At the height of Make Poverty History back in 2005, in the Cabinet Room at No 10, Richard “Four Weddings and a Funeral” Curtis asked then PM Tony Blair, “would you mind if I showed you a video I’ve made?” It’s not the same as some bloke at work offering to show you his holiday snaps. So when Richard Curtis showed his new Robin Hood Tax video to some of the 85 national organisations supporting the latest big campaign in the TUC General Council Chamber earlier this month, we knew we were in for a treat. There’s already a German version, made with different actors. But the message is the same: we’re calling for a small tax on financial transactions to pay for big change for everyone.
Transaction taxes have a lot of popular support (the campaign’s facebook site attracted 100,000 fans in just nine days), but also a lot of heavyweight supporters. European leaders in Austria, France and Germany are supportive. Economists like Jeffrey Sachs, Paul Krugman and Joseph Stiglitz are high profile backers, but the campaign has released a letter from 350 economists around the world who support the idea. In Britain, Vince Cable, FSA chief Lord (Adair) Turner and Gordon Brown have all backed transaction taxes.
The devil, of course, is in the detail. What we are proposing is a tax varying from as little as 0.005% on wholesale currency transactions up to the existing 0.5% stamp duty on share trading. Some of the riskiest behaviour – such as betting on currency movements over hours or even minutes – will decline in response to such a tax, and that’s no bad thing. But even so, we have calculated that if implemented globally, such taxes could raise £250 billion a year for public services, tackling global poverty and coping with climate change.
The question we’d like to put on the political agenda, however, is not “should we have a Robin Hood Tax?” It is the rather more pressing question of how else we are going to pay for the costs of the global economic crisis. The bank levy that President Obama has suggested is a sensible way to insure against the costs of bailing out the banks. But that doesn’t address the damage caused to the public finances by the impact that the financial crisis had on the rest of the economy. Across Europe, 7 million people lost their jobs over the last couple of years. Globally, over a trillion dollars was pumped into the world economy to stabilise, shorten and reduce the depth of the recession. It was the right think to do. Across the OECD, more than ten million jobs were saved.
But now we need to find a way to pay for restoring the public finances, as well as tackle the unfinished business of the Make Poverty History campaign (even the pledges on overseas aid made at the Gleneagles G8 have fallen $22 billion short) and make a start on the challenge that the Copenhagen climate conference failed to address. No opponent of the Robin Hood Tax has said how else those challenges can be met, but the answer is clear. Massive cuts to public services on the one hand, or huge increases in other taxes like VAT.
There are still issues to be worked out about how precisely to introduce the tax, what precise transactions should be covered, how to ensure the costs aren’t simply passed straight on to consumers. We don’t want to make an enemy of the bankers whose activities will be taxed – we want them to help design the system so it works.
Getting agreement on a global tax won’t be easy The Government could make a start with a small currency transaction levy in the Budget next month – which would still raise billions. The European Union could implement a continent-wide transactions tax, and show the leadership it needs to show to keep Europe working and keep it popular with its citizens.
But if we don’t start discussing what we are going to do, and how it can be done, then we will be left with a huge hole in the public finances, people continuing to die of treatable diseases in developing countries, and deforestation, floods and famine as climate change takes hold.
Richard Curtis is keen on happy endings, as his movies show. That’s essentially what the Robin Hood Tax could be. Turning a crisis for the banks into an opportunity for the world.
Owen Tudor is Head of European Union and International Relations at the TUC.
‘The Independent View‘ is a slot on Lib Dem Voice which allows those from beyond the party to contribute to debates we believe are of interest to LDV’s readers. Please email [email protected] if you are interested in contributing.
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59 Comments
Delighted to see an independent opinion from the TUC for a change.
I think you need a PHD in economics to work out whether a Robin Hood tax or a Tobin tax will actually work in real life.
