Do libertarians apologise for autocracy?

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An article claiming that libertarians support autocracy has made ripples online. In this article, Sam Bowman rebuts that article and argues that its author fundamentally misunderstands – and misrepresents – his topic.

Michael Lind has a long post on Salon.com on “Why Libertarians Apologise for Autocracy”. The piece is rather long, and has been getting some attention online. In my view it is a rather bad piece. In this post I want to reply to some of the most important claims that it makes. His post is a little incoherent, so forgive me if my reply doesn’t work well as a standalone piece. I encourage readers to take a look at Lind's piece before reading this.

Lind’s thesis is that libertarian objectives are incompatible with the democratic system of governance that most people value. This is a valid argument, and indeed one that has been made by some libertarians. Where Lind gets it wrong is in his seemingly-wilful misreading of key libertarian thinkers (like Mises and Hayek) and his shallow understanding of the libertarian movement in general.

Lind opens by quoting Ludwig von Mises’s Liberalism. This book, written in 1929, contains a discussion of fascism in which Mises appears to praise this system. Lind quotes Mises:

It cannot be denied that Fascism and similar movements aimed at the establishment of dictatorships are full of the best intentions and that their intervention has for the moment saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history.

It's a pity that Lind’s article links to the Amazon page for Liberalism, rather than the free download from Mises.org. If he had linked to the full version, the meaning of this strange statement would have become clear. Cato at Liberty have the full quote: [Continue reading...]

Throwing fuel on the banking bonfire

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I'm very skeptical of UK government plans to 'ring fence' or separate out the retail arms of the banks from their investment arms.

In the first place, if banks are broken up by politicians and regulators, you can be sure it will be a mess. They will be broken up in ways that simply don't work, and UK bank business will leach abroad.

Second, retail bankers need investment returns, and investment bankers need savers' cash. If you try to split them, they will do their darnedest to keep that symbiosis going. The only split that might work would be if the investment and retail banks were completely separate institutions, separately owned and capitalised.

Third, if you did split out the retail banks, it becomes 100% certain that if one of them failed, they would be bailed out by the taxpayer – which is part of the whole ring fencing deal. And 100% certain that such bailouts would be needed.

Of course, the argument is that retail banking is all safe, traditional, Captain Mainwairing stuff, so retail-only banks would never need a bailout anyway. Hence the calls to split them. However, given the certainty that the government would bail them out to protect retail customers, the new retail-only banks would have every incentive to behave riskily, generating big returns for their savers and offering borrowers fantastic mortgage deals.

You may think that the regulators would stop such risky behaviour in a sector that is supposed to be low-risk. Forget it. If there is one certainty to come out of the 2007/8 crisis, it is that regulators are useless. There was plenty of regulation in place, but it wasn't enforced, or it proved counterproductive.

The only thing that will make banking safer is competition. There is no proper competition in banking today because banks have to be huge in order to afford the costs of all that useless regulation. To boost competition, and to overcome the too-big-to-fail problem, the answer is not to break up the banks but to make the banks' reserve requirements more onerous, the larger they are. The sector would then naturally become less concentrated, and competition would do the regulators' job. It might even split, sensibly, of its own volition. Job done.

Organs for sale

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organOnce in a while an idea comes along that's so crazy it just might work. A week ago I wrote a blog about the rise in tuition fees and the perceived necessity of a university education. But let's for a second consider that, having looked at all my options, I decide a university degree is the right path for me but I'm still concerned about the costs. Well one academic might just have the solution I'm looking for – I could pay off my debts by selling a kidney.

Whilst the topic of financially incentivising organ donation is a divisive one, with many people concerned with the huge potential for exploitation, selling parts of oneself is not as extreme as you might think. It is, of course, a rarity to hear of someone selling a kidney to buy an iPad. Yet selling plasma, hair and even semen has been the practice of many cash-strapped students in the US and other countries. It's easy to see why paid donation is a popular option; donors give away renewable resources or "spare parts" to a good cause whilst receiving a valuable source of income. Perhaps there is a realistic scope for opening up organ and general bodily donations to a private market.

