Taxing talent, taxing height, taxing beauty

I'm pretty talented and reasonably tall. However, I'm not beautiful. Now that the debate over taxing good fortune is being broadened out hopefully my biases should start to be smoothed over.

Chris Dillow posted recently on a beauty tax, asking whether it was any more ridiculous than a tax on the rich. He supports a tax on the rich, in part, because of moral luck. Because you are lucky to be born talented or hard-working. Exactly the same logic can be applied to a tax on beauty, height, or much anything else.

Greg Mankiw applied (PDF) the logic of optimal taxation to height and found that it would imply significantly higher taxes for the tall. I think that the conclusion he takes from being able to draw this inference also applies to the argument Dillow makes:

The Times also quotes a critic:

Peter Diamond, an economist at M.I.T., says the paper’s basic mistake is the notion “that if you can draw a silly inference from an approach, then that discredits a model.” He comments: “I think there is probably no model that passes that test."

I wonder what Peter's alternative approach is. If economic theorists are allowed to embrace inferences from a model that they like and reject those that they consider "silly," what is the point of theory? That discretion gives the theorist the freedom to always confirm his priors. The economist ends up using theory like a drunk uses a light post--for support rather than illumination.

My Philosophy

First, let's clear up terms. When I say my philosophy I mean that spectrum of beliefs that constitute my vision of the good life rather than my political beliefs about the ordering of society, although there is almost certainly some interaction between the two. Political philosophy is important but I'll use the generic 'philosophy' for more internal thought for now. It'll make things easier.

I rarely write about my philosophy and only discuss it in earnest occasionally. By contrast, it is both my job, which I love, and my hobby to expound my political beliefs. I think this might partly be because my political views are well within the conservative mainstream whereas my philosophy is, as far as I know, absolutely unique. I follow Chris Dillow's advice and hold my most radical beliefs most lightly. There's more to it than that though. I think that if more people held my political beliefs the world would be a better place. I'm not so sure about my philosophy. What do you think?

God

I'd rather not know. I don't see much evidence for a God but I also don't see much evidence that there is no God. Dawkins' spaghetti monster analogy is misleading. In the absence of evidence to settle a question - whether it is the question of the existence of a spaghetti monster or a God - we resort to Occam's Razor and atheism is the result of Dawkins' answer to the question "what is the simplest explanation of the world around us". However, it is far from the only plausible answer. I don't feel the existence of a deity so don't consider myself to believe in God but I wouldn't rule it out as an atheist should.

However, I'm not quite an agnostic. I don't just not know whether there is a God. I don't want to know. In my present state of ignorance I can see two possibilities:

1) There is a God, but he wants me to think for myself. If God really wanted me to follow received wisdom then I really think he would have left a more thorough guide than a single - now rather opaque - book and a lot of often deeply flawed preachers. The Bible is an impressive work of literature but if you compare the work He has clearly put into that with the real marvel - the human brain and mind - it pales.

The human brain is the most complex arrangement of matter in the known universe and the mind an unparalled inspiration. As such, I think that if there is a God he hasn't given me my own moral judgement as some kind of afterthought or as a challenge to be overcome in order to follow true, received wisdom. I think God would want me to think for myself rather than follow a proscribed set of Commandments. I cannot imagine a God who was truly great, worth following who wanted me to do the right thing for fear of Hell or in the hope of being rewarded with Heaven.

If I knew that He existed I might be tempted to do the right or wrong thing in order to please him. Now, suppose he is wrong? Should I do the right thing because I'm afraid of Hell? Cowardice. Should I do the right thing in order to get into Heaven? I'm not opposed to the profit motive but I'm not going to trade my fundamental beliefs.

I think I'm best off not knowing.

2) There isn't a God. I'm left with the same question. How should I construct my moral code? The question of God's existence doesn't seem morally important.

How should I construct my moral code?

In this situation the important question is whether you wish to believe in nothing and either try to construct a rational belief system - unfortunately these can too often be a house of cards - give up on meaning, seek comfort and risk the sad fate of the last man or choose, for yourself, your beliefs without the crutch of deity or logic. I think the final one of those three options is the best. Rationality requires premises to work from and a life without meaning is a sad one.

"If we have our own why in life, we shall get along with almost any how"

- Friedrich Nietzsche, Twilight of the Idols

I need to work out what I value, my why.

What do I value?

The human mind. Mine and others'. Its creativity, ability to question, learn and relate. The mind is truly amazing. Exploring such potential, and creating a space for others to do the same, is great and requires no external justification.

If I have lived a life where I have seen where my mind can take me; had a full experience of the minds of others - high creativity from afar or good conversation up close; and defended a society in which the free expression and development of the product of the mind is not just permitted but encouraged that seems eminently worthwhile. I don't need more meaning than that.

The Stoics

"You desire to LIVE "according to Nature"? Oh, you noble Stoics, what fraud of words! Imagine to yourselves a being like Nature, boundlessly extravagant, boundlessly indifferent, without purpose or consideration, without pity or justice, at once fruitful and barren and uncertain: imagine to yourselves INDIFFERENCE as a power--how COULD you live in accordance with such indifference? To live--is not that just endeavouring to be otherwise than this Nature? Is not living valuing, preferring, being unjust, being limited, endeavouring to be different?"

- Friedrich Nietzsche, Beyond Good and Evil

Nietzsche wasn't terribly enamoured of the Stoics. For good reason: His philosophy is all purpose and drive; will. Theirs is a reconciling to nature, indifference. However, just as in political philosophy where liberalism and conservatism's alliance on the Right allows both to escape their weaknesses I see a similar, necessary, combination that makes both Stoicism and Nietzsche's philosophy functional.

