We'd suggest that Dame Margaret, Lady Hodge, turn the autoquote machine off
Apparently the Amazon subsidiary in Luxembourg has raised the ire of Dame Margaret, Lady Hodge:
Margaret Hodge, a Labour MP who has long campaigned against tax avoidance, said: “It seems that Amazon’s relentless campaign of appalling tax avoidance continues.
“Amazon’s revenues have soared under the pandemic while our high streets struggle, yet it continues to shift its profits to tax havens like Luxembourg to avoid paying its fair share of tax. These big digital companies all rely on our public services, our infrastructure, and our educated and healthy workforce. But unlike smaller businesses and hard-working taxpayers, the tech giants fail to pay fairly into the common pot for the common good.
There’s something almost Alf Garnett about that, dirty capitalists comin’ over ‘ere and exploitin’ our taxes.
Except that’s not what is happening at all:
Fresh questions have been raised over Amazon’s tax planning after its latest corporate filings in Luxembourg revealed that the company collected record sales income of €44bn (£38bn) in Europe last year but did not have to pay any corporation tax to the Grand Duchy.
Accounts for Amazon EU Sarl, through which it sells products to hundreds of millions of households in the UK and across Europe, show that despite collecting record income, the Luxembourg unit made a €1.2bn loss and therefore paid no tax.
If you were to be avoiding tax by squirrelling profits away in Luxembourg then there would be, well, there’d be profits squirrelled away in Luxembourg, wouldn’t there? When in fact Amazon makes a loss there and, as we’ve seen from the accounts of the UK companies, profits here which do pay tax.
Reality being that Amazon continues to invest in expanding its business and so makes a loss. Which does seem to be what we’d like Amazon to be doing too. We consumers out here like what Amazon provides so their spending more on us being able to have more of it is producing what we want more of. The problem with this is?
Our advice to Dame Margaret, Lady Hodge, is to turn that autoquote machine off, it has become out of synchronisation with reality.
Tax competition — or tax tyranny?
Tax Tyranny – I wish I had thought of that as a book title. Fortunately Pascal Salin did, and has done the title justice; this is a broad-ranging book about the many problems of tax, and one that manages the difficult task of being very knowledgeable about taxation, both the theory and practicalities, whilst also being very readable.
Written for the general reader, it avoids the technical language of tax economics, instead illustrating the principles with plenty of interesting examples. Most of these are French, but it is always beneficial to realise that other countries have their problems too; indeed one of the disconcerting things for a British reader is to see our tax rates regarded as comparatively low!
Rather than a textbook for tax wonks, this is political philosophy informed by tax economics. Professor Salin gets into the real basics of what tax policy should be about – the reality of human nature; voluntary co-operation; human rights and ethics; liberty vs slavery. Reducing taxes is, he shows, not just an economic imperative, but essential to give us humans the space “to act in accordance with our very nature”.
But the philosophical theory is combined with robust practicality; for example, after showing why a poll tax is better than an income tax, he then goes on to explain why it would still be worth working for a flat income tax of 20%
The book aims “to put taxation back in the context of the actual working of human societies” rather than leaving it in the hands of those who see their role as directing the wise allocation of resources, and as such it neatly skewers many of the arguments used by proponents of higher taxes. For example the principle of progressive tax, higher rates on higher incomes, is shown to conflict with human nature, since in voluntary contracts overtime is frequently paid at a higher rate than base salary – we naturally need more incentive to work harder or longer, but a higher rate tax removes that incentive and leaves us with less benefit from extra work.
That illustrates the trade-off between work and leisure that is a frequent theme of the book; tax is a disincentive to our natural tendency to work for each other, so it reduces the trade (domestic and international) that is “a key driver of progress”. He contrasts the entrepreneur, doing productive good for society, with another individual of the same ability who “prefers to walk in the countryside humming music”. How should the two be taxed, and what incentives – or disincentives – would those taxes have?
Like myself, Professor Salin sees tax competition as beneficial – the risk of productive individuals moving to lower taxed countries acts as a restraint on politicians’ desire to increase taxes too much. At a time when the US and EU politicians are calling for worldwide minimum levels of taxation, it is good that someone points out that the emperor has no clothes - “if a tax is stupid, it is no less stupid because it is harmonised” – and useful to be reminded that taxes should really be set “at the level of the smallest possible community”, encouraging tax competition and giving a genuine diversity and choice between different levels of taxation and government spending, so that people can vote with their feet. And he really does mean “the smallest possible community”, suggesting that tax policy could be set by each town or even village.
