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Posts Tagged ‘economics’

A recent poll reveals that “the austerity census has collapsed“: a majority of the British public apparently support a 75% top rate of income tax for those earning over £1 million.

Anyone who’s paid attention to the trend of my ravingly revolutionary political tendencies lately might be surprised to learn that I find this more frustrating than heartening.

Despite having very little to do with the dreaded spectre of socialism in particular, this idea of the super-rich being hit with correspondingly super-high tax rates is anathema to most capitalists, and the right-wing objections are predictable and well understood. It discourages the “job creators” from going about their job-creating business. It punishes success. It drives successfully industrious people out of the country. It decreases tax revenue by damaging motivation and pushing down productivity. It hurts the economy.

As to whether this is empirically true, I’ve seen arguments backed up by data and graphs that go both ways, and I’m not going to ferret out the complex truth of it here. What interests me is the way the common leftist response misses an important point.

The focus on low- and middle-income households, who are being far more troublingly squeezed even by the lower tax rates than those millionaires and billionaires, is appropriate and important. But even if the financial “hardships” of the 1% don’t exactly tug on many heart-strings, neither am I in this for retribution. If we’re going to increase the tax rate above a certain income level, it shouldn’t be because we want to punish anyone; it should be because it makes economic sense.

If these high tax rates really do demotivate the super-rich to stay in the country and/or keep doing any useful work (which many of them seem to claim is the case), this probably isn’t just down to simple petulance which needs to be beaten out of them. The salaries earned by the richest executives at the biggest companies really are obscenely huge, and it’s bizarre to think that these are jobs which nobody competent would ever be willing to do for any sum so paltry as, say, a mere £1 million a year. But it’s not just about earning a perfectly reasonable living wage. Having what seems like money that’s rightfully yours be taxed away like that, hurts.

It’s a very different experience (I imagine) to be paid £1 million for doing a job, than to be paid £4 million and then have to give £3 million away to the government. We’re a loss-averse species, for one thing, and it’s a very human trait to let the immensity of our windfall be swamped by the fact that it’s only a quarter of what we really should have had. Never mind that we’re being offered orders of magnitude more financial security than most people on the planet will ever have a chance at. We’re predictably irrational.

So it’s really not at all sociopathic for the super-rich to be a bit miffed by this idea. They earned their millions and billions of dollars legitimately, through their hard work and valuable contribution to the economy, after all. The government wasn’t involved in that, so why should all this money be forcibly taken away from them now to help people who haven’t bothered to be so entrepreneurial?

This, of course – the idea that profits are what the market does, and taxes are how government unrelatedly interferes – is where everyone is completely insane.

The idea that taxation is the point at which the government abruptly steps in and sticks its nose into what had been purely private business between free marketeers up to that point is absurd. The government is essential in supporting a framework of laws which make a massive agglomeration of wealth and capital and power possible in the first place. And you can bet it’s going to be a capitalist-friendly framework, given who’s got the assets to lobby and offer donations to politicians in order to sway their opinions. A framework including all sorts of clever off-shore schemes and work-arounds not easily available to the masses. To pick one of the more obviously egregious examples, when Vodafone owed up to £7 billion in taxes, HMRC simply decided to let them off.

More commonly, though, the problem isn’t that small pockets of businessmen aren’t handing over sufficiently huge sums of their money to the state, but that they’ve seized hold of so much in the first place. Any income that socialists might want to redistribute has already been distributed in some way they presumably deem unjust – but then why was it distributed that way in the first place?

That’s where we should be looking to change things. The system which allows some individuals to go so far above and beyond the reasonable limits of success, that they get to claim dictatorship over land and capital and just keep getting richer off the labour of others. The system which goes so far beyond simply rewarding hard work and innovation, that making 100 million dollars into 110 million is inevitable.

If the majority of the British public got their way, our government would continue enforcing a system of rules by which some individuals and small groups accrue immense wealth… and then take most of it away from them.

Who would get rich from this particular policy? The government.

Do you like the government and want to see them get richer and more powerful, majority of the British public?

I thought not.

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An interesting exercise in political framing.

The lesson seems to be that the other side are always going to be creatively dishonest and manipulative in their use of political language, so you might as well get in on that too, but do it better.

This kind of thing – knowing what hot-button terms to avoid, and what more voter-friendly turns of phrase to couch your ideas in – dominates so much of political discourse, while having nothing to do with actual policy. I think it’s another reason why democracy in general is making me bang my head against more and more walls lately.

The site linked above provides a progressive attempt at a response to a rather odious leaked Republican playbook, but I don’t think either side of the aisle is left with much moral high ground to enjoy, if these are the word games they both find themselves forced into playing.

Never say Entitlements. –Instead, say Earned Benefits.

People don’t like you as much if you’re entitled as if you’ve earned something, you see, and “entitlement” is often used by the right as some kind of smear. But this doesn’t mean that this redefinition is necessarily a more accurate one. It could be argued that somebody with a life-long disability has done nothing to earn the benefits and assistance to which simple human decency nevertheless entitles them.

Never say Government Spending. –Instead, say we Invest in America.