I take from Nietzsche the essential challenge of the good life - to compose and live by a system of values that are my own and I can reconcile myself to (eternal recurrence is one test). However, how one lives up to that challenge is a question left largely unanswered by Nietzsche. How can a person resist the temptations of an easy, rather than good, life? How can you fight off the temptation to obsess about the qualities or opinions of others?

I can’t think of better guides than the Stoics. Here are a few samples, all from one – quite short – book:

"At dawn, when you are having trouble getting out of bed, tell yourself: "I have to go to work - as a human being. What do I have to complain of, if I'm going to do what I was born for - the things I was brought into the world to do? Or is this what I was created for? To huddle under the blankets and stay warm?

- But it's nicer here...

So you were born to feel "nice"? Instead of doing things and experiencing them?"

“When you run up against someone else’s shamelessness, ask yourself this: Is a world without shamelessness possible?

No. Then don’t ask the impossible. There have to be shameless people in the world. This is one of them.

The same for someone vicious or untrustworthy, or with any other defect. Remembering that the whole class has to exist will make you more tolerant of its members.”

“Remember: you shouldn’t be surprised when a fig tree produces figs, nor the world what it produces. A good doctor isn’t surprised when his patients have fevers, or a helmsman when the wind blows against him.”

“Remember that to change your mind and to accept correction are free acts too. The action is yours, based on your own will, your own decision – and your own mind.”

"If you do the job in a principled way, with diligence, energy and patience, if you keep yourself free of distractions, and keep the spirit inside you undamaged, as if you might have to give it back at any moment -

If you can embrace this without fear or expectation - can find fulfilment in what you're doing now, as Nature intended, and in superhuman truthfulness (every word, every utterance) - then your life will be happy.

No one can prevent that."

– Marcus Aurelius, Meditations

In my own way I have come to Nietzsche’s challenge – to build my own system of values from premises I am aware of and happy with. The teachings of the Stoics have not taught me indifference in general but, rather, indifference to those aspects of life that are – in the end – trivial but are always easy to obsess over.

Of course, all this is a vision – life is imperfect and I am no saint – but it matters nonetheless.

His Dark Materials

I haven't read Pullman's "His Dark Materials". This, brilliant, article makes me rather disinclined to change the situation, or go and see the new film:

"You see, the problem with the message method of storytelling is that you have to stop the story to preach the message. The STORY here required that God be an evil Tyrant, as evil (at least) as Sauron the Great, as cunning as Fu Manchu, as mad as Emperor Nero. The story required an all-powerful Goliath to be fought and overthrown by the bravery of a boy with a knife. The MESSAGE required that the Christian God be depicted, not merely as a tyrant, but as a false and shallow and idiotic creature: the Wizard of Oz, nothing more than a puppet-head and a loud voice controlled by a scared little carnival man behind the curtain.

So the story required that the god-killer be at least as impressive as Milton's Lucifer, who, no matter his flaws, certainly has the dramatic stature and the majesty to attempt deicide. Jack the Giant-killer is an impressive character precisely because Giants are big and impressive. But the message requires that God be not merely unimpressive, but despicable: he cannot be an honorable foe, or even a strong one.

Mr. Pullman started with a story, a Paradise Lost version where Lucifer was the good guy facing impossible odds by defying an unconquerable god; but he ended with a message, where there are no odds because there is no god, merely a drooling idiot. So all plot logic flies out the window: the drooling idiot cannot be and could not be responsible for Original Sin or the Flood of Noah, or the Spanish Inquisition, or whatever crimes God should have been accused of, because he cannot do anything, any more than the puppet head of the Wizard of Oz.

The story required that Asrael be guilty of terrible experiments on children, but that his crimes be necessary in order to discover the secret of the dust and undo the evils done by the Christian God, which have to be much greater than any merely human crime. But the message required that the human condition be merely materialistic, and that there could be no God, and therefore no crimes.

A good story would have shown all the innocent people from Ethiopia, Australia and China tormented in the fires of hell, merely for the whimsical violation of the Christian rule that they are sons of Adam not baptized by a messiah of whom they never could have heard. The writer would only need to show us one ghost, dead of sudden disease as a child one hour before his baptism, being crushed forever between the red-hot plates of a coffin of heated iron spikes, while crying for his mommy, in order to arouse the proper indignation. The crimes of God have to be, for such a story, cosmic crimes. Jehovah has to be shown as a being powerful enough to stop the wheel of reincarnation, which otherwise would have eventually saved all living spirits through many lives of learning and growing, in order to establish an arbitrary paradise and an arbitrary hell. The story of that crime ends when Christianity is overthrown, and the reincarnation cycle which will one day save all people from all suffering is reinstated. (Not to spoil the surprise ending, but this is not so far from the idea that Ursula K. LeGuin handled with such artistic adroitness in THE OTHER WIND, a sequel to her "Earthsea" trilogy.)

But the message cannot be Taoist or Buddhist or even New Age Spiritualism. Mr. Pullman's message is atheist. He cannot have a reincarnation be shown as a better alternative to hellfire, because he does not believe in reincarnation any more than he believes in hellfire. In order for his message to prosper, materialism has to be the order of the day. All the ghosts of the lordly dead, the honored ancestors to whom the pagan shrines are adorned, also have to be false. The ghosts in a Pullman fantasy world have to be bored, and dissolving back into matter has to be the only ecologically sound proposition. It is a boring and undramatic resolution, unconvincing to the point of idiocy, but it is the only one his message would allow.

The message did not allow Mr. Pullman even to list crimes of which the Christian God was accused. If there was a scene where this was done, I missed it. If Jehovah in the story had killed a child or kicked a bunny, I as the reader would have relished the scene of an overdue vengeance being visited on him: the Vengeance of Prometheus for the injustices of Heaven!"