Financial institutions as we know are very innovative, and one of the ways in which they are innovative is to find ways to get round taxes like these. Not long ago we witnessed how innovative financial institutions are are getting round regulations, the effects of which have been disasterous.
However these kind of taxes have to be right in principle at least. The metaphor that Tobin used; “Throwing sand in the wheels” is clearly what is needed to inhibit financial institutions from behaving irresponsibly as they have been doing recently, and also to payback the huge cost to the taxpayer for bailing them out, whether directly or indirectly.
I think the question we should be addressing is not whether these taxes work, but how to make them work.
In addition I think the Lib Dems are right to advocate what is in effect massive state intervention to reduce the size of banks and seperate out their casino and retail operations. The average person should not face financial catastrophe because of the irresponsibility of their bank.
Since we live in a globalised world I also agree with the author that international cooperation is essential. Excessive bonusses incentivise irresponsible trading, short term profit and credit bubbles, and if possible we should not be held to ransom by those threatening to leave the country. They will simply replicate their irresponsibility wherever they go, so no one will win from that.
Geoff, I found your comment deeply amusing. This line in particular: “I think you need a PHD in economics to work out whether a Robin Hood tax or a Tobin tax will actually work in real life.”
You say this, then support a piece from a chap at the TUC whom, as far I’m aware, doesn’t have a PhD in economics. The article rather neglects to mention that all the people who support it who do have PhDs have doubts about its implementability, and that the people with PhDs who don’t support it point out that it’d be impossible to implement a tax of this nature without providing a way to get around it.
Speculative activity isn’t bad in and of itself; certainly it can have negative impacts as it represents the collective selfishness of the entire market, but it wasn’t the cause of the recession. I’m going to side with the people on the PhDs on this one: don’t support the Robin Hood tax until they’ve actually worked out all the ‘issues’. I’m not convinced they can.
The thought of a globally agreed tax mechanism fills me with utter dread. A transaction tax today, who knows what else tomorrow.
When I was writing banking and investment management software I always remember getting requests for bespoke work to calculate and collect things like rounding differences to three decimal places. If the bankers thought that worth collecting, how much more will they object to trrying to take five hundred basis points off them per transaction. Hint: the fact that a basis point is one five-hundredth of this proposed tax should tell you something about how much of a difference this will make to pricing.
It was probably Gleneagles that turned me into an anarchist if truth be told. All that strutting around, as if with the right to “rule the world” of several of the most dangerous men on the planet made me want to vomit.
How to get us out of the fiscal hole we are in? Let’s not. Repudiate the national debt and raze Westminster to the ground. Let us start again, free and unencrumbered by the vestages of privilege created by government.
The last thing we should do is give the Government more money. They are like drug addicts, and they’ll just blow it all on crack again.
We need to address the root cause of the fiscal crisis, not keep feeding Ministers’ problem spending addictions.
What was it P J O’Rourke said…
Adam Bell’s right, I only have the one degree in economics. I’m not entirely sure that makes me unqualified to comment on what Governments should do to pay for the world recession, climate change and global poverty. Certainly the experts at the top of the financial sector didn’t seem to know what they were doing, so expertise might not be all it’s cracked up to be.
However, since letters from economists seem to be all the rage these days, twenty signatories here, sixty signatories there, look at the 350 economists (we’re pretty sure they ALL have PhDs in economics) on the Robin Hood Tax website: http://robinhoodtax.org.uk/in-the-news/350-economists-call-for-a-financial-transaction-tax/. Adam is simply wrong that all 350 of these economists have doubts about the practicability of a financial transactions tax (excepting that we should all have doubts in a generic sort of way, because being smugly sure of yourself is what’s often got us into the sort of messes the Robin Hood Tax is designed to get us out of!) But we certainly don’t claim to have all the answers, and we’re certainly willing to listen to and discuss with anyone who can help design a better approach.