According to donation statistics, as of January 2011, 6,741 people are waiting for a kidney on the transplant list, a scary figure considering only 2,520 kidney transplants took place in 2010 and over 1,000 will die waiting for an organ to become available. Many people argue that legalising a market in transplant organs will undermine the current altruistic donor programme. Professor John Harris of Manchester University makes a good point, arguing that "being paid doesn't nullify altruism – doctors aren't less caring because they are paid. With the current system, everyone gets paid except for the donor."

Aside from increasing the number of potential living organ donors a legal market would dissuade so called "transplant tourists" who resort to travelling abroad to purchase organs of questionable health on the black market. Potential savings for the NHS are also a considerable factor. In the case of kidney disease particularly, even a substantial pay-out of around £25,000 for a transplanted kidney would pay for itself in eighteen months, due to the expense of dialysis treatment for suffers.

Setting up a private market for organs does run the risk of exploiting those most in need of cash, meaning proposals for a paid system would need to be carefully considered. But, at a time where NHS costs are sky-rocketing and the need for organ and blood donation is increasing, incentivising donation is an absolute necessity. Whilst the altruist in me likes to think I would donate a kidney to someone in dire need of one, the chance to pay off my student loans whilst doing so might just be the deal-maker.

Do libertarians apologise for autocracy?

Michael Lind has a long post on Salon.com on “Why Libertarians Apologise for Autocracy”. The piece is rather long, and has been getting some attention online. In my view it is a rather bad piece. In this post I want to reply to some of the most important claims that it makes. His post is a little incoherent, so forgive me if my reply doesn’t work well as a standalone piece. I encourage readers to take a look at Lind’s piece before reading this.

Lind’s thesis is that libertarian objectives are incompatible with the democratic system of governance that most people value. This is a valid argument, and indeed one that has been made by some libertarians. Where Lind gets it wrong is in his seemingly-wilful misreading of key libertarian thinkers (like Mises and Hayek) and his shallow understanding of the libertarian movement in general.

Lind opens by quoting Ludwig von Mises’s Liberalism. This book, written in 1929, contains a discussion of fascism in which Mises appears to praise this system. Lind quotes Mises:

It cannot be denied that Fascism and similar movements aimed at the establishment of dictatorships are full of the best intentions and that their intervention has for the moment saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history.

It’s a pity that Lind’s article links to the Amazon page for Liberalism, rather than the free download from Mises.org. If he had linked to the full version, the meaning of this strange statement would have become clear. Cato at Liberty have the full quote:

Fascism can triumph today because universal indignation at the infamies committed by the socialists and communists has obtained for it the sympathies of wide circles. But when the fresh impression of the crimes of the Bolsheviks has paled, the socialist program will once again exercise its power of attraction on the masses. For Fascism does nothing to combat it except to suppress socialist ideas and to persecute the people who spread them. If it wanted really to combat socialism, it would have to oppose it with ideas. There is, however, only one idea that can be effectively opposed to socialism, viz., that of liberalism.

It has often been said that nothing furthers a cause more than creating martyrs for it. This is only approximately correct. What strengthens the cause of the persecuted faction is not the martyrdom of its adherents, but the fact that they are being attacked by force, and not by intellectual weapons. Repression by brute force is always a confession of the inability to make use of the better weapons of the intellect — better because they alone give promise of final success. This is the fundamental error from which Fascism suffers and which will ultimately cause its downfall. The victory of Fascism in a number of countries is only an episode in the long series of struggles over the problem of property. The next episode will be the victory of Communism.

The ultimate outcome of the struggle, however, will not be decided by arms, but by ideas. It is ideas that group men into fighting factions, that press the weapons into their hands, and that determine against whom and for whom the weapons shall be used. It is they alone, and not arms, that, in the last analysis, turn the scales.

So much for the domestic policy of Fascism. That its foreign policy, based as it is on the avowed principle of force in international relations, cannot fail to give rise to an endless series of wars that must destroy all of modern civilization requires no further discussion. To maintain and further raise our present level of economic development, peace among nations must be assured. But they cannot live together in peace if the basic tenet of the ideology by which they are governed is the belief that one’s own nation can secure its place in the community of nations by force alone.