Compare this to the picture of Tolkien's work built up here by Spengler in a superb review of Children of Hurin. I don't agree with the philosophy Tolkein is advancing - I actually think the West is missing pagan heroism and I'm not a Christian - but it has none of the narrow mindedness of the simplistic "there's no God, stupid!" atheism that Pullman appears to be advocating. Tolkein's work has far more depth to it which makes the fact that Pullman "once dismissed the Lord of the Rings trilogy as an "infantile work" primarily concerned with "maps and plans and languages and codes" rather pathetic.

Google Reader

I set up Google Reader last night and am finding it pretty useful. I now have both my favourites in the wider 'sphere and all of Blogpower feeding to it. Should broaden my reading quite nicely as I now give at least a quick read to everything posted.

"I love thee like optical zoom, all others are mere digital"

At 23 I'm still pretty young. However, I already find the modern world's soullessness alarming at times.

The Coase Theorem and Green Taxes

The Coase Theorem explains - in terms that seem ridiculous until you really understand it, but painfully simple afterwards - why externalities don't inherently require state action to ensure an optimal supply. It explains why there is no inherent need to subsidise every public good, tax every negative externality. Too many nasty looking bikers? Pay them to leave. Trains setting your field on fire? Pay them to reroute somewhere else or stop running. Your child is going to have an abortion and you - as parent - don't like it? Bribe them, perhaps with offers of money for university. That final example is actually used in an academic discussion of the theorem, behind the academic firewall I'm afraid.

Of course, this only really works in the fictional land, populated by the imaginations of economists, where there are no transaction costs. In reality it would be a deeply unpleasant experience to negotiate over a pregnancy. All clubbing together and paying our 0.0000001 pence to a factory owner to attach a sulphur dioxide scrubber to his chimney just isn't practicable. We'd need to pay too much for it to be economical just to post him our tiny, fictional coins.

Coase wasn't ignoring this. However, if the problem is not an inherent market failure but, instead, a product of transaction costs making it impossible for society to come to a settlement through the market then negative externalities pose a fundamentally different challenge to the policy maker. After all, while transaction costs might make a market solution inefficient they are just as likely to make a mess of solutions relying upon state power. The case for Pigovian taxation is fundamentally weak.

Jim Manzi does a brilliant job of explaining how this relates to carbon taxes. Transaction costs make the obvious private sector solution to an alledged oversupply of carbon dioxide emissions, pay emitters to stop, impractical. However, there are also massive transaction costs to carbon taxes. He points to three important sources of transaction costs associated with a carbon tax. I'll paraphrase:

1. State intervention into major industries is extremely vulnerable to interest group lobbying. Oil and electricity generation companies have done quite well out of green politics so far. That isn't a freak accident. It's the result of the Logic of Collective Action: highly motivated minorities can exploit the use of state power even in a well-constructed democracy. This diversion of corporate talent to unproductive rent-seeking is wasteful in many ways.

2. We just don't have the necessary information to make an informed intervention in the market. We need to know what level to set the carbon tax. That should be the social cost but unfortunately estimates of social cost vary widely. If we get it wrong our policies will be too draconian or too lax.

3. Politicians don't use Pigovian taxes to correct for externalities but to raise revenue. They'll keep doing this and we'll wind up with higher taxes and the problems often associated with a high-tax economy.

Read Manzi's original post for a more scholarly explanation of each point.

I like to think that my report The Case Against Further Green Taxes is a part of the Coasean case against them. While Manzi can illustrate in theory the transaction costs associated with green policies you can see those problems in practice in Britain today. Corporate subsidy and green non-jobs wasting taxpayers' money, carbon taxes set too high and imposing an unpleasant, not to mention regressive, burden on ordinary taxpayers wanting to do socially useful things like get to work or move goods. The proper comparison to a free-market economy which emits too much carbon thanks to missing markets isn't an angelic, perfect government intervention but one with its own, often even more pernicious, flaws.

A practical example of the Coase Theorem

The Coase Theorem is the idea that a legal system would be unnecessary for the regulation of externalities in a world without transaction costs. A classic example is a train line that produces sparks that set off fires and destroy farmers' crops. If the damage to the farmer is worth more than the economic benefits to the train company the farmers will pay the train company not to run their trains. A rather odd example, from the very early days of this blog, is my consumption of Subway sandwiches.

Sweden has provided another example, via The Croydonian:

"A municipality in eastern Sweden paid a biker gang 200,000 kronor to move away from the region."

The national government could have intervened and used state power to get rid of the biker gang but it wasn't necessary. The socially optimal (presuming that the municipalities leaders are properly representing their constituents) solution won out without outside legal intervention. The bikers didn't want to stay more than the locals wanted them gone. The locals made it worth their while to leave.

The MCB and Holocaust Memorial Day

What's strange about Inayat Bunglawala's article supporting the decision of the Muslim Council of Britain to ends its boycott of Holocaust Memorial Day is that it reads like a case for the boycott:

"I have to admit that I have never been overly convinced as to the usefulness of such memorial events. The very first HMD event in the UK in 2001 was inaugurated by the then prime minister, Tony Blair. He looked typically sombre and determined during the televised occasion. "Never again," the world had said after the Nazi holocaust. But our Tony went on just two years later to give his active support to the criminal invasion of Iraq in which the dead now number in their hundreds of thousands. Never again, eh?"

Equating the Holocaust and the War in Iraq, eh?

This is almost too absurd for words. Anyone to whom the difference between a non-genocidal war fought against a brutal dictator which goes wrong and leads to substantial civilian casualties and an attempt to exterminate a race which leads to radically more deaths (regardless of whether you buy the Lancet's estimate of deaths in Iraq) isn't immediately apparent has no moral bearings at all.