I was almost disappointed when the book actually suggested a tax system – it seemed something of a surrender after the splendid opposition to the whole principle of tax. However it is prefaced by the comment that “there is no good tax” and that his recommendation is merely the least bad. And this is a comprehensive reform proposal, rather than his opposition to the illogicality of much tax policy, where governments solve the problems of the bad design of one tax by introducing another tax in addition to it.
For those who collect tax proposals, his is an individually assessed consumption tax, with consumption calculated as receipts minus investments (Professor Salin, like myself, prefers VAT to income tax, whilst opposing having both).
But far more interesting than his proposed tax are his proposals for tax constitutional provisions, particularly the “tax house” of parliament, separately elected, which would have to approve all tax and borrowing but which would have no responsibility (and therefore could not seek electoral credit) for expenditure.
There is a recurrent theme of “the destructive nature of taxes”, particularly their destruction of human capital and interactions. Rather than the usual claim that tax is “the price we pay for a civilised society”, Professor Salin warns that “civilisations die … when individuals have lost the desire to create and the enthusiasm to innovate”, and that tax stifles that creativity.
At the root of taxation and public spending is the bizarre idea that it is better for decisions to be imposed by politicians rather than by the free interaction of people. This book is a splendid call for human relations based, not on coercive taxes and top-down government-directed spending, but on free will and the voluntary interaction of people living in liberty.
Buy the book here.
Karl Marx was right on one thing
Most of the bits that Karl Marx got right were cribbed from Adam Smith which is a good source to use of course. There is one part of his analysis that is useful to us today though.
Marx insisted that it was competition among the capitalists for the labour they desired to profit from which raised wages. If there was that reserve army of the unemployed, meaning there was no need to compete for labour, then rises in productivity would feed through into profits and nothing else. If, however, there was full employment then some would have to raise wages in order to gain access to that desired workforce. This then pulled up wages across the economy.
This is correct.
The hospitality industry is facing a staffing crisis as restaurants and pubs say that up to a quarter of those employed before the Covid-19 pandemic will not return.
The UK’s largest listed pub group, Mitchells & Butlers (M&B), has lost 9,000 of its 39,000 staff since last year; D&D, the owner of more than 40 upmarket restaurants including Le Pont de la Tour and Coq d’Argent, is looking for up to 400 recruits out of a total 1,300 UK workforce; and Pizza Express is looking for 1,000 staff, having laid off thousands less than a year ago.
Pubs and restaurateurs agree that there is a particular challenge in the south-east of England and London as a lack of supply of skilled people from the EU, post-Brexit, is causing issues with hiring staff, especially in the kitchen. More than 30% of hospitality workers across the UK are thought to have come from Europe pre-Brexit but that rises to more than half of those employed in London.
We have had, by and large, full employment at times these past couple of decades. Domestically, inside the UK that is. But wages haven’t been rising as we might think they should. The reason being that the reserve army has still been there, just not wholly visible. It’s been in Brno, Budapest and Bialystock, a £50 flight away. Thus any increase in demand for labour has been met without wages needing to rise.
Of course, this is one of those economic things, as so many are, which is largely true instead of being wholly and exactly so. A tendency not a defining truth in our economy. But true as far as it goes for all that.
We’re entirely happy with that mobility of labour and moves for a better life. But it is worth noting the effects of the new legal restrictions upon it. Low end wages and working conditions are likely to improve in the UK as a result of Brexit. On the basis that on this one thing Karl Marx was in fact correct.
A Course on Integrating Economics and Philosophy
In May, our friends at the Objective Standard Institute will be running a course on how to integrate the free market economic ideas of Henry Hazlitt with Ayn Rand’s philosophy of Objectivism. Hosted by economics professor Raymond Niles, the course will teach:
Why production and trade are fundamentally driven by reason and self-interest—and why grasping this principle is essential to making the moral case for capitalism;
How supply and demand jointly determine market prices, and why establishing and maintaining freedom for this “pricing mechanism” to work is in everyone’s self-interest;
Why coercive policies, such as wage controls and tariffs, harm all parties involved—employers and employees, job-holders and job-seekers, businesses and customers, exporters and importers;
What free-market banking is, why it is in everyone’s self-interest, and why government intervention in banking is morally and economically disastrous;
Why free markets result in better and safer health care, food, travel, education, etc.
If you want the most powerful tool in the world for advancing freedom and capitalism, this course is for you. By integrating the principles of economics with those of Objectivism, you will equip yourself to think, write, and speak in support of freedom with greater confidence and efficacy.
Full scholarships are available to students and under-30s. Full or partial scholarships may also be awarded to those with financial difficulties. To apply for the course and submit a scholarship application, just follow this link.
