The Patriotic Millionaires aren't even trying now

We have to say that we’re really very impressed by this:

More than 250 billionaires and millionaires are demanding that the political elite meeting for the World Economic Forum in Davos introduce wealth taxes to help pay for better public services around the world.

“Our request is simple: we ask you to tax us, the very richest in society,” the wealthy people said in an open letter to world leaders. “This will not fundamentally alter our standard of living, nor deprive our children, nor harm our nations’ economic growth. But it will turn extreme and unproductive private wealth into an investment for our common democratic future.”

The rich signatories from 17 countries include Disney heir Abigail Disney; Brian Cox who played fictional billionaire Logan Roy in Succession; actor and screenwriter Simon Pegg;

Given the absence of actual billionaires on their list they’ve called in an actor who plays one on TV. Most impressive we call that.

This is even more impressive:

A new poll of the super-rich shows that 74% support higher taxes on wealth to help address the cost of living crisis and improve public services. A survey, conducted by Survation on behalf of campaign group Patriotic Millionaires, polled more than 2,300 respondents from G20 countries who hold more than $1m (£790,000) in investable assets, excluding their homes – putting them in the richest 5%.

The polling found that 58% supported the introduction of a 2% wealth tax on people with more than $10m, and that 54% thought that extreme wealth was a threat to democracy.

If you ask fairly rich people whether the people richer than thou should be taxed they say yes. This is not, we’d just like to quibble, the same as asking the fairly rich people whether fairly rich people should be taxed more. Nor is it the same as asking rich people whether rich people should be taxed more. For what is actually being asked is “Assuming that you’re left alone should these other folk have to pay more tax?”

We really do insist that the answer to the other question “Should you be taxed more?” has a high likelihood of getting to a different answer.

In fact, one of us investigated this 18 years back. The first in the UK to do so even. We found that in the year we asked about 5 people paid more tax than was legally due by offering an additional amount to the Treasury. Four of those were dead too. Others have done the numbers for different years and they’ve not changed very much.

It is possible in both the US and UK to simply pay more tax. Send in a cheque. You’ll even get a thank you letter. It is also true that often enough there is a difference between expressed preferences and revealed preferences - economists like to insist that it’s the revealed, what people actually do, that tells us what people really want or are willing to do.

So, as we said that near two decades back:

When the tax’n’spend brigade show us their thank-you notes, we should listen: until then we should ignore them and insist that our money remains, fructifying, in our pockets.

In the absence of those proofs of higher payment we have to conclude that the Patriotic Millionaires are - what’s that American word we’re looking for, ah, yes, that’s it - blowhards.

We can't help but feel that there's a solution available here

The World Bank tells us that forests are very important to the incomes of very poor people:

Well-managed forests are an effective tool to helping end poverty on a livable planet, especially considering that over 90% of people living in extreme poverty rely on forests for some of their livelihoods. Forest landscapes also cover more than 80% of the area that Indigenous Peoples occupy, many of whom see forests as the source of their livelihoods, food production, and cultural identity.

Yet, forests remain under threat.

One of the reasons that forests are under threat is that poor people cut bits of them down to grow a crop of runty corn for a year or three before moving to another slash and burn site. Or otherwise over-exploit the resources of the forests so that there’s less forest left.

That available solution being to get on with that task of growing the global economy so that we’ve abolished the sort of poverty that requires burning down a forest to grow a crop or three of runty corn.

This is, after all, what we did. Forest cover in the rich world has been rising pretty much since we became rich. The low point of American cover was the 1920s, for example. That is, rich people are rich enough not to have to carve hardscrabble farms out of the New England countryside and can abandon them and allow the area to reforest. Which is, some will be surprised to find out, exactly what did happen. Those autumnal colour palettes that hundreds of thousands travel to see each year were clear cut fields only a century ago.

Rich humans don’t cut down forests. So, get that last fraction of humanity over the hump and into economic wealth and the forests will be saved.

As we say, there really is an available solution here. We did it, everywhere rich did it, everywhere that becomes rich will. So, that’s the plan. Get rich to save the forests.

