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Archive for August, 2011

Wealth taxes gaining momentum?

From the Financial Times. Are the foundations for an effective restructuring of the tax system being laid? This is in reference to the low tax US, but it’s good to see commentary (in a right-leaning publication) calling for a wealth tax. It would be more effective than income tax for the investing community.

Mr Buffett’s taxable income of $40m is impressively small for a man with a reported $50bn fortune. He pays next to no tax because he accumulates wealth as unrealised capital gains, which escape tax altogether. In his case, shared sacrifice probably requires a wealth tax. Set at a modest 2 per cent, he would owe about $1bn a year, or 25 times his current taxable income.

The US should do as Mr Buffett asks, and tax him till he notices. He promises it will not change his investment policies, and he will know how the rest of us feel.

The full opinion piece does acknowledge Warren Buffett’s welcome calls for higher taxation. This is the exact kind of response we need. In essence: yes, but it will take more than fiddling with the marginal rates on a small part of the problem.

Past reporting on such ideas – e.g. Vince Cable’s initial floating of the mansion tax proposal – has been neutral at best. More typically, it has resorted to it’s-the-politics-of-envy flavour of commentary. So it’s good to see it being proposed so clearly and positively. Hopefully the return of the Lib Dem mansion tax will find fertile ground.

Anarchy in the UK: a view from abroad

This is from before the recent riots, I should point out. From the comments following a Christopher Hitchens article on Salon.com:

Must read: Moral panics all the way back to *1751*

For anybody resisting the wave of sanctimonious, riot-related bilge from the likes of Melanie Philips, there is a magnificent Bagehot column in The Economist. He’s found an out-of-print book from 1982, with periodic quotes dating all the way to 1751.

From the shelves of the London Library, a gem: “Hooligan: A History of Respectable Fears” a calm and witty history of moral panics that have gripped England over the ages, published in 1982, and written by a Bradford University academic, Geoffrey Pearson (later at Goldsmiths). The book is out of print, so I trust I will be forgiven (not least by Professor Pearson) for quoting from it at length: it is a brilliant survey.

 

Stay classy, Huffington Post

The Huffington Post has a fairly simple business model: use liberal and/or left wing causes as a demographic marketing exercise, then make enough money from adverts to sell yourself to a corporation (in their case media giant AOL). It works well, because like any demographic we lefty liberals love being pandered to.

Articles come from re-writing other people’s work to within an amoeba’s waistline of copyright infringement, providing a platform for self-promoters, and delivering a hefty dose of celebrity tabloid titillation. The approach is good business: all the advantages of digital media with little of that inconvenient, time-consuming “producing content” malarkey.

In the US, they’re looking to crowdsource some design work i.e. get other people to work for free. From some of the suggestions submitted in comments, not all designers appreciate the approach:

Read more

Don’t mind me, just checking the Twitter plugin

Why is it documentation always leaves out the important bits? All I wanted to know was whether the plug-in sends the tweet about the post at the time I write it, or the time I schedule it for publication.

Every once in a while, spam sounds almost human

If information were soccer, this would be a goooaool!

As with every blog, my spam filter catches a lot of nonsense. But I’ve rescued a few genuine comments in the past, so I wade through it occasionally. Very rarely, some spam reads as if somebody did actually write it. I’m quite fond of the spam quoted above for some reason. I think it’s because I can hear it. The idea of a post worthy of exuberant live commentary is surely the blogger’s dream.

The rich don’t need to be molly-coddled (says rich man)

A great column in the New York Times by Warren Buffett. Once the world’s richest man, he has a record of consistently debunking conservative delusions about the nature of incentives, money making, and job creation. This one hits a few nails on their heads:

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off.

..

My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.

What more is to be said? It’s a lesson for the UK as well as the US: the flawed analysis of right wing economic “theory” just doesn’t withstand scrutiny.

We chose to become more stupid and dull

A beautiful and painful piece from Caitlin Moran in The Times from the weekend on closing libraries. Unfortunately it’s behind a paywall, so unless you share my fetish for information you’ll likely not be paying for access. It’s a fantastic piece, and still powerful when reduced to these lines:

A library is such a potent symbol of a town’s values; each one closed down might as well be 6,000 stickers plastered over every available surface, reading: “WE CHOSE TO BECOME MORE STUPID AND DULL.” ..

