Archive for the ‘Authorised Theft’ Category

Child Benefit

Tuesday, October 5th, 2010

Mrs Rob gets paid child benefit. It’s ridiculous, and typical of the way politicians pander to votes and attempt to engineer social outcomes.

But the way I look at it, the net amount of money flowing from us to the government is £960 per year less than it otherwise would be. In itself this is a Good Thing.

But the government is planning to abolish child benefit for households where one earner earns more than £43,876 per year.

So if I earn, say, £43,876 per year, and I get a £1 per year payrise, I’ll be £959 per year worse off, which is absurd.

More than that, I won’t be better off until I get at least a £1600 pay rise, because that payrise would be taxed at 40%, so I’ll only take home £960 of it.

For families with two children, that figure comes out at £2920.

That’s got to make for some pretty weird incentives…

Update: I seem to be only the second person on the Internet to have noticed this. Here’s the first. It’s certainly beyond the BBC.

Olympics Lanes

Thursday, July 29th, 2010

Olympics lanes?!

Usain Bolt Will Not Pay Tax

Tuesday, July 13th, 2010

Good for Usain Bolt.

New regulations mean the 23-year-old Jamaican could lose more money than he would earn from competing at the Crystal Palace Diamond League event.

“I am definitely not going to run [in London],” Bolt told a news conference.

Crystal Palace organisers had hoped to stage a three-way showdown between Bolt and his sprint rivals Asafa Powell and Tyson Gay.

Athletes competing in the UK are liable for a 50% tax rate on their appearance fee as well as a proportion of their total worldwide earnings – which for Bolt, who earns millions from endorsements, could be hugely costly.

More of this, please. The more high-profile people complaining about tax, the better. However:

The Government has since agreed to waive the rule so London can host the 2011 final, and competitors in the 2012 Olympics are also exempt.

What scoundrels. They’ll steal your money unless it suits them for you to appear in their showboating extravaganza, at which they’ll boast about how *they* made it all possible. When will people realise that governments do not make things possible, they only get in the way? Athletes of the world, unite! Boycott the UK Olympics! Have some principles! It’ll never happen…

How The World Works

Monday, June 28th, 2010

A quick flick through the June-July E&T magazine from the IET…

Professor Michael Grätzel, creator of dye-sensitised solar cells, has won the 2010 Millennium Technology Grand Prize, awarded by Technology Academy Finland. [...] Though Grätzel cells are still in relatively early stages of development, they show great promise as an inexpensive alternative to costly silicon solar cells and as an attractive candidate as a new renewable energy source, the judges said. [...] In 2010 the total amount of the prizes is £1.1m, of which £1m comes from the Finnish state and £100,000 from Technology Academy Finland.

Renault has adopted the Better Place system to sell a 160km-range vehicle for roughly the same price as an equivalent diesel car: the purchase price does not need to include the battery because that will be rented to the consumer. [...] The boot is also smaller – at 300 litres it is about the same size as the smaller Clio and about 60 per cent the capacity of the conventional Fluence. The car weighs a total of 300kg more than the diesel-driven model. [...] A Renault spokesman said the cost of ownership will be similar to that of a diesel-engine model once the rental and government subsidies for low-emissions vehicles are taken into account.

Green subsidies are influencing the pick up of investment interest, and not just in photonics says Magill. ‘Government subsidies are driving investment in a lot of cleantech and green technologies. In fact many privately held companies, small venture-backed and their investors – the venture firms themselves – are hiring consultants to understand how best to get at those government subsidies and incentives.’

However, these subsidies do not appeal to everyone. ‘We stay away from sectors or companies that depend on such tariffs because we know they change with the mood of the politicians. I don’t want to be dependent on that,’ says Sperling.

Bad News Day

Tuesday, June 22nd, 2010

Truly we are beset upon all sides by the tyranny of evil men. But that’s not really news.

The Spirit Level Delusion

Saturday, May 22nd, 2010

I’ve just finished reading The Spirit Level Delusion by Christopher Snowdon. It arrived two days after I ordered a signed copy direct from the author.