One more thing. I’ve been involved in debates across the blogosphere on this issue recently, and what opponents of the Robin Hood Tax never do is to say what alternative to it they support. Is it savage cuts to public services coupled with no action on climate change financing, and a standstill on overseas aid, or an increase in other taxes like VAT? Because those are the alternatives: politics, like economics, is about choices. I choose a financial transactions tax.
What I was saying Adam is that I support the tax in theory, but I do not know if it would work in practice.
I am certainly reassured that there are people like Joseph Stiglitz who believe it can be made to work in practice. He knows from experience having worked previously at the world bank how financial institutions do innovate their way around regulations, but he says that the technology is their to stop that from happening.
I don’t understand why some of the respondants object to the idea of a tax to get our money back from the banking bailout. In addition we should bear in mind that the threat of global warming is even more serious than that of the potential financial collapse that has just been given sucha high priority. The Make Poverty History goals remain important as well given we remain considerably wealthier than most countries in the world. So as Owen says; what is the alternative?
If we are talking about alternatives to the horrible Robin Hood proposal, I haven’t seen better than Vince Cable’s pamphlet, ‘Tackling the fiscal crisis: A recovery plan for the UK’.
http://www.reform.co.uk/Research/ResearchArticles/tabid/82/smid/378/ArticleID/950/reftab/56/Default.aspx
Vince wrote: “The emphasis for fiscal consolidation must fall on controlling public spending, not higher taxes: to commit to additional tax revenue raising from the outset undermines any commitment to setting priorities in spending. This process will be painful and difficult. It will involve real cuts in many areas and will mean that the big budgets – health, welfare, defence and education – must be tackled. There should be no “ring fenced” areas of spending. Existing spending has to be justified, not simply assumed to be necessary and trimmed at the edges.”
As we would expect from Dr. Cable, it is sound, practical, compassionate, and sensible. Which is why he’s our choice for Chancellor, rather than Richard Curtis.
Of course there are some of us who believe that *anyone* formally schooled in “economics” automatically disqualifies themselves from sensible discussion of the real world…:)
It seems to me that the Tobin Tax (which is what it is isn’t it – I refuse to sully the name of Yorkshire’s greatest anarchist by calling a tax after him, and besides, it sounds like it should be a toll booth on the M1 somewhere near East Midlands airport!) is being presented as something of a panacea that may sound good to people in principle but who have not had any alternatives presented to them.
The same happens with one of the other suggestions that has been floating around for much longer than Tobin and, if anything, is more appropriate to today’s problems, because it actually does something about the cause in theory – so called “Seignorage reform”. Couple “Seignorage reform” with some of Soros’s ideas about a portion of each country’s “seignorage” being paid into the BIS and then dispersed in SDRs to developing nations, and it seems to do a great deal more toward equity in the world than the Tobin Tax.
Tobin will do nothing for the “quality” of money in the system. It will still be fractional-reserve debt-issued fiat money inflated by lending. Seignorage reform at least claims to address this part of the problem as well.
Whilst there is more than one proposed solution, I certainly would not wish to see one of those adopted, globally no less, without there being a proper debate and beauty parade of all the options. And for those who promote Tobin to say nobody else has suggested anything else is disingenuous.
Tobin’s one advantage is also its greatest disadvantage: it is intended to be a simple thing that does not change the current monetary system, just tax some aspects of it. Sadly this is not what is needed – we do need to change the current monetary system or else the current situation is *bound* to recur, and probably worse each time it does. The debt-money system is fundamental to the boom-bust business cycle.
But as I said above – the debt is not mine. I didn’t vote for it. I repudiate it. Indeed government told us, even if we did vote for it, that it wouldn’t borrow like this. Politicians caused this crisis *just as much* as bankers – they are responsible for the loose money policy that exacerbated lending – for political gain (not to be seen to enter a recession within Labour’s first term in office) and for not caring about the massive inflation of the broad money supply that it wrought, because ohh, everyone felt good about their rapidly rising house values (a *perfect* example of how inflation is asymmetric and leaves very many people poorer).