Pedantry does, in fact, matter

It’s important for us all to get the details of economic language correct. For encapsulated in certain phrases are a number of concepts and then also guides to action. Take, for example, the idea of public goods. Here’s one current public intellectual trying to do so:

No one is realistically suggesting that there is an alternative to either of these things. In fact, the exact opposite seems to be the case. People want more of the NHS, better education, functioning justice and social care that works, for example, and they want the government to supply them, not because these things are then free, but because they know that the government is the only agency that is capable of delivering these things universally for the public benefit.

These things are what are called 'public goods', which are a supply of goods (sometimes) and services (more commonly) that are provided without the intention of profit being made to all members of society, usually by a government, but possibly by a private sector organisation.

In more detail, a public good is defined as:

Public goods are a supply of goods (sometimes) and services (more commonly) that are provided without the intention of profit being made to all members of society, usually by a government, but possibly by a private sector organisation.

This is incorrect. Yes, this does matter. Here is Wikipedia on public goods which is a good enough definition:

In economics, a public good (also referred to as a social good or collective good) is a good that is both non-excludable and non-rivalrous. Use by one person neither prevents access by other people, nor does it reduce availability to others.

There’s a difference in those definitions. It’s an important one too.

The Wikipedia - and correct - definition tells us what the problem is. If it’s not possible to stop someone from enjoying the item (excludability) and also the enjoyment by one does not affect the enjoyment by another (rivalry) then it’s near impossible to make a profit from provision. Therefore a purely private producer will - likely enough - underprovide such public goods as against utility maximization supply levels.

We’ve thus a problem and so also one that could - maybe - usefully be solved by judicious government intervention.

In health care, for example, my hip replacement is rivalrous with your - we cannot both be in the operating theatre at the same time and having the same piece of titanium implanted. Clearly, a hip replacement is also excludable as the NHS manages to exclude so many from gaining one for 18 months.

Within health care there are indeed public goods - herd immunity produced by widespread vaccination for example. But it’s the herd immunity which is the public good, not the vaccination. And there are different ways of achieving that - the US largely insists that children must be vaccinated before starting school (or kindergarten etc) and the UK by the NHS doing the vaccinations for free. It might even be that one of those is better than the other as the method - but it’s not the vaccination, something clearly rivalrous and excludable, which is the public good it’s the herd immunity.

The definition is also not that profit is not attempted - it’s that profit is not possible. Vaccine manufacturing companies clearly do profit, it’s the vaccination campaigns where the benefit cannot be monetised nor profitable. Another one of those judicious interventions is concerning invention and novelty. Once the new thing is created then anyone can do it - copy the invention, copy the book or song. Thus we think that there will be less than optimal levels of invention, book or song. So, we institute patents and copyrights. Entirely artificial ownership rights which provide excludability and so create the possibility of profit. Maybe this is the right way to do it, maybe not, but that is the story as to why we do.

Where the public goods problem exists then yes, there is a good argument for that judicious intervention. Which may even, horrors though it be, mean direct government provision of the item. Like, say, defence of the realm. Even though we can all see the problems with that we did try competing private providers and we don’t look back on the Wars of the Roses as being a national good time.

But public goods are not goods supplied to the public, goods good for the public nor even publicly provided goods. They’re goods which are non-rivalrous and non-excludable.

As we say this distinction is important. For if we forget about this initial and original definition of public goods then we end up going down the rathole of Mazzonomics. Which, we think we’ve understood this correctly, insists upon the following. Invention is a public good, therefore government does and should subsidise it. On the grounds that not enough people will do it because of the difficulty of profiting from having done it. OK so far. The conclusion then becomes that government should own all - or some part of - the inventions which it subsidised into existence so as to be able to share in the profit of having done so. Which does seem to us to be remarkably confused. The evidence given being that Darpa works just great over in the US. Which indeed it does but one of the defining features of Darpa is that it never does try to take ownership.

Ho Hum.

Public goods are a useful - even true - concept and where identified there is indeed a whole library full of usefully true arguments for, and of effective plans to, judicious government action. But those all actually apply only when we have in fact identified a public good. Not when someone just wants to argue in favour of more government.

Details matter, pedantry is valid.