It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history. But though its policy has brought salvation for the moment, it is not of the kind which could promise continued success. Fascism was an emergency makeshift. To view it as something more would be a fatal error. (From Ludwig von Mises, Liberalism, section I:10)

As Jason Kuznicki says, ‘The word I’d reach for wouldn’t be “fascist.” It would be “prophetic.” Especially given that these words were written in 1927.’ The Mises Institute blog links to a long New York Times Magazine piece from March 1933 – six years after Mises wrote, and two months after Hitler’s rise to power – that praised Mussolini effusively:

One may object to any form of dictatorship, but one cannot help being stimulated by the phenomenal vitality of this man who, in his role of dictator, has commanded the barren soil of Italy to produce wheat within a given time. … Here I had the feeling that there is no limiting condition imposed on any Fascist project; a strange impression that whatever Mussolini commands is executed without being hampered by problems, practical or financial.

While the establishment was praising fascism, Mises was denouncing it as the violent evil that it was. For Lind to quote Mises out of context in order to make it look as if he was praising fascism is disingenuous. It’s also a bit rich for someone like Lind, who has written much on his desire for a revival of nationalism in the US, to try to smear other people as sympathetic to the fascism of the 1920s.

Next is Hayek and Friedman’s supposed admiration for Augusto Pinochet, the dictator of Chile during the 1970s and 80s. Lind quotes the historian Greg Grandin:

Like Friedman, Hayek glimpsed in Pinochet the avatar of true freedom, who would rule as a dictator only for a “transitional period,” only as long as needed to reverse decades of state regulation. “My personal preference,” he told a Chilean interviewer, “leans toward a liberal [i.e. libertarian] dictatorship rather than toward a democratic government devoid of liberalism.”

In a letter to the London Times he defended the junta, reporting that he had “not been able to find a single person even in much maligned Chile who did not agree that personal freedom was much greater under Pinochet than it had been under Allende.” Of course, the thousands executed and tens of thousands tortured by Pinochet’s regime weren’t talking.

How Grandin knows that Friedman and Hayek viewed Pinochet as “the avatar of true freedom” is unclear, since their public statements never showed this.

Friedman has been famously smeared by people like Naomi Klein as an apologist for the Pinochet regime. In fact, his involvement with the regime extended to an hour-long meeting with Pinochet during a lecture tour in the country, and a letter he sent to Pinochet outlining the country’s key economic problems.

That criticism has always puzzled me. Was Friedman supposed to have refused to help Chile? Certainly, you can argue that his policy recommendations were wrong, but is Lind’s argument that economists should not try to help evil regimes to make their people richer? In fact, there is widespread agreement among historians that it was Chile’s rising middle class that drove Pinochet out of power. What does Lind think of the many economists who have tried to help the Chinese government hurt its people less through bad policies?

Hayek’s defences of Pinochet are more dubious but, again, misrepresented by Lind. Hayek’s defences of Pinochet were always framed in comparison to the alternative – the socialist Allende regime, which brought Chile to its knees in the early 1970s by collectivizing much of Chile’s industry and land, setting wage and price controls that made unemployment skyrocket, and creating hyperinflation by attempting to print money to finance government expenditure.

Allende used the police to break strikes against his actions – which was ruled unlawful by the Chilean Supreme Court – and ultimately drove the country to deep recession (an average contraction of 5.6% every year between 1971 and 1973). Many feared that Allende would become another Castro, whom he was diplomatically close to.

All this excused neither the Pinochet coup nor his regime’s murder of dissidents. But it highlights the fact that Pinochet was seen not as an ideal, but as a lesser of two evils. This thinking was present on all sides during the Cold War, where the Third World’s choices of government were widely viewed as being between communism or right-wing autocracy. The “lesser of two evils” realist approach to foreign policy is unpleasant, but it has many supporters on both the left and right. As Harry Truman said, “He may be a bastard, but he’s our bastard.”

Even if Mises, Hayek and Friedman had been the collaborationists that Lind accuses them of being, what would that mean about libertarian philosophy? Sheldon Richman says:

Lind’s article contains much to comment on, but here I want to make just one or two points. Even if Mises, Hayek, and Friedman really approved of fascist regimes (one can disagree with them while maintaining that things aren’t quite so simple), it would take more than that to indict libertarianism. Lind never explains why this alleged record doesn’t merely reflect on the particular named individuals who for one reason or another departed from their stated libertarian principles.