That public choice concept gains another proving
A proof as in a test of the veracity rather than an insistence upon it:
Specifically, “bad” outcomes, such as apartment blocks being built (which locals oppose) or school closures, are significantly less likely in neighbourhoods where politicians from a local ruling party live (compared with areas where local opposition politicians live).
The effect is large: when a party wins power it leads to a 19 percentage-point fall in the chance of proposed school closures in areas where politicians from that party live.
The authors say this is a sign that favouritism drives decisions and surprising to find in Sweden, with one of the world’s lowest corruption levels. Some might now want to break out the champagne when an MP moves next door but I’m old fashioned. Maybe it shows why we should care about them failing to live up to important ideals of public service, even if they’re not technically corrupt.
Public choice economics is simply the observation that politicians and their bureaucrats are humans like the rest of us. As such they are incentivised by their own self-interest along some spectrum of purely selfish to enlightened.
The corollary of this contention being true is that we should give politicians - and bureaucrats - minimal control over our lives so as to reduce the portion of it subject to their self-interest. That is, minarchy is the solution to the problem that we are all human, yea even those who rule over us.
Put not your faith in central government
We’re told often enough that government must intervene, take charge, because of market failure. Part of this is simply because the general conversation misunderstands what economists mean by market failure. Which is not that all flavours of all markets have and will fail to deal with a particular point or problem. Rather, that markets as currently constituted aren’t doing so.
Thus we get Nick Stern’s statement that climate change is the world’s largest market failure ever. His point being that carbon costs and prices are not in market prices, they are externalities to the market processes. As his Review then goes on to insist the solution is not then to use non-market processes. It is to lever the externalities into market prices and so use market processes to solve the problem. Market failure is not, in this and many other insistences, a declaration that markets fail, it’s that they don’t exist and must be created. The same is true, for example, of dealing with the commons problems of fisheries through individual transferable quotas, one of the few things known to actually solve the problems.
Along with this is insufficient consideration of government failure. Even in those cases where markets don’t work and cannot be created or adapted to do so it is not therefore true that government will. Government has its own modes and methods of failure. Consider, say, water provision to First Nations in Canada:
Amid mounting frustration, Whetung and other Indigenous leaders have launched national class-action lawsuits against the federal government. Arguing the federal government failed to provide clean water and forced communities to live in a manner “consistent with life in developing countries” they are suing the government for C$2.1bn (US1.7bn) damages – the costs associated with years of bottled water trucked and a water treatment system for the whole community.
Despite being one of the most water-rich nations in the world, for generations Canada has been unwilling to guarantee access to clean water for Indigenous peoples. The water in dozens of communities has been considered unsafe to drink for at least a year – and the government admits it has failed.
We’ve known how to do this for a couple of centuries now. Millennia if we think about water itself, the Romans and their aqueducts, if we emphasise the clean part then since perhaps the 1850s and that incident with the water pump handle in Soho. Providing potable water is something we collectively know how to do. So, why isn’t it being done?
As a consequence of colonial-era laws, Indigenous communities have been barred from funding and managing their own water treatment systems, and the federal government bears responsibility for fixing problems.
Ah, yes, government does have its own modes and methods of failure. Central government, far away from the problem, perhaps more than most.
A water treatment system for a community is certainly a collective problem but it’s not obvious - to be polite - that government is the solution now, is it?
Curve Lake First Nation, a forested community in southern Canada, is surrounded on three sides by fresh water.
But for decades, residents have been unable to safely make use of it.
Perhaps we should stop being polite about it? That comment about government being short of sand in a desert is meant to be a joke rather than a diagnosis, isn’t it?
There's an easy answer here - public choice economics
A piece in The Guardian lauding the end of neoliberal economics and politics:
Taken together, these developments indicate that neoliberalism is dying in Britain, for the time being at least. But those who have long dreamt of neoliberalism’s demise should think twice before popping the champagne. A more assertive state does not inherently lead to more progressive outcomes. Instead we must ask: in whose interest is the state intervening?
In the UK, the unprecedented levels of state support in the economy have been accompanied by what appears to be widespread cronyism and potentially corruption.
Not that we agree with either the description of neoliberal being used or the recognition of its imminent demise. Still, to answer that question about whose interests state intervention will deployed in favour of - public choice economics.
The central observation here is that those who are in government and the bureaucracy are human beings just the same as the rest of us outside those gilt-edged offices. They react to, suffer from, the same temptations and incentives as the rest of us too - gaining office does not suddenly turn you into a morally pure and self-disinterested saint. It also doesn’t proffer omniscience but that’s a slightly different point.