"The British Muslim community was divided right from the outset over the issue of attending HMD. Some argued that the HMD would be misused by Zionists to try and garner support for the policies of the Israeli state."

Paranoia about 'Zionists' leading you to see a conspiracy in a memorial to an unparalleled historical tragedy? That's right - you're a crackpot.

"Others said that if there was to be a memorial day then it should be a more inclusive genocide memorial day. After all, had we not recently witnessed genocide in Rwanda and also of Bosnian Muslims in Srebrenica?"

This is ludicrous. It's a memorial to the Holocaust. It makes no claim to represent all genocides. There are 364 other days in the year on which one could hold a Srebrenica or Rwanda memorial day. Those tragedies have nothing to do with whether the Holocaust deserves a memorial of its own.

"During the Satanic Verses affair, the UK Muslim philosopher Shabbir Akhtar had warned that the next time we saw gas chambers again in Europe, it would be European Muslims that would be inside them."

a) What does this have to do with the matter at hand?

b) During the Satanic Verses affair? When Muslims were breaking the law calling for the death of someone who did no more than write a controverial book? When they weren't even punished for that crime, let alone persecuted in any way?

"Some others said that the reasons for non-attendance would not be properly understood and that it would cause unnecessary hurt to many in the UK Jewish community."

Yeah, they might think that it is putting petty political point scoring over a dignified remembrance of the victims of genocide. Or, they might think that those reasons are just a thin veil for community leaders seeking to appeal to anti-semitism.

"The MCB, with its several hundred affiliates, reflected those divisions. The only national poll that was carried out on this issue - it was commissioned last year by the Jewish Chronicle - found that 52% of British Muslims supported the MCB's hitherto position of non-attendance."

That's what worries me. That it isn't just a nasty minority and 52 per cent of British Muslims are willing take such an ugly stance. I really hope that they can be brought to see reason.

"So, this weekend's decision to attend will certainly have its detractors among British Muslims. Vikram Dodd in today's edition of the Guardian notes that some of the MCB's affiliates may even leave over this issue. On the whole, however, I believe the MCB made the right decision and it sends a welcome and positive signal about its commitment to a shared future in a multi-faith Europe."

This is the conclusion I'd have hoped for. It seems sad, though, that the only argument supporting it is that the boycott was a PR disaster. Bunglawala hasn't repudiated any of the logic that led the MCB to its rightly discrediting position.

Competence in politics

The public are clearly rather unimpressed by HM Government (I doubt she's very impressed either).

The Telegraph have focussed on a perception of 'incompetence' as the main explanation of the Government's woes. Chris Dillow probably disagrees. He thinks competence is a political non-question as the opposition can't claim with seriousness that they will be more competent. In a sense he is right, no one could 'manage' an organisation like the NHS. For that reason there is little to be said for the poll question "A test of any Government is whether it is good at management: whether or not it provides the country with competent day-to-day administration. How would you rate the present Government's performance as managers in connection with each of the following?"

This question is either entirely meaningless, because no one can credibly claim that they can offer competent day-to-day management of organisations as dysfunctional as your average government department, or substantively meaningless as, while people might shift from party to party seeking elusive 'competence', every government will steadily prove itself 'incompetent' over time. They will slowly exhaust the public's patience.

The proper question we should be hoping people will ask is not "which party is more competent" but instead "which party will stop making ordinary people pay for their own hubris in imagining they can run politically managed services competently". On this measure I think there is some difference between the parties but Chris is entirely right that it isn't a lot.

The Telegraph asked another question: "Which of these statements comes closer to your view? Although it has had a fair amount of bad luck recently the present Government is basically competent and efficient. Or, the present Government is neither competent nor efficient: to put it bluntly, it couldn't 'run a whelk stall'." This opens our analysis up to a broader understanding of competence. I think there is another way of understanding competence and incompetence that is, perhaps, more enduringly relevant.

I think that competence in government isn't necessarily about managing, or mismanaging, anything. It can be understood as a purely policy phenomena. I would call someone incompetent if they make a policy decision that led to problems that could easily have been foreseen but that took them unawares (expected problems aren't incompetence, more often they are trade-offs). You can see this kind of incompetence in both of the major administrative scandals that are engulfing the Government. The tripartite structure's weakness in the face of serious pressure and the merging of HMRC combined with complicated tax credits and shortages of resources leading to administrative chaos and data protection failures.

I think that this is a key part of how the public understands political competence and incompetence. It essentially recasts competence as a simple question: how cautious is a politician of the possibility that their policies will have unintended consequences?

That seems relevant for even the least managerialist Government. The next thing that needs to be thought about is how a Government or opposition can make themselves more competent. An answer to this question is tricky but I think that subjecting their policies to a more severe 'trial by fire' within their party and movement would be crucial.

'Liberals' conspire against the Public Sector Rich List

This post by Gracchi on the Liberal Conspiracy website attacking the Public Sector Rich List has plenty of phoney 'gotcha' moments. Fortunately, none of them remotely stack up:

"Firstly its noticeable that on their website, they claim the need for this survey because these public sector workers are paid so much more than teachers, soldiers and policemen. The politics of envy resurfaces and is evident in many of the comments! Such an argument presupposes a commitment of some kind to equality- and acknowledges the injustice of directors of the Royal Mail sitting in plush offices earning millions whilst soldiers sit in Basra risking their lives earning thousands. I’m not sure how that sits with the reductions in taxation that the TPA advocates elsewhere- nor am I sure that the only inequalities are within the public sector."

Let's look at the actual reasons why we said the Rich List was needed:

• "Transparency. People and organisations that receive large amounts of taxpayers’ money should be accountable to the public they serve. Taxpayers should be able to judge for themselves whether the remuneration of senior officials represents good value for money.