The £250bn figure may be very small compared to turnover, but it is a massive bite out of profits. In fact, it would equate to about a third of the profits banks made in 2006 (the year before the crunch!). In effect, that will mean one or more of the following:
1) Loan rates will rise as the costs are passed on to customers. Expect interest rates to rise, hurting mortgage holders and others in debt. This would presumably also hit national debt, unless governments excluded their own borrowing (and it’s a fair bet that they would – when have they ever sought to live by the rules they make for others).
2) Pension pots will be reduced in value, exacerbating the coming pensions crisis.
3) Poor countries would find it even harder to raise capital abroad. Owen talks about Make Poverty History, but once again we see a suggestion that will make it harder for developing economies to grow and prosper.
“A small tax on financial transactions to pay for big change for everyone” suddenly becomes a massive tax on financial transactions that will creat big problems for everyone.
BTW: The third point raises an interesting issue. When the Tobin Tax (as the “Robin Hood tax” was known before the marketing met got hold of it) re-reared its ugly head a few years ago, the idea was to raise money to fund international development. Now that we are drowning in government debt, it is to be used to pay for the financial crisis. Like Labour selling ID cards, this seems to be a policy looking for a justification. That generally suggests its a bad idea.
I’m not actually stunned, btw.
I just forgot to change my name after my amazement at an outbreak of Lib Dem harmony on LDV.
Others are going to respond on some of these points, but I just wanted to respond to Tom Papworth (glad you’re not stunned any more!) Off the top of my head, you’re right about the ratio of the tax take from the Robin Hood Tax compared with bank profits (although the latest we have on market projections is that bank profits are going to exceed the last peak). However, that’s not the only source of the revenue, which will also come from hedge funds and many other financial institutions. We’ll be publishing further research soon indicating that the majority of the tax will actually fall in other areas, so the proportion of bank profits that would be taken out of the system would be less.
But of course the Robin Hood Tax won’t magic money out of thin air, and if the tax take increases, someone else will get less (it will also have an impact on the volume of riskier financial transactions, but we’ve already controlled for that in our estimates). That’s one of the reasons why we call it a Robin Hood Tax – it’s all about redistribution. Fairly clearly, if the people who get less are city traders and big bank bosses, that would be a popular move. But we know it’s more complicated than that, honest we do!
Ah, I have been caught out with numbers of PhDs; 350 of them, in fact. However, it’s interesting to note what the letter says: ‘This tax is technically feasible. It is morally right.’ It doesn’t make any commitments about its avoidability, or whether it’ll be good for the economy. It’s a moral message rather than an economic one. As such, it would carry more weight if it came from 350 priests than 350 economists.
As for alternative solutions, I favour a combination of cuts to social security payments (especially housing benefit; there’s nothing I loathe more than entitlement and anyone who’s canvassed a housing estate knows than entitlement isn’t the exclusive preserve of the rich), and new green taxes to properly cost the externalities of polluters. It may seem unfair that the poorest should bear the costs of the mistakes of the rich, but the poorest are the least likely to generate more wealth, and investing in them during a recession will only prolong it.
It’s not fun, wondering how you’re going to afford your next meal – which I have done, from time to time – but the moral case behind the welfare state has been significantly weakened by non-stop tabloid coverage of benefits scroungers and others exploiting the system. They are of course a minority, but given that the welfare system seems unable to discriminate between them and cases of genuine need, throwing more money at it is unlikely to make the problem go away.
For example:
http://www.telegraph.co.uk/news/uknews/5651825/Benefit-payouts-will-exceed-income-tax-revenue.html
10% of the mooted revenue of the Robin Hood tax would be needed to cover the shortfall in benefit payments relative to income tax in this year alone.
Adam, I do not know if I understand you properly.
Cutting housing benefit will make people homeless and destitute.
Is that what you want?
I like to think the answer is no, so I would rather give you the opportunity to respond before jumping to conclusions.