It's not going to work - New Soviet Man didn't

We’re treated to a rumination on how the world should be managed:

Human ‘behavioural crisis’ at root of climate breakdown, say scientists

Or the paper itself:

In the present paper, we have examined this more deeply, and explore the behavioural drivers of overshoot, providing evidence that overshoot is itself a symptom of a deeper, more subversive modern crisis of human behaviour. We work to name and frame this crisis as ‘the Human Behavioural Crisis’ and propose the crisis be recognised globally as a critical intervention point for tackling ecological overshoot.

The argument becomes, effectively, that we need a new humanity.

True, they miss a significant point when they talk about trying to reduce population growth. That ship has already sailed, peak population is a decade or three away already. We’ve done that.

They are right that it’s population times consumption which is the global total, but this is absurd:

Meanwhile, the quarter of the global population who live below the USD $3.65 poverty line, and the almost half, 47%, who live below the USD $6.85 poverty aspire to achieve equivalent high-end lifestyles, encouraged, in part, by the constant barrage of advertising.

Advertising is what makes humans desire three squares, a roof over their heads and a change of clothes? We think they might be misunderstanding human beings there.

Their call becomes an insistence that we must propagandise everyone into a new mode of existence. Even, brainwash.

Which really isn’t going to work now, is it? New Soviet Man never did turn up to make socialism work despite many decades of actual totalitarianism. Systems which attempt to change humans don’t work, systems which direct human impulses to beneficial ends do.

We do think that there’s a useful point to this paper though. Systems which try to propagandise humans into particular patterns of behaviour are called “religions”. Given that the call here is to propagandise the species into a different pattern of behaviour we think it fair to now point out that this ecological regrowth idea is simply a religion.

And, of course, as impervious to factual evidence as any other such.

We're surprised here - well, OK, no we're not

So an interesting archaelogical find:

Scientists have discovered the remains of a sprawling network of mysterious ancient cities in the Amazon that may revolutionise our understanding of human civilisation in the world’s largest tropical rainforest.

A little-known culture built arrow-straight roads and canals through thick jungle to connect urban settlements where they ate sweet potatoes and drank beer, excavations have found.

The settlements, resembling the Maya’s “garden cities” and which date from around 500BC, are the largest and oldest of their type, suggesting the mysterious Upano people predated the Mayans, Incas and Aztecs in the pre-colonial Americas.

We’re aware of the technology used to find those ruins, giant space lasers measuring the height of the ground from orbit Buck Rogers stuff. Indeed, one of us has used it to find slag piles from medieval mining.

However, the bit that surprises us. There have been a number of these finds of civilisational ruins inside what is now the Amazon jungle. Vast areas of land underlaid with biochar as well - effectively charcoal mixed into the soil.

The implication of which is that the Amazon rainforest - or at least large patches of it - is not something that’s been pristine these past 10,000 or 12,000 years. Rather, large parts of it have been cut down for framing, or burnt for that charcoal. Since when the forest has regrown.

That the Amazon rainforest can regrow, our proof being that it has, seems to be a fairly important fact to us. So we’re surprised that we’ve not seen a swathe of stories explaining this at the same time as we have seen that swathe about these latest archaeological finds.

Hmm, what’s that? If it turns out the Amazon is replaceable then that kills a certain set of environmental stories you say? Ah, perhaps we’re not so surprised then.

Markets and prices are information, even if we don't like what's being said

Jeremy Warner has a possibly depressing article telling us that there’s really no future for Royal Mail - or at lesat, none that preserves it as it is.

But since then, the volume of letters has continued to collapse, falling another third. Reducing the number of days is again just chasing your tail to oblivion.

With so many other calls on the public purse, I doubt subsidy is an option for Britain either, even under Labour. What is essential, however, is that any adjustment in the USO reflects what people and the economy actually need, not what Royal Mail and its heavily unionised workforce want, which is just the protection of profits and jobs respectively.

But it’s also about Royal Mail rising to the challenge of finding better and more efficient ways of delivering parcels and other services to households so as to substitute for the death of the letter.

Now, it is possible - possible because many will use this argument - to argue that privatisation is what has caused this. But that’s not, in fact, true. What privatisation has done is make this clear.

There are very large fixed costs to having the universal service obligation. Very large costs which are not covered by revenue given that fall in volume.

And?