If Hayek had been a crack cocaine addict, what would that say about his business cycle theory? If Mises was a gambler, would his theory of money and credit be discredited? No. Lind’s desperation to play the men makes him miss the ball entirely.

Lind goes on to claim that:

When it comes to American history, libertarians tend retrospectively to side with the Confederacy against the Union. Yes, yes, the South had slavery — but it also had low tariffs, while Abraham Lincoln’s free labor North was protectionist. Surely the tariff was a greater evil than slavery.

Sadly, this is a very blatant and false straw man. A minority of libertarians argue that the legal right of secession was legally preeminent during the American Civil War. I don’t agree – slavery nullified the Southern states’ right to legal recognition, in my view. But the debate is a complex legal argument that returns to the American Revolution: if it was just for the American colonies to secede from the Crown, why is it unjust for an American state to secede from Washington DC?

Lind again misleads his readers by quoting David Boaz, the Vice-President of the Cato Institute:

Boaz asked his fellow libertarians, “If you had to choose, would you rather live in a country with a department of labor and even an income tax or a Dred Scott decision and a Fugitive Slave Act?” It says something that in 2009 this question stirred up a controversy on the libertarian right.

Where was this controversy? Lind doesn’t say. Certainly, I have not encountered it anywhere among American libertarians.

I cannot believe that anybody with any knowledge of the historical debate around the American Civil War could believe, as Lind claims, that the defence of the right to secede is down to people disliking tariffs more than slavery. This goes beyond the disingenuousness of the rest of the piece. It is a simple, wilful smear that should bring Lind’s integrity as a journalist into question.

Moving onto 20th Century politics, Lind says:

For that matter, where was the libertarian right during the great struggles for individual liberty in America in the last half-century? The libertarian movement has been conspicuously absent from the campaigns for civil rights for nonwhites, women, gays and lesbians.

Steve Horwitz – an Austrian school economist and libertarian who is also a staunch advocate for gay marriage – has nicely skewered this claim:

Which US political party was the first to have a gay rights plank in its platform? It wasn’t the Democrats, Michael, it was the Libertarian Party, back in 1980.

Indeed. And few other policies hurt more innocent people – and, disproportionately, innocent African-Americans – than the War on Drugs. Where is Lind’s on that? Where are his political allies?

And if Michael Lind had done more than read the Wikipedia page on libertarianism, he might have read about civil rights advocates like Moorfield Storey, the first president of the NAACP (National Associate for the Advancement of Colored People), who was a classical liberal; Zora Neale Hurston, the African-American feminist and libertarian, a committed opponent of the New Deal and interventionist foreign policy; Karl Hess, who fought the Vietnam draft; and the early women whose writings helped to create popular libertarian movement like Rose Wilder Lane, Isabel Paterson and, of course, Ayn Rand.

Milton Friedman was instrumental in the abolition of conscription in the United States.David Warsh writes:

Three months after he was elected, in the midst of a hugely unpopular war, Nixon named a fifteen-member “Advisory Commission on an All-Volunteer Armed Force.” Among its members were Friedman and his old friend Allen Wallis, president of the University of Rochester. … Five members were avowed supporters of the draft, five advocated an all-volunteer force, and five were said to be uncommitted. Former Secretary of Defense Thomas Gates was the chair….

General William Westmoreland appeared before the commission to testify. Like most military leaders, Westmoreland opposed the idea of an all-volunteer force. … At one point, Westmoreland declared that he wouldn’t wish to command “a band of mercenaries.”

In his memoirs, Friedman recalled, “I stopped him and said, ‘General, would you rather command an army of slaves?’ He drew himself up and said, ‘I don’t like to hear our patriotic draftees referred to as slaves.’ But I went on to say, ‘If they are mercenaries, then I, sir, am a mercenary professor, and you, sir, are a mercenary general; we are served by mercenary physicians, we use a mercenary lawyer, and we get our meat from a mercenary butcher.’ That was the last we heard from the general about mercenaries.”

And so the Gates Commission went forward, recommending unanimously … in February 1970, just a few weeks before the Cambodian invasion, that the draft be abolished.