On the other hand, the people who are meant to be creating wealth have not proved to be very good at it recently. In fact some of them have put us in the mess we are in today, and have been rewarded with a bailout.
Housing benefit is, of course, a subsidy to land and landowners, not tenants. It is an awful way of ensuring people have shelter – paying off those who reap what they do not sow.
Since money is not wealth, I fail to see how bankers can “create wealth”. Long term hopeless mismanagement of our economy by a small group of people who think that is what we “elect” them to do has made us dependent on this false wealth.
And you still don’t get the state’s culpability for the mess we are in do you? It wasn’t bankers who implemented a loose money policy, but politicians, and for political ends. Even the banker’s banker Eddie George said so, to parliament, three years ago now before all this broke. The bankers are not of course blameless, since lending makes them money and any encouragement to do so will be accepted with relish, but it is politically determined economic policy that tells them what direction to head in.
There isn’t a necessary connection between the two, Geoff. Cutting housing benefit will lead to more overcrowding, certainly, but after talking to many young couples who got a flat on the social, had four kids and then demanded a council house to accomodate their choices, my sympathy for people living in overcrowded houses is limited to an ever-shrinking number of cases. I couldn’t afford to look after a child or have security of tenancy, but my taxes are paying for other people to be able to do so. I invite you to find the moral justification behind that.
Moreover, the fact of the matter is that we can’t afford to not to cut social security benefits. If to meet the gap between benefit payments and income tax you’d need £25 billion in the UK alone, then even if the Robin Hood tax meets its goal it’d be swallowed up paying for the welfare states of the West, and any mooted potential redistribution to the third world would be lost. You can bet your bottom dollar that if politicians have to choose between famine relief in the third world and propping up the welfare state here, they’ll choose the latter – precisely because of voters saying, ‘Cutting housing benefit will make people homeless and destitute’.
How do you plan to pay for an expanding welfare state, Geoff? This isn’t just pensions – the amount paid for social security benefits has consistently expanded over the last thirty years. At what point would you say we can’t afford to not make people homeless any more?
It seems to me that there are two broad responses to the deficit caused by the recession.
1) There are those who see this as a golden opportunity to reduce the size of the state by cutting spending.
2) Those who recognise the economic difficulties and the need to reduce the deficit when the time is right, but want to do what they can to preserve public services.
If you take position 2 then it is right to examine tax rises as part of the solution. The advantage of the Robin Hood tax is that it’s an innovative new approach to raising substantial amounts. This is why the right wing/libertarian blogosphere is so opposed to it. A new source of tax is a strategic defeat for them.
For others it should be judged as all tax issues should be:
1) Who pays and how progressive is it?
2) What other consequences will it have?
3) How politically acceptable will it be?
4) Is it technically sound?
The Robin Hood Tax looks like it has a good chance of providing favourable answers to those. Its incidence will be wider than bankers and their bonuses, but transaction taxes starting as low as 5p in every £1000 is hardly going to bear down on the poor and modest earners. This is a progressive indirect tax.
If it damps down speculative transfers as Tobin wanted then that will be a good thing too, though its backers seem more interested in raising funds.
Polls show that it’s backed by the public. Indirect taxes are often politically more acceptable, but very unprogressive.
EXperts say that computerised trading makes it easier to levy, and the 350 supporters include City types who understand the mechanics.
I think you’re being generous with your “two broad responses”. The Robin Hood proposal and its supporters seem to be more characteristic of the third response: people who never saw a tax they didn’t like, and think the financial/fiscal/deficit crisis represents a good opportunity to tighten the screws.
As Tom Papworth mentions upthread, the history of this proposal makes it clear it’s really a policy looking for a justification and a PR opportunity, not a serious response to a policy problem.