If Royal Mail had stayed as some subunit of government then these harsh facts could be disguised. It’s vilely easy to handwave numbers around inside a £1.2 trillion a year behemoth. A service that privatisation has performed for us is to put the organisation on the one balance sheet, the one P&L, we all get to see the information. This is of great value to us as a society.

Sure, we’d all like the USO to remain. But there’s a cost to that. What the one set of accounts does for us is show what that cost will be - and then we can make the decision about whether we desire to keep that USO quite so much. Maybe we do and maybe we don’t, but at least we’ve now got the information necessary to make the decision.

It wouldn’t surprise us at all to find that just as Great Britain was the first place to have a universal letter delivery system it also becomes the first to not have one. For exactly the same reason, being sensibly ahead of everyone else in travelling along that technological curve.

Do note that we’re not insisting that has to be the answer. It is indeed possible that people think the USO is of such value that it should be subsidised into remaining in existence. What markets, prices and the existence as a stand alone organisation achieve for us is making clear the cost of doing exactly that - at which point, fully informed, the decision can be taken.

Prices in markets are information - however much we might not like the lessons being delivered.

Using France as a guide the subsidy would be of the order of £20 per household per year. £20 to not send a letter but retain the ability to do so, each actual letter would cost an additional £1. That worth it? That’s entirely up to you and your valuations. Privatisation has brought that clarity to the numbers though.

Huzzah, The Guardian's just noticed that government is running out of other peoples' money

This is proof that it’s not just socialism, but expansive government that does that running out of other peoples’ money:

There is a scene in The Simpsons in which Ned Flanders enthuses about the joys of tax. Asked by his son what taxes pay for, he exclaims: “Everything!” – from policemen and trees to sunshine. I have always been a Ned in this regard and have argued that tax is one of the great social goods. But, as I filed my self-assessment return last week, I found myself grumbling. It isn’t so much that the bill was relatively high, but that I could no longer work out what exactly it was paying for. NHS waiting times are soaring. The social security system is leaving families destitute. It is a feeling surely familiar to many in Britain now: the tax burden has never felt heavier, yet the public services they are meant to fund have rarely been worse.

One possible answer is that government is simply trying to do too much. Another is that much of what government does is being done inefficiently. For the observation itself it entirely true. Taxes are, as a percentage of everything, the highest they have been in many a decade. And we don’t seem to be gaining all that much wondrous and joyful from our payment of them.

So we’ve this consumer resistance going on - why should we pay so much tax for not so much?

One answer is proposed here:

We are told on repeat that public services are unaffordable. Really, there are plenty of ways to fund them – it is just that a populist press and most politicians do not deem it legitimate. This is already being challenged outside Westminster: look to Scotland, which last month announced a tax on high earners to protect public services.

Introducing a one-off 1% wealth tax on households with more than £1m would garner fevered Daily Mail headlines but it would also generate an estimated £260bn, more than enough to cover a year’s funding of the NHS and social care spending.

Well, no, the suggestion is that a 5% tax on wealth, raised at 1% a year for 5 years, will produce £260 billion. Which would be about a, roughly, 4% increase in tax revenue over that period. Hands up everyone who thinks a 4% rise in revenue is going to sort out the British public sector?

Quite.

Which brings us back to the base observation. We’re already paying about as much tax as anyone reasonably expects us to be willing to hand over. And those public services still need their maw crammed with extra cash. We’re going to have to have a smaller state, aren’t we? Given that absolutely no one at all is interested in having a more efficient one.

Of course you can have infinite growth on a finite planet

This assertion betrays a woeful lack of understanding of the the most basic economics:

On one side of the divide is a growing cadre of environmentalists and left-wing economists who argue you can’t have infinite growth on a finite planet and the crunch point is fast approaching. They claim the corporate and political imperative to continually expand the economy is pushing mankind to the brink of Armageddon.

It’s a ludicrous assertion.

Sure, there’re a limited number of atoms on the planet. We can’t, while staying here, use more than that number. No one doubts that. But that’s not what economic growth is.

GDP is not minerals - or anything else physical - processed. It’s value added. The limit to GDP is therefore in knowing how to add value. Therefore, while physical resources are obviously scarce - there’d be no subject called economics if that were not so - it is not physical resources which limit economic growth. It’s knowledge.

