high. The OECD does a little league table of tax structures, and compared with other industrialized countries Canada’s take from property taxes is about double the average. In a 36-country list we are near the bottom (33rd) in our dependence on taxing goods and services, and about average (12th) in dependence on corporate taxation, but fifth highest in dependence on personal taxation — and third in dependence on property taxes.

September 2, 2019

The economics of climate change policies

Filed under: Economics, Environment, Government, Politics — Tags: , , — Nicholas @ 03:00

Tim Worstall explains the economic implications for the various demands that we consume less in order to fight climate change:

A major contention from economists is that if we decide to fight global heating in the wrong manner then we’ll make ourselves poorer than we need be. A major contention from the same economists is that if we don’t fight global heating at all then we’ll make ourselves poorer than we need be. That being the economic point about all of this, we must fight global heating in the correct manner.

The correct manner not being vast plans by bureaucracies. Instead, change market prices with the one intervention – a crowbar into the system just the once with a carbon tax – and then let the economy itself chew through the implications of that.

Do note that the argument is not “poorer than we are now”, it’s poorer in the future than we need to be in that future.

And then we’ve got the varied Green, New Deal, unsoaped hippies and socialist idiots whose demand is rather different. They are insisting that we must be poorer, now, than we are, now. These people really do have to be told to bugger off:

    A sustainable environment means consuming less, not differently.

The only useful measure of how rich you are is “What are you able to consume?” Insisting that you consume less is therefore insisting upon being poorer.

It’s also entirely wrong that consuming differently won’t make a difference. Because again those economists. The thing we consume is value. That’s also the thing that we produce. That Gross Domestic Product, GDP, that is so bewailed as a societal target is nothing but the value added in the economy. GNP is the value which accrues to the people in the economy. NNI is the net value that goes as income to those in the economy. And so on through the different possible combinations of net and gross, national and domestic, production and income.

They’re all measures of value added. Not of resources consumed at all. So, if we face resource constraints all we need to do is change the value we’re producing by using fewer of those scarce resources to do so. Then we can carry on consuming ever greater quantities of value that we’ve gone and created. This must obviously be so – we do quite obviously face resource constraints currently. All economic resources are scarce, that’s what makes them economic resources in the first place, their scarcity. We don’t actually have an economics of atmospheric nitrogen because it’s not scarce. We do have an economics of soil nitrogen because it is scarce. The conversion of one to the other comes at a price – many prices in fact. The conversion itself, the algal blooms from having done so and so on. But the doing also adds value – which is then what humans consume, the value added.

So, the idea that consuming differently won’t make a difference is dribble. Plus, the idea that we must all be poorer in order to sustain that environment is drivel. Simple observation tells us that places with poor people have worse environments than places with rich.

August 24, 2019

Remy: All My Loving (Beatles Parody)

Filed under: Economics, Humour, Media, Politics, USA — Tags: , , , , — Nicholas @ 06:00

ReasonTV
Published on 23 Aug 2019

Remy discovers the hysterical, shrieking crowds are here for the entitlements.

Written and Performed by Remy
Produced and Edited by Austin Bragg
Music tracks and mastering by Ben Karlstrom
——————

Reason is the planet’s leading source of news, politics, and culture from a libertarian perspective. Go to reason.com for a point of view you won’t get from legacy media and old left-right opinion magazines.

—————-

LYRICS:

Does adulthood dismay you?
Vote me and I’ll pay you
You won’t have to grow up it’s true
All your bills will be paid
Your adulthood delayed
And I’ll give all this money to you

Bob commuted to college
For discounted knowledge
So large debts he would not accrue
Lived at home, did some chores
Now he’ll also pay yours
Cuz I’ll give all his money to you

All this money
You will get from Bob
All this money
If I get this job

All your work wages risen
Your debts all forgiven
Your childcare will be paid for too
Want free parental leave
Just takes one vote for me
And I’ll give all this money to you

All Bob’s money
I will give to you
All Bob’s money
If I win it’s true
All Bob’s money
All Bob’s money
All Bob’s money
I will give to you

August 19, 2019

UBI: threat or menace?