• Rewards for failure. People in the public sector should be paid well for good performance. But in far too many cases senior public sector officials are being paid over the odds for dreadfully poor performance, which in some cases would warrant a sacking in the private sector (see Table A1.2 for 10 examples)."

We did include the wages of soldiers, nurses and policemen in our report but as a comparison. Some of the bigger salaries are so high that the numbers can almost become meaningless. Just like the £101 billion of waste figure in the Bumper Book of Government Waste they need to be compared to something so that people can get their heads around them.

"Secondly they argue that the salaries of public officials should be justified- and they are right. Lets take Adam Crozier, chief executive of Royal Mail. He is paid a ridiculously vast amount of money, but he was recruited from being Chairman of the FA- and before that was a leading advertiser. If the TPA believe in the efficacy of private markets setting wages then Adam Crozier is probably being paid at about the market rate for a chief executive- and so are many others amongst these fat cats in the public sector. Ultimately the cause of the pay of the public sector fat cats is the pay of the private sector fat cats. If you want to get your hands on these types of people you have to pay these types of salaries. So if you want to take a look at public sector people being paid too much for these jobs, perhaps you have to either settle for rubbish directors (of which more in my third point) or you have to think about private sector pay scales."

Firstly, private sector Chief Executives often make far less than even the average in the Public Sector Rich List never mind Adam Crozier. This was pointed out by Chris Dillow in his response to a Comment is Free piece making a similar point to Gracchi's:

"The Institute of Directors reports (pdf) that the average managing director of a firm with turnover below £5m gets a basic salary of just £65,000. One with a turnover of £50-500m gets £141,440. These are decent professional salaries, but not a fortune. And the survey also finds that public sector bosses are already paid more than private ones, at least outside financial companies (which are managed so much better, of course)."

Of course, the Royal Mail is a big company and Crozier doesn't, necessarily, represent bad value. However, the Royal Mail's performance this year has been far from brilliant. Gracchi doesn't have the slightest clue whether he is being paid the right amount and the idea we should just trust the judgement of the Royal Mail's Remuneration Committee to get it 'right' is palpably ludicrous.

In the private sector when a senior manager is paid too much shareholders should be up in arms. The revolt over Jean Pierre Garnier's deal at GSK is a classic example that should be emulated more often. In the public sector the public need to fulfil that role. They need to fight the temptation for public sector organisations to be run for the benefit of management instead of the public. Our rich list allows them to do that.

"Thirdly, ah says my Taxpayers’ alliance friend- but the question is whether they have any impact on their organisations. But again that presents him with an ideological problem. Generally researchers for the TPA believe in hierarchy and hence in differentiated pay. There is lots of evidence, just have a look at Chris Dillow’s blog, that company directors don’t necessarily have an impact on their company stock’s performance- and its quite possible that the same thing applies in the public sector but again all the arguments in favour of or against hierarchy apply similarly in both sectors and hence all the arguments for and against large pay differentials and packets!"

The idea that because you believe some managers are good value you should believe all managers are good value is idiotic.

"The ultimate problem with this kind of Daily Mail politics is that in order to establish that well paid bosses don’t make the public sector any better off, the Taxpayers’ alliance would have to accept that well paid bosses don’t have any positive impact on any organisation. Otherwise they are arguing for poorer public services! (Or perhaps that equality is a moral good which trumps efficiency, but again is that a unique truth for the public sector!) All these arguments seem to me to rebound upon their owners."

This is full of non-sequiturs. Just because we think some public sector bosses offer poor value we don't have to be opposed to well-paid bosses in general. Equally, just because we find big pay packets in the public sector alarming doesn't mean we have to in the private sector. If a firm in the private sector pays its senior management way too much then they will be hurting their ability to compete in the market. Public sector organisations, by contrast, are often monopolies and are paid for by money taken from a taxpayer who has little say in the matter. They don't face the threat of creative destruction if they prove inefficient.

"In a sense this isn’t important- the list they did didn’t really make the national media."

This is utter leftie hubris. I'm afraid a little boasting will be necessary to refute it.

The report got excellent coverage in the national media. It was initially an exclusive for the Sunday Times who put it on the front-page, gave it two pages inside the paper and wrote a leader on the subject. It was then covered by Sky News, BBC News 24, the Mirror, the Express, the Scotsman, the Times, the Telegraph, the Financial Times and the Sun - in many cases quite prominently. It's hard to think of a recent thinktank publication that has had better national media coverage.

Finally, we had this in the comments:

"Of the top ten on the list, six cost the tax payer nothing at all.

Network Rail, Royal Mail, BNFL, and Channel 4 are not parts of the civil service. They are public owned market bodies. They earn their revenues from business activities, and they pay their from those revenues.

So what do they have to do with the tax payer’s alliance?"

These are organisations either owned or heavily subsidised and guaranteed by the taxpayer. If they go belly up we will wind up with a hefty bill to pay. Every penny the Royal Mail pays to Adam Crozier is a penny that will not contribute to the Royal Mail's return on the taxpayers' big investment in owning Royal Mail.

Gracchi's article is a mish-mash of simplistic assumptions and clumsy logic that can't stand up to the slighest scrutiny.

Cross-posted from the TaxPayers' Alliance blog

Putting a politician in charge of financial stability

Defending financial stability in an economy near you... soon...

Peter Franklin strikes again:

"Devoting a Cabinet minister to financial stability is no guarantee of financial stability, but it would help and, if nothing else, would send a message to the anxious savers and pension fund holders of Middle England that we take their concerns seriously."

At the moment no one has direct overall responsibility for financial stability. I think that just about the only way you could make things worse is to put a politician in charge. This isn't an area where there are many ideological issues at stake that should be decided democratically. It is, instead, an area that requires expert and experienced judgement.