Now obviously I cannot speak for the entire “libertarian” blogosphere, and cannot really speak at all for any part of the “right-wing” blogosphere (which are not one and the same and to characterise them as such does your argument a disservice) but there are reasons for not wanting new taxes other than not wanting any taxes (though I don’t, but for good sound left-wing reasons).
Like the vast majority of new taxes, such as the one proposed on another recent thread here about inheritance, it misses the point. The entire banking system is a state protected privileged “monopoly”. It controls the accessibility of capital to ordinary folk who would be producing real wealth. The way the money system works enables governments and their private oligopoly client bankers to defraud us all through inflation and interest respectively.
So along comes someone suggesting that we leave their privileges in place, but tax the result. So far as I can see the longer-run implications are exactly as Tom lists above – that actually access to capital will become even more restricted, and especially to those whom small amounts of capital would benefit both them and society the most (they will increase their production more than some corporate megalith for proportionately the same investment).
Oh, but it’s okay, cos we’ve got our £250bn out of it (which, by the way, is an annual international figure is it not, not something that Britain would get for itself) – which, by the way, is a drop in the ocean I’d suggest compared with the potential increase in productivity small scale entrepreneurialism could deliver under a more radically reformed and equitable banking system, allowing us also to reduce state dependency for very many people.
But it is symptomatic of a certain political belief that “your money is our money” and if the “easy” way is to take more of yours then that’s what we’ll do instead of using what is one of those pivotal moments in history when everything is in crisis to try and discover what the underlying causes are and do something about them.
Now, there are two proposals that have been doing the rounds for years (neither of which I am particular enamoured with but it gives the lie to Tobin-ers complaining that nobody else has come up with anything):
1. Tobin tax
2. Seignorage reform
At the very least the latter attempts to do something about the causes, rather than merely redistributing the after-effects. A decade or more ago one of its main proponents, James Robertson, produced research to suggest that it could generate £100bn a year plus for the United Kingdom alone and something like £400bn for the entire EU, let alone the US and China given the then rate of expansion of M4 money. When combined with the ideas of Soros about states being asked to put some of this “windfall” for creating the money the system needs instead of their private bank contractors doing it at interest into the BIS to be redistributed to less well developed nations, it is head and shoulders above Tobin. IMHO.
But free banking and competitive money would be better still. Since we cannot trust states to manage their money supply even through privieleged contractors I have no faith in them being able to do so when left to themselves.
But the point is, don’t start banging on about opposition to this being a “right wing” phenomenon. Just because so many people have failed to understand the damage the banking and money system really does until the sh*t hit the fan does not mean there have not been many more who have understood that and called for change for the best part of two hundred years now.
Create a fair system, don’t just redistribute an unfair system. That is just intervention for intervention’s sake.
PS – to learn something about a real radical left-wing liberal understanding of banking and credit there’s forty-seven short articles here.
As my 19 century radcial Liberalism teaches me, tax should not fall on labour and (as in this case) trade, as they are productive. Instead the burden should go on unearned income and assets. I am all for redistribution, but a transaction tax seems an economically illiterate way to go about it.
I suppose the Tobiner’s response to that though Paul is that this is not predominantly “trade”. It is predominantly (97% in forex markets I think I last saw estimated) “speculation”. Nonetheless, much of that “speculation” does play a significant part in managing economies; it is how the market tells irresponsible governments who are not properly held to account by a largely economically illiterate population and a more or less pliant economic intelligensia that they are screwing up.
It would only become unnecessary were we able to reduce significantly the amount by which governments could, in fact, screw up by taking away their power to do so. But since one screw up is merely seen as an opportunity to add another intervention to correct it, enhancing the state’s and their clients’ power in the process and usually harming the ordinary person in ways they seem to believe are somehow unavoidable, it is unlikely to happen.
Adam, I am really shocked that you support policies that will make people destitute.
Of course there is a desire in the popular newspapers to punish people who have children so that they can claim benefits. However if you make them suffer, you make their children suffer as well, through no fault of their own.