Filed under: Economics, Government, Politics — Tags: , , , — Nicholas @ 03:00

At Samizdata, Samizdata Illuminatus outlines the arguments for some form of Universal Basic Income (UBI) or Negative Income Tax (NIT) and argues that it’s a terrible idea that should not be implemented anywhere:

Cartoon that appeared with Michael K. Spencer’s article “Is Universal Basic Income really a solution?” at https://medium.com/@Michael_Spencer/is-universal-basic-income-really-a-solution-c0d6d95f100e

For those that are not familiar with the term, UBI (Universal Basic Income) means, roughly, “the government should guarantee everyone some minimum level of income whether they work or not”.

The notion began simply enough. Some economists observed that there are a myriad of intersecting government programs for the poor (in many countries, dozens) which distort behaviour in horrible ways and which cost a fortune in overhead to administer. This is where the problem of UBI begins, in the hubris of the armchair philosopher. “What if”, these economists asked, “we can’t get rid of the dole entirely (even though that would be better) but we could at least make it efficient by replacing the entire morass with a single program, say a negative income tax?”

Trained to explore ideas (no matter how bad) for a living, said academic economists then vigorously explored this impossible hypothetical world in which they could not get rid of the dole but could somehow get politicians to perfectly implement their hypothetical improved alternative, and proceeded to write lots of papers about it.

Again, this academic musing was already a utopian impossibility, for in the real world, there are interests that would act to block the elimination of existing welfare schemes and insist that the new scheme be added to the current ones rather than replacing them. This sort of thing is routine, of course; originally, VAT schemes were thought of by academic economists as a less distorting replacement for income taxes but ended up added in addition.

The interest groups arrayed against replacement of existing welfare schemes range from the bureaucrats whose job it is to administer said schemes (and who for whom “efficiency” means unemployment), to the vast range of contractors employed in providing benefits of one sort or another, to the politicians who get votes and power in exchange for largesse paid for with other people’s money, to the current recipients of existing benefit schemes who will correctly reason that the notion behind “efficiency” is not to increase their benefits. There’s no advantage in replacement for any member of the existing system, and thus, it was a non-starter to begin with.

This did not, however, prevent many people from falling in love with the idea, as wouldn’t-it-be-ever-so-elegant-if-it-could-happen so often trumps this-is-reality in the minds of those saying “what if” over a pint or seven late in the evening at the pub next to the economics department offices.

Oh, and of course, a form of the negative income tax was created in the United States under the name of the “earned income tax credit”; as might have been predicted in advance, it was added to existing welfare programs rather than in any way replacing them.

From this simple yet benighted beginning as a completely unrealistic thought experiment, the idea of UBI gained traction and then, as most cancers do, developed a mutant and even more virulent cell line, one that allowed it to spread and grow in the minds not only of leftists (who are already inclined towards redistribution of all sorts) but those on the right who are inclined to view ordinary people as useless.

We are now informed that UBI is a solution to a different problem as well. We are informed, in not-so-hushed tones, that the rise of new technologies like Artificial Intelligence will soon automate away most jobs, resulting in a vast class of people who will be unemployable in any trade whatsoever, which will consequently lead to mass unemployment, and that said permanently unemployable people will starve to death if we don’t find ways to provide them with income.

We are told we thus must guarantee a minimum income for all, without regard to whether they are capable of earning a living on their own, or we’ll have riots on our hands once AI based systems become ubiquitous. They claim that we should, nay, must, promise everyone some minimal subsistence income, whether they work or not. This will provide the masses with the ability to survive, and thus society will be preserved.