Your ideal person to put in charge of financial stability is someone respected by the markets with a real knowledge of economics and how the system works. A non-politician. Make it a ministerial post and you're highly unlikely to wind up with someone qualified to oversee the financial system (of course the same can be true with the Civil Service - see Sir John Gieve). There aren't really people with those kinds of qualifications in the Commons - just a few ex-financial journalists and the odd banker.

You'll probably get someone who won't have real experience in anything but politics. Particularly given that it will be a job where people only notice the minister if things go wrong. Just like the Home Office at the moment it will be a poisoned chalice which will mean it won't even get the brightest ministers. Whoever got the job would just have to watch, fearfully, and hope things take care of themselves. If something went wrong there would probably be a carefully established media strategy but little idea of what to actually do about the problem. The stability of the British financial system would be further impaired and Middle England wouldn't be impressed.

"The EU is cutting emissions" - which EU?

Brilliant bit of deconstruction over at the Cooler Heads blog:

"Reader, beware. Europe has quietly swapped out one “we” for another, such that the “we” Dimas refers to now is the EU-27, a whole ‘nother kettle of fish. This does not reflect the performance of “Europe” according to Kyoto, which is the EU-15, or “Old Europe”.* The remaining States only afford such rhetoric by bringing to the table an emissions inventory well below their 1990 baseline, due to economic collapse, an artifact of political history unrelated to the Kyoto agenda."

Go there for more detail.

Stay positive

Great post by Mark Wallace over on the TaxPayers' Alliance blog. About the things you can learn from an unscientific BBC web poll.

How to smear a writer

Does Sunny think David Landes is a racist?

"Portuguese intellectual shortcomings soon became a byword: thus Diogo do Couto, referring in 1603 to "the meanness and lack of curiosity of this our Portuguese nation"; and Francis Parry, the English envoy at Lisbon in 1670, observing that "the people are so little curious that no man knows more than what is merely necessary for him"; and the eighteenth-century English visitor Mary Brearley who remarked that "the bulk of the people were disinclined to independence of thought and, in all but a few instances, too much averse from intellectual activity to question what they had learned.

[...]

Portugal had become a backward, weak country" (The Wealth and Poverty of Nations, p. 135-136)

His attack on Martin Amis suggests he probably does.

He quotes Amis as saying "the impulse towards rational inquiry, is by now very weak in the rank and file of the Muslim male” quote. That's a generalisation but I don't think it is a racist one. It could be true or untrue but requires no particular hostility to Muslims. It is very similar to innumerable quotes that could be pulled from Landes' book. For example, "Portuguese intellectual shortcomings soon became a byword".

Sunny says that Amis' most offensive utterings were the following:

"The Muslim community will have to suffer until it gets its house in order. What sort of suffering? Not let them travel. Deportation - further down the road. Curtailing of freedoms. Strip-searching people who look like they’re from the Middle East or from Pakistan … Discriminatory stuff, until it hurts the whole community and they start getting tough with their children."

Sunny never links to the original interview from which these comments spring so I've had to do a bit of searching to get it. As a commenter on his Liberal Conspiracy post points out the actual quote starts with:

"There’s a definite urge – don’t you have it? – to say,"

These aren't Amis' recommendations, they're a guilty admission of thoughts that he regards as unacceptable. He is describing dark thoughts that civilised people control but that are not indicative of racism or any other quality worthy of condemnation. It is those who do not see them as problematic that we have to worry about.

Amis' crime, if he has committed one, is to be a literary figure without the depth of self-control expected of someone engaged in an intensely political debate. Sunny's only response to the commenter who pointed out the distortion was, essentially 'but Imams get taken out of context too'. That Sunny can be so brazen about his character assassination is disgusting.

Perhaps Imams also suffer Amis' fate sometimes, although often when Imams claim to have been taken out of context that turns out not to be the case, but I don't know of anyone who has actually defended the practice of taking people out of context.

The statement about demographics is also taken out of context. Sunny presents it as an appeal to nativist fears of being 'overrun'. Again, here's the introduction Bennett and Sunny miss out - from the same interview linked above:

"He and The Hitch were in Las Vegas the previous week, and shared their grim premonition that this could be the beginning of the end for Israel."

His concern about Muslim demographics isn't a generalised concern about "them" and "us" but a specific concern about the Western world's ability to defend Israel. He's concerned that demographic change will make that impossible. The preceding paragraph further sets that in context as part of a broader worry that the British set Israel up in an impossible position. Deep fears that the Muslim world are out to 'get' Israel can be attacked as unjustified but are not racist.

Racist is an unfortunate description to throw around. Just like anti-semitic and insane it is one that sticks to people and defies rebuttal. After all, it is an attack not on someone's arguments or even their interests. It is an attack on the inner workings of their mind, it alleges that their very soul is defective. There is no real way to open yourself up, to prove yourself a non-racist. The best anyone can really do is the "well, I've got lots of friends of other races" but that isn't allowed to stand. Friendly personal conduct, apparently, is no barrier to being deeply unpleasant in some larger way.

Accusing people of racism is a bankrupt and small-minded style of argument. It is a witch-hunting discourse that will favour those who don't express themselves, who shut up and then manoevre into positions of power after a career of quiet blandness. It is, in the deepest sense, anti-intellectual. It closes our minds.

Oil peak and trough hysteria

The rhetoric on Peak Oil is so desperately disingenuous it is hard to know where to start. First, the possibility of the oil price breaking the $100 barrier is taken to indicate that the arrival of Peak Oil is imminent. Given that there is currently a cartel among the major oil producing countries the oil price doesn't tell you anything significant about possible production. The oil price is the result of demand interacting with the cartel's chosen supply, which bears no resemblance to total possible supply.