Think on what the complaint - untrue but the complaint all the same - is about neoliberalism. That the capitalists have gained power and are using it to enrich themselves. A rational observation of human beings in all their glories would be that those who do gain power will use it to enrich themselves. Government and the bureaucracy gain power over the economy and the governors and bureaucrats will use it to enrich themselves.
So, whose interests will prevail in this new and non-neoliberal world? Those of the governors and the bureaucrats. Any connection between their interests and our own out here in the citizenry will be somewhere between a coincidence and a mistake.
Those with power in the economy will use it to bend that economy to their interests - the underlying failure in the critique of neoliberalism is to believe that we neoliberals don’t already know that. Neoliberalism is an insistence that power and economic benefit are intractably, ineluctably, intertwined. Which is why we must have that neoliberalism.
For only in a market economy, one of competitive markets, are we as individuals in control. Therefore and thus we need a competitive market economy so that we are the people with that control and thus the economy works for us - not for any of those other groups that may gain power whether capitalists, bureaucrats or the people we elect to get the rubbish taken out.
As PJ O’Rouke once remarked, never let the people with all the money be the people with all the guns. The neoliberal revolution is exactly that, an insistence that we the people be the ones with the economic power. So that the economy works for us, the people - not any other grouping that might gain the power to manipulate in their interests.
What do women want?
“Minister. Can you spare a few minutes?”
“Of course, Humphrey. How can I help?”
“We’ve drafted a new consultation paper. May I take you through it? We are asking women what they want.”
“Good luck, Humphrey. That is not a question I have ever been able to answer.”
“We are asking women, and of course men, what the government should do, or rather what women would like the government to do, to improve women’s health.”
“You’re joking. You are asking men what women think the male Secretary of State should think about doing to make women think he is doing something they think they want to improve their health.”
“Yes, that sums it up nicely, Minister.”
“Maybe, but I cannot understand why men, and those who are neither men nor women, are being asked to fill in these forms at all.
“It would be discrimination if we didn’t, Minister.”
“Come to that, why are we doing this at all? Why are we concerned with women’s health rather than everyone’s?”
“I believe it has something to do with votes. Women have a propensity to believe that the health system discriminates against them, and they want to be heard.”
“That’s nonsense Humphrey. You know as well as I do that women’s life expectancy is, on average, five percent longer than men’s. If we are going to play silly games with gender studies, we should start with men, or maybe those others. How many “others” are there?”
“We are not dealing with reality, Minister, but with votes. Votes are based on perceptions.”
“Perception no doubt explains, Humphrey, why you gave me the “easy read” version of the questionnaire. And as East Anglia is not part of the Midlands nor the South of England (page 6), it is not perceived as being in England at all?”
“Oh dear. That could indeed be an oversight, Minister.”
“You’re the logician around here, Humphrey, not me, but I have a problem with the subjects proposed for inclusion in the eventual strategy paper. Tacking “against women and girls” onto almost any subject brings it into the frame. For example, this draft has “Violence against women and girls” as one of the five possible topics. Violence may obviously result in health problems but that has to be addressed by stopping the violence – a matter for the Home Office, Humphrey, not this department. You might as well include “Taxation of women and girls”. The arrival of any HMRC envelope addressed to my wife sends her completely off her rocker but I don’t think that’s the business of this department.”
“With the utmost respect, Minister, perhaps it should be. We are seeking to ascertain what women perceive to be damaging to their mental well-being and if the HMRC is the cause, you should take it up with the Chancellor.”
“Oh great, Humphrey. Thank you very much. I can just hear him announce, in his next Budget, that all envelopes addressed to the fair sex will, in future, be coloured pink.”
“Excellent idea, Minister, except I would not advise you to refer to women and girls as the “fair sex”. Pink envelopes might well benefit the health of the nation.”
“On my same logical theme, I liked “Finding out more about health issues that only women have”. Shouldn’t the whole consultation be limited to that? We might even ask the medical professional what those are? We spend quite a bit of money training them to address that matter.”
“Votes, Minister, votes. It’s all about perceptions and votes. Women want to be listened to or at least given the impression of being listened to. Please don’t imagine we are in the least interested in what the answers might be.”
“Silly me. You are quite right, Humphrey. Still, I did wonder about “Do you feel OK talking about health issues with doctors, nurses or other health and care staff?” and the need to define care staff as those who “support people to live at home or do everyday things”. (p.8) It’s obvious you talk with some people about some things and other people about other things. Women friends gossip about ailments and husbands, sorry partners, help women to live at home. Perhaps the word “professional” should be inserted before care staff?”
“I am beginning to think, Minister, that we should have given this consultation more thought before bringing it this far. I have to admit that some might consider that its whole tone is rather patronising.”