It’s a critique of The Spirit Level: Why more equal societies almost always do better by Richard Wilkinson and Kate Pickett. They are epidemiologists who have made scatter graphs of various variables against inequality, each point plotted belonging to a country. Lines of best fit are made and the gradient of the line used to make such claims as, “average life expectancy is three or four years shorter in unequal societies”.

The Spirit Level Delusion also takes on other anti-consumerist classics, such as Affluenza, The Selfish Capitalist and Happiness.

The first six chapters take on the key claims in The Spirit Level. Alternative scatter graphs are plotted, showing that quite often it depends on exactly which year’s data is used or which countries are included and excluded. In other words, the theory is not very robust.

In other cases, more is going on. Chapter two takes on the claim that unequal countries have a higher level of mental disorders. It turns out that the rates of disorder are not significantly different in between countries anyway. And the secondary claim, made by Oliver James in Affluenza, that mental health deteriorated over the years as inequality increased in rich countries is made to look silly when Snowdon points out that this is largely due to vast changes in psychiatry during the 70s and 80s. DSM-III and IV were published, hefty tomes listing symptoms against disorders. The idea was to standardise diagnosis. But lots of questionable research was done in which people were plucked at random out of the population and asked questions like “has there ever been two weeks or more when you lost interest in most things like work, hobbies, or things you usually liked to do”. These studies oddly enough were able to show that 25% of the population suffered from some mental disorder. It’s enough to make one question the existence of mental illness, but according to Snowdon, James just assumes it’s all to do with Regean and Thatcher.

In chapter five, the claim that infant mortality is higher in unequal nations is challenged by pointing out that in rich countries infant mortality is entirely due to complications at the time of birth. The differences are again tiny; add a few poor countries to the scatter graph and they disappear entirely. What differences there are between rich countries are explained by such things as the USA’s tendency to have more premature babies, itself largely caused by differences in medical practice.

A similar pattern emerges in chapter 6. The Spirit Level Delusion argues that people in more equal countries are more civic minded. They give more of their GDP to poor countries and recycle more. But hang on, aren’t these things government policy more than individual choice? Yes, Wilkinson and Pickett have proved that governments who redistribute wealth more also donate more foreign aid.

Chapter 7 is one of the most fun chapters; it takes on the anti-consumerist movement in general, going all the way back to Galbraith’s The Affluent Society, published in 1958. He argued that we were rich enough already; and that all growth was now fuelled by over-production that could only be consumed by convincing people they needed things they did not through advertising.

For Wilkinson and Pickett, it is crucial that the reader becomes convinced that the only consequence of economic growth in the West is a rampant and futile consumerism. If people only spend to compete for status, the products themselves have no intrinsic value and it will be no loss, therefore, if economic growth is brought to a halt and people can buy fewer of them.

Wilkinson and Pickett see themselves standing at the end of an era, beyond which the old ways cannot produce further gains. The fact that Galbraith said much the same thing half a century earlier should give us pause for thought. In 1958, Galbraith cited vacuum cleaners, televisions and wall-to-wall carpets as the unnecessary wants of an affluent society. While none of these are any more essential for survival today than they were fifty years ago, it would take a brave politician today to tell the electorate that they would be happier without them.

[...]

The belief that if something is not essential, it cannot be useful, makes a Calvinist virtue of having only the bare necessities. In doing so, it sets capitalism an impossibly high benchmark. Unless a product keeps body and soul together, or produces lasting happiness, it is deemed frivolous, even decadent. The people, meanwhile, are encouraged to set their horizons low. They need little more than food on the table and a roof over their head. So long as everyone has the essentials, no one will suffer materially. So long as no one has much more than the essentials, no one will suffer from the psychosocial traumas of inequality, greed and anxiety.