It isn’t surprising that Lind makes no mention of this in his piece at all, but it is depressing that such an omission made it past the editors at Salon.com.

Like John Stuart Mill, Hayek was fearful of the tyranny of the majority – the ability of a majority to use a democratic system to infringe on the rights of minorities. Mill and Hayek both recognized that the argument for democracy is the outcomes that it brings, not the democratic process in and of itself. Liberals value individual liberty above all else; the strength of democracy is that it tends to deliver the most liberal outcomes compared with other systems. The process of choosing leaders should be judged by its outcomes.

This is important, because it shows Lind’s key error: to focus on process rather than outcome. I don’t know what Lind values, but if an electorate voted to enslave all redheaded people I would hope that he would oppose it, and denounce it as an infringement on the rights that all people should have in a civilized society. That 51% – or even 91% – of people voted for it is would be irrelevant. It would still be wrong.

If libertarians are sceptical about unlimited democracy, and refuse to praise democracy in and of itself, it is because they value the rights and welfare of the minority as well as the majority. This doesn’t imply that a benevolent dictator would be better (or even possible), just that fetishizing democracy can lead to illiberal outcomes that we don’t like. Zachary Caceres outlines the desperately poor record of democracies in protecting weak members of society in an excellent post here. And the idea that democracy is not intrinsically just is not unique to libertarianism – see Richard Arneson’s paper on this topic for one example. (H/T to Rajiv Shah for this link.)

There are no libertarians that I am aware of who want to overthrow any democratic regime. Indeed, I can think of no political movement that focuses more on debate and education than the libertarian one. I can’t put it any better than Roderick Long: “libertarians don’t oppose democracy (in the conventional sense) because they hanker after autocracy; they oppose democracy because it is too much like autocracy.”

Lind’s other error is to focus on individuals rather than ideas. This is lazy, unpleasant smear tactics. But it should be taken as a good sign by libertarians. People like Lind, who promotes nationalism and corporatist economic policy, are scared of our ideas, and are reacting to their rise. More than anything, Lind’s post reminds me of an overused but apt quote: First they ignore you, then they laugh at you, then they fight you, then you win.

Are libertarians heartless corporate shills?

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The leftist reaction to libertarian ideas is fairly predictable – they tend to assume that assume anyone advocating them is either (a) in the pay of big corporations or (b) utterly indifferent to human suffering. Or both.

The big corporations point is, of course, completely fatuous. Big corporations generally like big government. They like the ways taxes and regulations insulate them from competition. They like they having politicians and diplomats promote their interests overseas. And they like the way taxpayer-funded infrastructure increases their economies of scale. Trust me: if you follow big corporate money through the political process, you’ll find that almost none of it goes to libertarians.

The compassion point is similarly baseless. Quite honestly, I don’t think that, on an individual level, libertarians are any more or less empathic than the population at large. Indeed, many libertarians are motivated precisely by a deep concern for the disadvantaged, and the myriad ways state failure diminishes their lives. Others are driven by a deeply held belief that freedom is an essential precondition for human dignity and individual flourishing. To accuse libertarians of atomistic nihilism is to misunderstand what their philosophy is all about.

That said, I do think there are three distinctions you can draw between the left’s idea of empathy and that of libertarians. Firstly, libertarians do not believe empathy justifies any policy, regardless of the consequences. The left, by contrast, often uses policy to display its social conscience – it doesn’t seem to matter what the outcomes of various government programmes are, so long as the motivation is to help people.

Secondly, libertarians think compassion is something which individuals display and act on in relation to other individuals. They don’t want compassion to be nationalized or institutionalized. If you care, it’s your job to do something. Leftists typically prefer to force their feelings on everyone through the redistributive state.

Thirdly, most libertarians think that their compassion is something to be earned. It is not something you owe to everyone irrespective of their qualities or virtues: there are those who deserve your sympathy, and those that don’t. Leftists tend to think that compassion should be indiscriminate: after all, we’re all just victims of societal circumstance, aren’t we? The libertarian worldview, by contrast, emphasizes individual responsibility.

Hayek famously refused to accuse his opponents of anything other than intellectual error: “we ought to remain aware that our opponents are often high-minded idealists whose harmful teachings are inspired by very noble ideals.” Leftists ought to come to a similar realization: libertarians are not bad people, just because they disagree with them.