August 16, 2019

Rule Britannia, Britannia Rules the Salt | BETWEEN 2 WARS I 1930 Part 1 of 1

Filed under: Britain, History, India — Tags: , , , , , , , — Nicholas @ 06:00

TimeGhost History
Published on 15 Aug 2019

After the Great War, the British empire is at its peak in terms of population and size. However, resistance against colonialism is starting to brew in the British colonies and dominions.

Join us on Patreon: https://www.patreon.com/TimeGhostHistory

Hosted by: Indy Neidell
Written by: Spartacus Olsson and Francis van Berkel
Directed by: Spartacus Olsson and Astrid Deinhard
Executive Producers: Bodo Rittenauer, Astrid Deinhard, Indy Neidell, Spartacus Olsson
Creative Producer: Joram Appel
Post-Production Director: Wieke Kapteijns
Research by: Francis van Berkel
Edited by: Wieke Kapteijns
Sound design: Iryna Dulka

Portrait Colorizations by Daniel Weiss.

Sources: National Portrait Gallery, Library and Archives Canada, Jenny Scott

A TimeGhost chronological documentary produced by OnLion Entertainment GmbH.

August 1, 2019

QotD: Small government provides little scope for special interest lobbying

Filed under: Economics, Government, Quotations — Tags: , , , , — Nicholas @ 01:00

When a government is small, it can provide very limited benefits to special interest groups, so there is a small incentive for special interest groups to lobby the government. The successes of those that do lobby the government will cause the government to grow. This occurs because the great majority of voters and taxpayers are rationally ignorant about most government activity, making it easy to increase everybody’s taxes a small amount to provide a sizable benefit to a few. Most people do not have an incentive to investigate in detail the allocation of their tax dollars, but the special interest groups with the sizable benefit will repay the representatives with political support. Thus, special interest groups cause government growth.

The growth of government, in turn, raises the payoff available to special interest groups. With a higher payoff to special interest groups, this encourages the formation of new special interest groups to share in the payoff. A larger government can support a larger number of special interest groups. Thus, as government grows, more special interest groups form. The formation of special interest groups in turn increases the demand for special interest legislation, cause a further growth in government spending.

Randy Holcombe, An Economic Analysis of Democracy, 1985.

July 31, 2019

The quickest way to raise the real income of minimum wage earners

Filed under: Britain, Business, Economics, Government — Tags: , — Nicholas @ 05:00

Tim Worstall explains how to quickly raise the living standards of everyone in Britain earning the minimum wage, without costing employers any more:

I – Tim Worstall that is – then started pointing out that the difference between this living wage and the minimum wage was the amount of tax that we – shamefully – charge to the low paid. Tax being both income tax and national insurance contributions. In fact, I rather shouted about it around the place, at the ASI, and here in The Times in 2012.

    The gross annual salary of a full-time worker on the minimum wage is £12,070.50. We could come close to lifting every low-paid worker out of poverty if we simply increased the personal tax allowance from £8,105 to that sum. Not a penny of income tax or NICs should leave their pay packet. A full-time worker, however, on the living wage would be taking home £12,410.74, after the taxman has taken a cut — that’s only £340 more. And before the Foundation uprated the living wage yesterday, the annual difference was just £8.74.

    There are problems. Raising the personal allowance gives everyone a tax cut — which I’ll admit doesn’t break my heart. But we could lower the amount at which the higher rates of tax kick in to make up for that lost revenue. And won’t these workers lose their right to unemployment benefit and a pension, if they don’t pay NICs? No, they qualify already, as the system treats the very low paid as if they had made NI contributions. We should go farther. The link between the full-year minimum wage and the personal allowance for tax and NI should be made explicit. Change one and the government of the day must change the other. If the minimum wage is the minimum moral amount that someone’s labour is worth, then that is what they should get, not the amount after Denis MacShane’s European wanderings have been paid for.

    Which leaves us with two competing visions of how everyone can be free of poverty pay. The Living Wage Campaign’s vision is to shout at every employer in the country until they give in. The Worstall Way is to increase the incomes of the working poor by stopping taxing them.

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