“The questionnaire does mention, once in passing, the internet as a source of information. Is that really enough? For many people, it is their primary source of information about their health. And it could be, but usually isn’t, the primary means of communicating with one’s GP. Getting through by phone is next to impossible, appointments are all booked and they’ve never heard of email.”
“Minister, you exaggerate.”
“Yes, I do but not by a lot. One good thing that has come out of the pandemic is consulting with the GP by phone. My wife really likes that, and it works well. It could easily be on Zoom when the doctor needs to look at something.”
“All good points, Minister. I have to agree that the consultation is weak on the digital front.”
“Thank you. The big question is what the outcome of all this consultation and report writing will be. On p.12 the consultation asks “Have you been given enough information about women’s health issues?” Obviously the expectation is that the answer will be “no”. That will allow us to employ a lot more people to pump out pamphlets. The clue lies in the illustration to the left of the question. I know the objective is just to give the appearance of listening, and I do the same thing over breakfast every morning, but isn’t that all a bit cynical even by our standards?”
“Minister, as you know, that is a political matter on which I could not possibly comment.”
About half of Americans are in poverty or near poverty, have low incomes
This is one of those claims about the United States that we rather like. Not because we revel in the low living standards of the cousins you understand, but because it’s something that is both true and entirely meaningless. This insistence that some half of all Americans live in poverty or near poverty - the alternative formulation being in poverty or have low incomes.
Every month, millions of working folks are forced to choose between rent, bills, healthcare, childcare and food because they are not paid a living wage. According to one measure, 43.5% of Americans were living in poverty or low-income households in 2017, with the latter often just one emergency or missed paycheck away from falling below the poverty line.
Well, yes, that 43.5% is in fact correct. Correct given the definition being used that is. Compared to the average human living standard over time or across geography now it’s ludicrously ridiculous but given how it is constructed it is in fact true:
“By the Official Poverty Measure (OPM), more than 95 million Americans (nearly 30 percent of the total population) are either in poverty or considered ‘low-income’ (living below twice the poverty line),” the report says. “That number rises to 140 million people (43.5 percent) when using the SPM, which takes into account federal assistance resources, such as refundable tax credits, as well as critical out-of-pocket expenses for food, clothing, housing, and utilities. It also takes into account geographic differences in costs of living.”
The crucial part is that “twice”. The numbers do vary a bit over the years, the Official Poverty Line is linked to earnings in the early 1960s upgraded for inflation only, the SPM is linked to a percentage of current median household incomes and clearly household incomes vary with changes in wages as well as inflation. There is also the necessary adjustment for household size to consider.
But by and large and roughly that poverty line is 40 to 50% of median wages/median household income. 200% of the poverty line is thus 80 to 100% of median wages/household income.
That official poverty measure for a family of four (two adults, two children) was $26,200 last year, 200% of that is $52,400, Median household income (for 2019) was $68,000 or so. The SPM is higher than the OPM. As we say, that estimation that the poverty line is 40 to 50% of median household income is not accurate but it’s a darn good guide.
The claim that 40% of whatever of American live in poverty or near poverty, or in poverty or have low incomes, is entirely driven by the initial definition that “poverty and near poverty” is close to median income.
Half the population has an income below median. It’s only in Lake Wobgeon that this won’t be true and as Garrison Keiller has spent decades telling all and sundry that’s a fantasy world.
Just who do these people think the media is?
The specific complainant here is George Monbiot but it’s a more general whine that can be heard from points left:
The media are allowing this government’s cronyism and dishonesty to flourish
George Monbiot
OK, that’s actually The Guardian’s subeditor giving a precis of Monbiot’s views in the headline but still, it’s an accurate enough one.
The interesting question is who is this media? Monbiot’s column has been running over 20 years now. If we’ve managed to manipulate The Guardian’s search engine properly that’s 1,357 pieces that have been presented to us. We can’t even bear to calculate how many decades Polly Toynbee has been occupying that pulpit from which she sermonises on how the country should be.
Add the BBC to the newspapers, as we must (not least because both named there worked for the BBC as an indication of that internal culture) and “the media” is in fact that very group that so continually complains about what the media does.
This is not, just for the avoidance of doubt, a complaint about how they get their views out there and we do not. Rather, this story that’s retailed that the media is some group over there that’s misbehaving is wearing more than a little thin to us. For the people doing this complaining are the media panjandrums of our time. Whatever “the media” is it most certainly includes George and Polly. Time to take a certain responsibility for what has been created rather than continue with the rebellious outsider complaint.
Face it folks, you are now the media establishment.