Unless the Government has developed an exit strategy for the cuts, and has insisted that councils not sell closed properties, by the time we get back to “normal” again, our Victorian and postwar and Sixties red-brick boxy libraries will be coffee shops, Lidls and pubs. ..

And in their place, we will have a thousand more public spaces where you are simply the money in your pocket rather than the hunger in your heart.

Paraphrasing the Lib Dem constitution, we should not live in a country defined by conformity, poverty or ignorance. I’m that here in Reading my lot kept the libraries open and even extended the opening hours.

Watch as he leaps and spins

Isn’t it amazing how modern dialogue is so comfortable with 180º turns from one sentence to the next? Try this bit of verbal gymnastics from Ed Miliband:

I deeply regret that inequality wasn’t reduced under the last Labour government. But we did great things to tackle inequality in our society.

- Ed Miliband, on Radio 4′s Today programme

It’s like the old “I’m sorry you feel that way” non-apologetic apology. That deliberately changes the subject from what the speaker actually did to your feelings. Similarly, Ed quickly shifts from Labour’s actual achievements to doing “great things”!

This is nitpicking, I know. But left wing politicians do have a tendency to point out “Government programme!” like Dug in Up shouting, “Squirrel!” It makes it difficult to figure out what is notable because of what it achieved, versus what looks or sounds impressive. It also plays up to every right wing cliché about wasteful bureaucracy, which makes new programmes all the more difficult to implement.

I hope the post-riot debate is not about Great Things, but Things That Work. After all, Labour won’t recover from their failure to reduce inequality from 1997-2010 if they feel a constant need to invent excuses for it.

Disciplined expenditure is tougher than austerity

Update: on second reading, my initial interpretation is unfair to the authors of  the Facing the Future paper. But, I do feel that the overall tone of the paper fails to confront the fear of deficits. So a couple of tweaks aside, I’m letting it stand. The philosophy of austerity is economically flawed, and leads to a genuinely dangerous attitude of political macho. It should be actively challenged, not passively accepted.

Reviewing the Lib Dem conference papers posted so far, there’s a problem. I suspect, going by the economic section in Facing the Future, that we remain in thrall to economic advice that has been proven wrong, that deficit busting is necessary to keep the markets happy. This just isn’t the case. It does the nation no favours to worship the Confidence Fairy and fear the mythical Bond Vigilante.

We have been fond of talking about “tough decisions”. Well, acknowledging past mistakes and charting a new course is a tough decision. Do the Lib Dem leadership really intend to face the future, or will we remain stuck in the failed philosophies of the past?

Are we ready to have our words thrown back at us as the economy remains flat for some time to come? Is the not-expected-any-time-soon recovery going to happen before the next time the electorate casts their votes on Lib Dem competence in government?

There are economists of good repute who predicted the crisis, and accurately forecast the several years of low interest rates even if money was pumped into the economy. I’ll mention Joe Stiglitz, ‘cos I’ve met him and he’s a nice guy. More seriously, he’s a Nobel prize winning economist with a track record of getting it right. It’s time we started listening to such people.

As the People Who Keep Getting It Right tell us, our current challenge is not the deficit but being caught in a liquidity trap. In other words, interest rates are not low because we have bravely announced an austerity plan and become a safe haven. It’s because the rates have hit rock bottom and the markets don’t see any growth in our future.

Therefore the real problem we face is not staying the austere course, but maintaining budget discipline as we aim for growth. If Nick Clegg is serious about “laying the foundation for a sound, balanced economy”, then he’ll find a way to push for Lib Dem politics to build on sound economic theory. Not just economic slogans that sound good.

That said, politics does need slogans, and slogans must sound good. How about these?

  • Discipline before austerity
  • Building the economy before busting the deficit
  • Cutting unemployment before cutting public services
I’m not a political strategist; no doubt those are wide of the mark. But it’s not the slogan that’s most important. It’s that we stop listening to the People Who Keep Getting It Wrong.