Once OPEC is consigned to irrelevance by depleting supplies and rising demand all that will mean is that oil is one more scarce resource. Peak oil is no more threatening than that. As supply dwindles and the price rises a genuine incentive to use oil efficiently and look for substitutes will be created. If you're worried that this process will be challenging, which it might be, the last thing you would want to do is intervene to try and make us confront this challenge now. Keep the price as low as you can, as long as you can. Don't put green taxes in place. That way we will face the greatest challenges from declining oil stocks when we have more technological substitutes in place and, as a result, using less oil is less expensive. In fact, the best policy for Britain would be to take advantage of an expected high price and slash rates now on North Sea oil so that more is discovered there and we have a larger domestic supply going foward.

What's really ironic, though, is that the faster we expect oil stocks to diminish, the more credibility we attach to those expecting Peak Oil to arrive sooner rather than later, the less seriously we should take global warming. After all, if oil stocks are going to diminish faster than we expect then the world will have to stop using fossil fuels sooner rather than later. There will be an economic imperative, that the market will reflect without any government intervention at all, to cut fossil fuel use. There's no need to accept a massive expansion of state power if the job of increasing the price of using oil-derivative powered plains, trains and automobiles will be done by declining oil reserves anyway. We can avoid the waste and incompetence that has so far been associated with attempts to use the power of the state to control fossil fuel use.

$100 oil isn't really anything to do with Peak Oil or any other natural shortage of supply but the result of faster than expected demand growth, thanks to a strong world economy, that OPEC is unwilling to balance out. Oil stocks will decline but this will just make oil one more scarce resource. Markets are very good at making efficient use of scarce resources and human ingenuity, when put to good use by a free-market economy, is great at finding substitutes. We'll be fine.

Lawyers and deterrence

I've long been opposed to the death penalty and I haven't changed my mind yet. However, this is incredible, from the New York Times:

"According to roughly a dozen recent studies, executions save lives. For each inmate put to death, the studies say, 3 to 18 murders are prevented."

I've heard it stated as fact by so many lawyer-debaters that the death penalty doesn't work as a deterrent I'd assumed that was actually what the evidence showed. Instead it appears to be just a lawyers' urban myth.

I'm increasingly of the opinion that lawyers just don't like the idea of deterrence. It doesn't fit with the highly individualistic understanding of justice that their profession encourages them to think in terms of. Their job is to deal with cases in isolation. The importance of the broader impacts of sentencing to create a deterrent just isn't apparent when you're looking through that prism. Given that they're a group given massive power and unnaccountable to the world around them such a systematic cognitive bias among the legal community is pretty bloody important.

Illness

I'm afraid I'm still ill. Just a messy, undignified cold. Which is no fun. I've got a host of things I want to do and write about but my brain is working at an absolute snails' pace.

On the plus side, I think I now 'get' Mutley's blog. This is genius.

A day's a long time in politics

When Dave wrote it (two days ago - I apologise for the title of this post - poetic license) this was a reasonable, if overly generous, account of what had gone wrong at HMRC. Now it looks like pretty much every argument in Darling's defence is completely invalid. At the same time it is becoming very apparent that this mistake will prove expensive for customers, banks and, when someone claims for compensation, the taxpayer. He might get away with it if the discs are found within the next few days and could hang on regardless but Darling should resign:

1) It wasn't just a random mistake

• It was a decision that senior staff were aware of.
• It wasn't the only such incident. 2,111 data protection breaches in the last year.
• Junior staff shouldn't have the ability to do this sort of thing.

2) The Government bear a large measure of responsibility for organisational failure at the HMRC

• There's nothing wrong with trying to slim the staff at a government department, operations can often be simplified and the need for massive bureaucracy reduced. However, combining staff cuts in the same department with a messy merger, the massive complexities of new IT systems and the ongoing debacle of an overly complicated tax credit system is a recipe for disaster.
• The Government was warned that there were serious problems with data protection within Government departments. They ignored those warnings.

3) Darling's defence for the delay in letting everyone know the data was gone appears desperately weak

He said it was to give the banks time to prepare but why was there a delay before he told the police and then a further delay before he hold the banks? Why do the banks deny that they asked for time to prepare?

On Jeff Randall Live

I'm afraid I've been very busy and am now feeling very ill. Hopefully I'll recover by the morning. In lieu of anything more substantial here is a transcript of the Shadow Chancellor, Peter Hahn - former director at Citigroup and now academic at the Cass business school and myself discussing Northern Rock on Jeff Randall Live, Sky News. A couple of extracts:

"JEFF RANDALL:
Matthew, let me bring you in, nationalisation, we don’t exactly have a great record with that do we? Looking back to all those car companies in the 70s and indeed the Dome more recently wasn’t exactly a great success.

MATTHEW SINCLAIR:
Well indeed and talking about confidence, if you are going to make this issue entirely one of, make all of the control of Northern Rock the government’s, if we are going to make it entirely a government concern, then we need to have confidence in the government. How much confidence do we have in them, how much confidence would we have in their management, in their ability to take Northern Rock forward if this becomes entirely a matter of the government handling a huge amount of risk once it nationalises and takes over all of the risk connected to Northern Rock?

[...]

JEFF RANDALL:
Matthew, Taxpayers Alliance, you sit there and watch the government’s every move, you count the pennies, what mistakes have been made here?

MATTHEW SINCLAIR:
I think the problem we had here was not necessarily that the government went in and lent but it went in without a proper exit strategy and without a proper idea of how it would limit its commitment. This is analogous to the Iraq War, your problem isn’t the decision of whether you go in or not, your problem is what you do next and I don't think they ever had a very clear picture of what that was going to be."