Good grief, what a dismal view of the world. Snowdon goes on to point out that in fact consumers do not shop endlessly in the vain belief that it is the only way to be happy: this is merely a conceit of condescending and out of touch elitists — for that is what the anti-consumerists really are. Neal Lawson describes how he is woken by his Blackberry, rises from his Habitat bed, steps on to his John Lewis carpet and wraps himself in his White Company towel. Says Snowdon, “what are supposed to be endearing admissions of weakness sound more like the hypocrisy of champagne socialists.” Futhermore, “occasional sneering references to cheap flights for the masses (thereby forcing people like Lawson to travel to increasingly remote destinations to avoid them) betray this implicit snobbery.”

In chapter eight Snowdon describes how the anti-consumerists propose we will achieve the transition to zero-growth and high equality. Even higher and more progressive taxes are at the sane end of the spectrum. Rationing, usually in the form of carbon rationing, is suggested. Snowdon notes how what once was seen as an unfortunate side-effect of post-war rationing, deprivation, is now marketed as a feature: the deprivation will make us happier. At the other end of the spectrum we have James Oliver in Affluenza having the government value every house in the country and then “knock a nought off”. The chapter finishes with a scatter graph of equality vs. tax as a percentage of GDP. You can imagine what it looks like.

The final chapter summarizes the problems with The Spirit Level. I learned about a whole new kind of bias, immortal time bias (popes live longer than artists because you have to be old to be the pope), and a whole new fallacy, the ecological fallacy. This is really the main problem with The Spirit Level. You simply can’t separate out all the variables when comparing statistics from different countries. To demonstrate, Snowdon shows a scatter graph that proves recycling causes suicide.

Incidentally, Wilkinson and Pickett concede that suicide rates are higher in more equal countries. In chapter 3 Snowdon describes their strange theory that this is because people kill themselves rather than killing others. In chapter 4 he shows that there is no relationship between suicide and murder. In the final chapter he quips, while discussing the strange correlations that can be found, “it is conceivable, for instance, that socialist policies are a factor in lowering aspirations and increasing the suicide rate.” This sounds rather plausible. But we must be careful not to play into their hands: it is better to make the case that growth, by making the poor richer, is an end in itself. Snowdon makes this case many times, arguing for instance that when we notice the first class passengers disembarking the flight looking refreshed and the economy class passengers looking tired, the solution is certainly not to abolish first class in the hope that it will make the economy class passengers feel better about their discomfort.

Ultimately, ecological epidemiology tells us that Asian countries have low crime rates; Scandinavians are more trusting than Europeans and Americans are fat, and on evidence like this Wilkinson and Pickett would have us destroy the economy.

The Spirit Level Delusion is a great manual for fighting back against the demands for equality over all else. One thing it doesn’t do is attack the way inequality is measured. I still hold that however much more money the top 20% earn than the bottom 20%, in developed countries the bottom 20% still drive around in cars and go on foreign holidays. I think that in reality growth makes people more equal, even as “income inequality” increases. Nonetheless, Snowdon’s careful dismantling of the Spirit Level statistics on their own terms is helpful. And I think his arguments in general will be very useful in the years ahead. I don’t imagine for a minute that the Tories are immune to talk of equality — their “social justice” sounds like the same sort of thing.

Starve Them

Tuesday, April 27th, 2010

A man on the BBC suggests cutting benefits and starving people into going to work. I’m impressed.

It’s Lord Digby Jones, a “plain speaking captain of industry”, talking to a group of “NEETs” — young people not in employment, education or training. The whole episode of Panorama is on iPlayer.

Or on your local airwaves:

Panorama – Return of the Real ApprenticesPanorama - Return of the Real Apprentices TV Schedule

An opening clip is of Digby Jones asking the NEETs, “what do I as a taxpayer pay you every week?”

Having watched the programme which features four young lads, it seems fairly clear to me that the two who really want to work are now working, and the two who don’t seem so sure about the idea are not. I think the former would be working anyway without the government “new deal” scheme, and the latter are only discouraged by job-seekers allowance and, in one case, incapacity benefit for being depressed.

I wonder if it is a coincidence that the two out of work are posh, and the other two are not. The programme also features a young Polish man who came to the UK to work for minimum wage and now owns the business that he used to work in. He says he finds it hard to employ British people, in part because their expectations are too high.