A New World check-up

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So it’s off to the New World for 2 ½ weeks with a visit to friends and family in Toronto and then on to Arizona and Utah to soak up some of nature’s majesty. Seen through the prism of the Old World’s media, times are just as bad over there as they seem to be over here.

Fundamentally, both worlds are grappling with the same problem – societies that have been living well beyond their means for a generation. Rapidly ageing populations coupled with below-replacement birth rates are leading Europe and the Americas down a trail first blazed by Japan some 20 years ago. The debts for the good times are now due and the coffers are empty.

Even as this process ground on relentlessly, governments everywhere hobbled productivity with unrealistic minimum wages, working-time directives, market-distorting subsidies & taxes, pie-in-the-sky environmental objectives and regulation upon regulation.

An optimistic view would be that a general consensus in most countries of the nature of the problem has taken hold but each country’s response has been different. The first casualty, Iceland, immediately admitted the errors of its ways and just bit the bullet. The EU’s Mediterranean members seemed to be in denial for the longest time in hopes that something will turn up – mostly German money. The EU’s masters – Germany and France – are putting their faith in yet another grand master plan for the European project.

Here in the UK, the consensus on deficit reduction is largely holding with the argument being mostly about speed and depth. The test will come as the modest cuts now in the works actually come into effect over the coming years.

Over in the U.S., the hangover from fighting two wars while spending at home like there’s no tomorrow hasn’t been cured yet. They haven’t even agreed on a course of treatment. In time-honoured American fashion, it’s taken the grass-roots Tea Party movement to grab the politicians by the scruff of the neck to force recognition of the real problem. America usually gets it right in the end but time is running out.

That leaves Canada. From afar, it seems like an oasis of sanity in a tempestuous world. The country went through its fiscal crisis back in the early 1990s and, amazingly, seems to have learned its lesson. The banks are solid and government debt mostly manageable. However, it’s extremely dependent on exports of commodities to America and Asia and, ultimately, its economic fate will be determined in Washington and Beijing.

It’s been a good year for pessimists in the Old World. Let’s see if the New World offers any relief.

Birds do it, bees do it

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As Ella sang a number of times.....

Electric eels I might add do it
Though it shocks em I know
Why ask if shad do it - Waiter bring me
"shad roe"

In shallow shoals English soles do it
Goldfish in the privacy of bowls do it
Let's do it, let's do some trade

Yes, apologies, that last line shows why I'm writing blog posts not lyrics. Ahem.

The great argument deployed to justify government regulation of voluntary exchange is that we're all feeble minded idiots who'll get ripped off by nasty people. We have to be limited in what we can do for our own good. That definition of "our own good" and what limits there will be being decided by people on nice salaries in lovely offices on final salary pension schemes paid for by us of course. For our own good.

However, the failure of this argument is that such regulation is not the only method possible of punishing the bad guys. Most of life is a repeat game, we're interacting with very much the same people multiple times. And it's not just humans who know how to do that either:

Beneath your feet, plants and fungi are exchanging nutrients in a marketplace where generosity is rewarded and cheating punished. The two kingdoms were known to exchange nutrients at root level – now, researchers have shown that they have evolved ways to enforce fair trading.

All without a bureaucrat or regulation in sight, mindless plants and fungi are capable of playing repeat games, regarding good and desired supply, punishing cheaters and enforcing fair trade.

So my suggestion is that we get our own mindless plants and fungi out of their offices, strip them of their nice salaries and pensions and burn their regulations on how we may conduct voluntary exchange. For I'm pretty certain that we can manage to outperform Medicago truncatula even if the newly unemployed bureaucrats will find it difficult to beat mycorrhizal fungi.   

Calculating the optimal progessive income tax

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An interesting new paper from Peter Diamond and Emmanuel Saez, trying to calculate what would be the optimal top tax rate to have in a progressive income tax system. Worth taking seriously as one has a Nobel and the second is tipped to be an obvious choice in years to come.

The things that need to be balanced are that the poor like an extra £ of redistribution more than the rich hate losing an extra £ to taxation and there will be behavioural changes as a result of changes in taxation rates. So, the calculation is really, what's the top rate at which we can snaffle as much as we can off the rich to give to the poor without killing that rich goose that lays those golden eggs?