The assertion that we cannot have infinite growth on a finite plant fails at this most basic level of understanding therefore. For it’s simply not grasping what economic growth is - an increase in value add.

Of course, some take this even further, Jason Hickel seems to have said that we should have degrowth so that we can then have socialism which seems a bit absurd.

Even leaving that sort of thing aside the agreed finity of the size of the planet is not an argument for the finity of the size of the economy. Simply because the thing we measure as the economy, as economic growth - GDP - is not physical . It’s value, not stuff. So, how can a limit to the amount of stuff be the limitation?

The IPPR has just disproved Keynesian deficit spending

We’re reasonably sure this isn’t what they meant to do but there we are.

One of the joys about economics is that it has to add up. If this is happening here in the economy then that over there must also be. One can then check and see whether the first is indeed going on by looking for that second that is, or is not. Equally, if we declare that this one thing is true when moving this way then it will also be true when running the other.

The IPPR wants to tell us that government borrowing to “invest” (the ““ is because it’s extraordinarily rare that govt does invest, rather than spend to pleasure voting blocs) doesn’t have much effect upon things.

Don’t take my word for it. The International Monetary Fund’s chief economist last year wrote: “The magnitudes of the effects [of fiscal tightening on inflation] appear to be small.” Economists from the Bank of England and the Bank of International Settlements also find very limited impact of extra government borrowing on inflation, if any at all. Recent experience also illustrates this: the US government had a significantly higher deficit than the UK last year, and yet it saw inflation fall to a lower level than we did.

That is, borrowing to spend is not very stimulatory.

Hmm. But then that means that borrowing to spend is not very stimulatory. Or at very least there has to be some ‘splainin’ done as to why it is when it isn’t.

But if borrowing to spend isn’t stimulatory then we’ve just disproven one of the major planks of Keynesian economic management. That fiscal policy, the widening out of the deficit, solves recessions. For if we say that fiscal policy isn’t stimulatory then that is what we’re saying, fiscal policy isn’t stimulatory.

Which is interesting, no? And will IPPR recall this next recession and not tell us that government should borrow more to spend? No, we don’t think so either.

Can the leopard change its shorts?

If the panthera is Ms. Harman perhaps not. The latest from the Fawcett Society, where Ms. Harman is newly installed as El Jefe:

Women of Bangladeshi and Pakistani heritage in the UK are earning on average almost a third less an hour than white British men, a pay gap campaigners say “should be causing national outrage”.

An analysis of pay data also reveals that mixed-race women and women of Black Caribbean heritage take home a quarter less money than their white male counterparts.

The Fawcett Society publishes the figures on what has been designated Ethnicity Pay Gap Day 2024.

Now, Fawcett is doing something that we really, really, don’t like. Which is issue the press release, get the story into the newspaper, before releasing the actual report. So it’s not possible for people - people like us - to check the figures in their report. Not until the news cycle has turned and the press release has done its job.

However, here it’s obvious enough. Those pay figures are “blended”. That is, they are of all workers, full time and part time. Part time workers get paid less per hour than full time. So, if we observe across sub-populations that have different rates of part time work we’ll get a very skewed understanding of pay differences. So much so that this has even hit Wikipedia:

In June 2009, Sir Michael Scholar, head of the UK Statistics Authority, wrote to Harman to warn her that different headline figures used by the ONS and Government Equalities Office with regards to pay differentiation between men and women might undermine public trust in official statistics. The GEO's headline figure was 23%, which was based on median hourly earnings of all employees, not the 12.8%, based on median hourly earnings of full-time employees only, used by the ONS. Scholar wrote: "It is the Statistics Authority's view that use of the 23% on its own, without qualification, risks giving a misleading quantification of the gender pay gap".

As we’ve noted more than once in fact.

But if even Wikipedia is rapping you over the knuckles for your misuse of statistics then really, perhaps you shouldn’t be doing that?

So, we do not have a definitive answer to the headline question. It might well be possible. But in the case of Ms. Harman it appears that no, new job but no new shorts. She’s still using the wrong, misleading but convenient to her politics statistics. Aren’t we all surprised?