The programme concludes with one of the posh, out of work boys’ parents arguing that the government should force their son to work for his benefits. At least then he’d be forced to get out of bed and his life would have structure. This is what in the USA is called workfare. Lord Digby Jones seems to think this is a good idea, too. I doubt it would do any good. The work would either be useless or it would displace real workers. The unmotivated son would not be motivated by doing useless work he didn’t see the point of. He’s far more likely to be motivated by the family that would have to look after him if he didn’t get welfare payments at all.

I’m also left with the impression that the notion of “employers”, “employees” and “jobs” is part of the problem. You must get a job. If I don’t have a job I have no self esteem. And so on. In a society with more petty capitalism, where you didn’t need a degree in red tape to start a small business, there might be more places for people to fit in, and more small businesses able to employ young, inexperienced workers as apprentices. Not just to “get a job”, but to be able to start out on their own.

It’s not about getting a job, it’s about making your way in the world by doing things for people so that they do things for you, like cogs in a machine. Minimum wages, welfare and employment law are just glue that gunks up the mechanism.

Keynes vs. Hayek

Thursday, March 18th, 2010

Not sure how I missed this for so long. But via the Facebook group I bet Ludwig von Mises can get more fans than John Maynard Keynes, I found this video from EconStories:

Under the heading “Learn More”, the creators of the video direct us to a Daily Kos article that explains the lyrics more fully. It’s the Daily Kos, but the author of that article admits to having “Hayekian leanings”.

Economics on Facebook and rap videos? Could economics be cool?

Directgov Kids

Monday, March 8th, 2010

Oh boy, this website is a hoot. If ever there was proof government should be kept as far away from education as possible, this is it. Here’s a sample. It’s a comic to teach children about why we pay tax. (Note that this only seems to work on Internet Explorer. If you don’t see a comic strip below, visit http://kids.direct.gov.uk/main.aspx and click Places, The Offices, and then on the magazines on the reception desk.)



Sorry. You need the Adobe Flash player to view this content. You can get the Flash player here.

Notice how expertly put together it is; very visually appealing. It’s worrying that the government is getting very good at this kind of thing — their “information” films have similarly high production values.

I find it interesting that in the tax-free world from the comic, there is no-one to collect litter or repair traffic lights, but there is someone to charge the children money for crossing the road. Therein lies a clue to another way the world might work without taxes.

More from NickM and the Adam Smith Institute.

Just in case it’s not clear what my problem is, I’ll spell it out. Here is a web site made by the government, funded with tax money. It teaches children that without paying lots of tax, all kinds of bad things will happen. But this is a political view: it is possible to imagine other ways that the world might work, including ways that involve low taxes and more services provided privately. So there are a range of ideas about tax. Education would involve teaching children about the full range of these ideas. Presenting one particular view as a fact is not education. Instead what is happening here is that the government is taking money from one generation in order to teach the next generation what a good idea it will be to take money from them. So not only is this not education, it is manipulation of children with the goal of making people think less about tax to make life easier for the government. This proves that the government should not be entrusted with the education of children.

Taxing Neurons

Sunday, January 31st, 2010

My wife made a spreadsheet that calculated the family finances for various scenarios including differing lengths of unpaid maternity leave. “What your spreadsheet fails to take into account,” I said, “is that if you earn less over the course of the year then you will pay proportionally less tax.”

Debate ensued about how to calculate this. We would need a column for net pay. We would need to look up my wife’s tax allowance, and the various rates, and earnings levels at which they cut in. And then there is National Insurance which is another set of rules. In the end the spreadsheet would have encoded in its formulae the entire tax code. And if you work for half the year and not the other half, exactly when do you get the overpaid tax back?

This is my longstanding gripe: that not only do they take your money, they also use up valuable brain cycles thinking about all this, and valuable neurons storing knowlege about it.

In the end we decided that it wasn’t worth the effort, and I went off to play Eve Online, the intricacies of which are a much better use of brain space.