Update: Thanks to Edmund for pointing out that the link went to an interview with Chris Langham. It now points to the right place.

Immigration and society

I have never been convinced that there is a particularly acute case for or against immigration on economic grounds. I would expect that the labour market's gain and the congestion problems would largely offset one another. This appears to be supported by the statistical work on the subject. Mike Denham links to a National Institute of Economic and Social Research study that found that immigration increased GDP by 3 per cent, it increased population by 3.8 per cent - GDP per capita fell a little. I don't think either side can honestly claim that the issue of immigration can be comprehensively settled by an appeal to economic logic alone.

My concerns over immigration are, instead, philosophically conservative. My premise is that a decent, peaceful and liberal society is a rarity whose defence is constantly in doubt. The libertarian approach to the pursuit of liberty - of trying to define and create the most pure liberal society possible - I sympathise with but regard as fundamentally mistaken. It leads them to prioritise transient victories, laws and constitutions.

Instead, I see the most important challenge as creating a nation able and willing to sustain and defend a liberal society. This project is always difficult due to a number of necessary structural weaknesses in liberal democracy. The logic of collective action demonstrates how minorities can capture the state thanks to the difficulty of mobilising a majority. Liberal values can be limiting when facing enemies facing no such constraints.

The challenge of defending Western values is currently particularly difficult thanks to relativism. Dalrymple sets out why the challenge of confronting threats to Western values is particularly acute:

"When faced by people who, quite mistakenly and with a combination of staggering ignorance and arrogance, believe themselves to be in possession of a truth that justifies almost any atrocity committed, if not by them, exactly, then by those whom they have indoctrinated, modern Western Europeans do not know how to react. They have either forgotten what it is to believe in anything, to such an extent that they cannot really believe that anyone else believes in anything, either; or their memories of belief are of belief in something so horrible—Communism, for example, or Nazism—that they no longer believe that they have the right to pass judgment on anything. This is not a strong position from which to fight people who, by their own admission, hate you and are bent upon your destruction, brought about preferably at your own expense. First, you can't take them seriously; second, you suspect they might in any case be right."

Our weakness is immediately apparent if you look at the craven response by our media and political establishment to the Danish Cartoons Crisis. Massive and threatening protests across Europe and the Islamic world attacked freedom of speech and pronounced themselves grievously offended by cartoons published in a small newspaper in a small European country. Not a single British newspaper printed the cartoons and Jack Straw praised their cowardice as 'sensitivity'. Our most important values were coming under attack by those who hoped to use the threat of violence to intimidate others, to destroy free speech without a law in sight. Our supposedly fearless media was not willing to join Jyllands-Posten and a handful of other European newspapers in the trenches and make such a simple statement of collective defiance of the Islamist threats.

We need to be concerned about our ability to defend our values. I am often worried by the way integration is usually described: as a policy intended to ensure "community cohesion". That misses the point. You could theoretically create a very cohesive society, at least in the short term, by clamping down upon freedom of speech and just having everyone shut up about their differences. I don't think this would work in the long-term as a society lacking the catharsis of free speech would develop greater lingering resentments. More importantly, it implies sacrificing one of the West's most important values. Defending those values is more important than pursuing community cohesion for its own sake.

Importing huge numbers of people every year who often do not share those values is a very risky thing to do. 4.6 per cent of the British population have arrived here in the last ten years. A great many of those have arrived with values incompatible with the Western tradition that Britain is a part of. Unlike Iranian immigrants to America British immigrants from Pakistan, for example, are not drawn particularly disproportionately from a Westernised elite. Compare immigration to Britain now with previous waves of immigration that were smaller (the Huguenots were about one per cent of the British population) and didn't have the same clash of values and it is hard to see a parallel for the kind of challenge we already face. Further immigration at the same rate might make it utterly impossible to defend liberal values whose defence is already looking fragile.

An undermining of common values walks hand in hand with an undermining of national identity and the willingness to compromise. Compromise has to be based upon a certain measure of trust that your moderation will not be taken advantage of. Building trust is more difficult in a society where people cannot call upon shared experience and history. Integrating immigrants into that shared experience is harder when there are so many of them that they are unlikely to see an existing community of which they can form a part. Politics will become uglier and commerce more bureaucratic if people do not trust each other. A fractious politics could create differences of values even if they don't already exist.

Even leaving aside differences of values creating a nation where people trust each other enough to work and live together happily is a real challenge. I have no idea how we might go about creating such a spirit in a nation with so many new entrants. Anyone who supports immigration on the scale of the last ten years without a really good idea of how they'll turn the new population into a nation seems, to me, to be engaged in an exercise of utter irresponsibility.

So, to conclude, my problem with immigration is not economic. My biggest concern is not that immigrants will take jobs from indigenous Britons (although we should be very concerned about the impact on the lower paid) but that it will lead to the slow death of the values that define what is best in our society. That we will become more divided and untrusting.

I must, finally, comment briefly on whether we can limit immigration. I think we can. I've seen two suggestions of reasons why that might not be possible and both seem deeply spurious. First, Chris Dillow posits that we can't because our coatline is so much longer than the US-Mexico border that they're proposing to build a fence across. This rather misses the point that we already have a bloody great moat. As an island nation it is almost uniquely easy for us to defend our borders. Second, others suggest that international obligations prevent us controlling immigration. This just doesn't fit the numbers as those granted asylum and EU migrants combined are under 40 per cent of the last decade's inflow. Intra-EU migration is also less important with respect to the values clash as immigrants from European countries are more likely to share Western values like free speech.

As such, I think we can and should limit immigration in order to defend the fragile social order - already under severe strain - that has made Britain so successful, so worth migrating to.