Does that include the trillion-dollar wars? When do those investments start paying out?

And so on.

You can see why everyone in politics wants to reframe the issues in ways such as these, of course. It’s in the nature of the system. When the world is no longer run by politicians who are powerfully motivated to be weaselly, the world will be a very different place.

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– It’s important that certain facts about US military action overseas aren’t reported in the media. Otherwise the public might get “the wrong idea” – which, in this case, means “an accurate idea”.

– As the government keep telling us, these “workfare” schemes where jobseekers often do entirely unpaid full-time work for large, profitable corporations aren’t compulsory. There’s a voluntary work experience scheme in place. It’s just that, if you refuse it, you may be put on a mandatory one.

– Apparently both passive-aggression and actual aggression are among the standard ways in which elected officials interact with the general public. How reassuring to know we have people representing us who hold us in such high regard.

Tim Harford for Chancellor.

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Spending much time examining the attitudes of, say, Fox News, on the subject of the rich and the poor, can very quickly become very illuminating.

It’s not just Fox, by any means, but they’re among the most prominent apologists for the classism and wealth gap in America. They’re among those devoting serious airtime to bewailing the nightmare of hotel housekeepers earning as much as $60,000 a year, while simultaneously complaining about the unfairness of Obama’s tax policy on those poor souls earning over $250,000, who are really struggling to get by.

What I think it illuminates is just how narrow a band of ideas people like this are actually interested in.

They don’t care to extrapolate downwards and consider, if a couple earning a quarter-million annually is having such a tough time, how much of a struggle it must be for people on one tenth of that income (which is still well above minimum wage). They don’t consider the reasons why the free market might value these housekeepers’ work at $60,000 a year, although they’re happy to assume that investment bankers earning hundreds of times that deserve every penny. They ignore how difficult and specialised a job the staff in this particular hotel might actually have, how good they might be at it, how many specific skills they might have acquired and honed. They seem oblivious to how negligible an impact this supposedly flagrant expenditure actually has on the economy as a whole, and don’t explain why we ought to be concerned that this money is somehow being misspent.

There doesn’t, in fact, seem to be a single economic consideration being given to the matter. It doesn’t even occur to them to consider it on that level.

No, they’ve just got a very clear idea of the kind of people who do this sort of work, and what sort of rewards they do and don’t deserve, based on how they feel about them.

Housekeeping is something poor people do, and should be treated as such. It’s just housework. A lowly thing for lowly people. $60,000 a year just feels like too much. More than they deserve. More than I want to see them getting for that lowly work they do. They’re only housekeepers.

But businessmen earning comfortably into six figures? Well, now, they’re more our sort of people, and you just wouldn’t believe the hard time they’re having at the moment, what with taxes and housing costs and private schools and daycare and sundry other vital expenses, and it’s so unfair the way people think they’re part of some privileged majority.

It’s not like a couple of hundred grand a year means you’re not allowed to have problems. But the way those problems are framed compared to other people’s can reveal a lot about your real priorities.

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– Yes, mandatory work activity schemes are mandatory, and no, they aren’t fair. The nonsense of “fairness” is shown up for what it is in this article, too. If fairness means making others suffer so that those who are already suffering feel better about not suffering alone, then no thanks.

– Plenty of extremist maniacs still want Salman Rushdie dead, but they’re not willing to pay so much for it nowadays.

– How is America’s attempt to cut back on spending going?

– “A second term for Obama won’t in and of itself awaken the public to the bipartisan, systemic nature of American plutocracy anymore than Bill Clinton’s second term did. A Republican in office might awaken the partisan left’s devotion to peace and freedom again, but only until the next Democrat is in power.

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Corporate tax rates are at a low, their profits are at a high, and the gap between the pay CEOs claim for themselves and what they let the workers share is growing ever wider.

Satan is much more powerful than God. Or, God is evil. One or t’other, Christians.

– Plainclothes police officer is spotted by CCTV operator – who tells the officer to pursue the man he can see “acting suspiciously”. Hilarity ensues for the next twenty minutes.

The geek social fallacies of sex.

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Let’s not be political for a moment. Let’s just look at some numbers.

The combined pay of the top 299 CEOs is enough to support 102,325 average jobs.

1.4 billion people live on less than $1.25 a day.

The poverty rate among children in the US is over 20 percent. The US poverty rate among children ranks the US 26th among 30 nations in the rate of poverty among children.

This right here is enough data to tell you that something is terribly wrong, and the current system is failing in dramatic ways.

The first point on its own should be enough to tell you that we have a wealthy class and a poorer underclass, and that something about this inequality is unjust and indefensible.

Stop being a conservative or a liberal for a moment. Don’t focus on the details and just complain about what’s wrong with whatever you think I want to change about the free market. Hold off on leaping to the defense of a system that suits you just fine, because of all the ways the familiar alternatives would be even worse.

Just look at three hundred people being paid a greater share of wealth than a hundred thousand others. And that’s even before you look internationally.

You don’t need political theory to tell you that such imbalance is fucked up.

If we can’t do any better than this, we might as well save ourselves some guilt and just give up now.

But if we can do better, there’s no better time to get started.

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