The answer?

As an illustration using the different elasticity estimates of Gruber and Saez (2002) for high income earners mentioned above, the optimal top tax rate using the current taxable income base (and ignoring tax externalities) would be *=1/(1+1.5 x 0.57)=54 percent while the optimal top tax rate using a broader income base with no deductions would be *=1/(1+1.5 x 0.17)=80 percent.

You can just see it now, can't you? Whoopee! Tax the rich more!

Well, actually, this research was done for the US but let's apply it to the UK. This is the top tax rate for the top 1% as well: roughly those who currently pay the 50% income tax rate in the UK situation. It's also not the income tax rate. It's the total marginal tax rate: so we must include national insurance as well, that 13.8% that employers nominally but workers actually pay at such income levels.

So, we've firstly got evidence that the 50 % income tax rate in the UK is above the optimal level for that with the NI takes us well over our calculated to be optimal level of 54%. We'd need to have a top income tax rate of some 42, 43%, for the total marginal rate to be at that optimal 54%.

So, this is good, isn't it? Cut taxes now!

There's also a much more important difference that we should note between the US and UK tax systems. A US citizen is taxed on global income in the US. If they leave the country they still pay US taxes (with a large tax free allowance, with credits for foreign taxes paid). So the only possible behavioural response for a US citizen to such high tax rates is to just earn less money.

For a UK citizen of course this is not true. We can work less, take more leisure, if we think the Treasury is taking too much off us, just as can the American. But we can also leave. In fact, we're signed up to the EU which guarantees that we can move. Also, it guarantees that you cannot discriminate between EU citizens on the basis of national origin. So a Brit living in France would pay tax just like anyone else living in France: it would not be possible for the UK Treasury to insist that income made outside the UK were to be taxed at some special UK citizen only rate.

This escape hatch means that the optimal top rates decline: by quite how much no one as yet knows but it is obvious that they do decline.

So this is even better. We need to really cut taxes now!

And as to that mooted 80% top marginal rate? If we had a broader tax base and no deductions? That ability to bugger off and thumb ones' nose at the Treasury still applies. Meaning that the up to date research from two of the world's finer economists tells us that UK income tax rates are too high.

As, of course, we here at the ASI have been telling you for decades.

Tim Cook is gay: apparently this is important

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I'm told that not only is Tim Cook gay but also that this is something very important which should be emblazoned across the newspapers of the world.

 Tim Cook is now the most powerful gay man in the world. This is newsworthy, no? But you won’t find it reported in any legacy/mainstream outlet.

Well, no, it's not newsworthy and it's this glorious freedom of the market system which makes it not so.

Part of my family comes from Northern Ireland, where you can see what an economy built around close obligations and direct mutual exchange looks like. From the main square you'll have one street leading off to the Protestant church, another to the Catholic. Lining the streets to those respective houses of worship will be the Catholic pubs, the Catholic greengrocer, the Catholic butcher and on the other street the Protestant same. Great grandfather owned the post office licence in such a village and when partition came he advised his children to leave the country. For the money maker, that PO licence, would not remain with the family. Not with a Catholic in a new Protestant ruled state.

That is what happens when we have an economy which takes note of who you are rather than what you can do, when the economy gets caught up in the mutual hatreds and recriminations of small town life. However, we can and have escaped that. We escaped precisely by moving to the impersonality of the global marketplace. I don't care that the CEO of the company I don't buy my computers from is gay, any more than I care that the chips in my phone are made by a Hindu, Musselman or Chinee, that my vegetables are supplied by a Protestant or Catholic or that the server upon which these words reside is in the UK or Poland.

This is the huge great joy of the impersonality, the amorality, of the market. I no more need to care about the sexuality of who makes my computers than he does of my sexuality (middle aged and declining, thanks for asking).

It is of course true that it wasn't all that many years ago that this was not true: those outside the mainstream culture (and it extended to much more than just same sex attraction) were excluded: at times from employment at at others even from the joys of consumption. Which is why Mr. Cook's sexual preferences simply aren't newsworthy. Society has gone through a large and at times painful change to make these sorts of things just not newsworthy: let's keep it that way, eh?