Even in narrow economic terms, making people destitute is a false economy. Our first instinct is to survive, and if the only way to do that is to commit crime, then that is what many will do. Then you find that as in the USA, you spend more money on police and prisons.
Of course you might come back and say we still can’t afford it, in which case you might as well advocate that we become a third world country.
A country where there are extremes of wealth and poverty is one where those who have money will only spend some of it, and those who don’t have money would spend it if they had it. If you reditribute wealth from the rich to the poor, then the rich would have less money that they wouldn’t spend anyway, the poor can then start to spend where previously they could not afford to, and that in turn will benefit the economy as a whole.
No comment I see Geoffrey on the *fact* that housing benefit is in fact a subsidy to landowners, not the poor. I am really shocked that you support policies that take money from the relatively poor (i.e. anyone above the tax threshold), to increase the wealth of landowners in the name of housing the very poor and at the same time make it harder for those relatively poor but not eligible for this so-called “help” to house themselves.
The point is Jock that we need a roof over our head. If you remove housing benefit, that will make people destitute. My conversation here is with Adam who actually advocates that happens. You do have a point about moral hazard, that landlords can exploit the state by charging excessive rates and claiming the money as housing benefit. I am interested in looking at any policy option that can stop that, but at the same time the bottom line as far as I am concerned is that is does not make people desititute.
It has nothing to do with moral hazard or landlords exploiting the state deliberately, it is about price control. It creates a minimum cost for housing below which the market will not, can not go, it subsidises *everyone* who owns land and property and penalises *everyone* who doesn’t but who would like to take pride in being able to provide for themselves.
It also skews the labour market, making it less likely that people who could go out and earn a little towards their keep would do so.
So, it subsidises the haves and penalises the have-nots, quite literally. Excellent progressive policy. Excellent.
I’m confused, is this free money or not?
Not remotely, no. It is about making money less free, both in the sense of being able to move it around, and in the cost of accessing it for most people.
OK Jock. How then can unemployed people afford to pay the rent without housing benefit?
Geoffrey, I’m not sure you understand how housing benefit works. Cutting housing benefit doesn’t impact on a local authority’s statutory duty to provide housing; it rather impacts on where less well-off people can afford to live by increasing the amount of rent they’ll be liable for. Therefore it reduces the number of properties available to the less well-off in high-rent areas, having the knock-on effect of reducing rent in those areas for the better-off. It’s certainly a policy which favours the middle classes over the poor, but doesn’t necessarily lead to destitution. It just means that people can’t necessarily live where they want to if they can’t afford to do so.
I also note that you didn’t deal with my question. What do you do when the cost of social security exceeds tax reciepts, and you’re forced to run a constant deficit? One of the few things Gordon Brown has got right is his description of the cost of benefits as the cost of society’s failings; what do you do when the cost of those failings is no longer affordable?
Jock, I know this thread has turned into a debate on housing benefit (er…. oh well, that’s the anarchic beauty of the web I suppose) just one comment on your earlier post about niggle away’s use of the term right-wing/libertarian blogosphere. I don’t think he was suggesting that right wing and libertarian are synonyms, although the back-slash gives that impression – I think what he meant was “right-wing libertarians”. I’m sure he knows there are also libertarians in the centre and on the left. Don’t feel pigeon-holed!
As for Paul Pettinger, it’s just abuse, not rational argument, to call things “economically illiterate” unless they are. Firstly I doubt you mean “illiterate” – you may just about mean “innumerat” in this context – but in practice something with support from Joe Stiglitz and Paul Krugman, whether you think they’re right or wrong is likely to be at least intellectually respectable. It would be better to engage in real debate, but I recognise that this is a naive hope on planet blog……
Finally (ha! that’ll be the day!), on the subject Adam Bell has just returned to, the Robin Hood Tax is not supposed to plug all budget deficits forever, just some of them at the moment. It’s quite right that the main, long-term solution to the public sector budget deficit is to increase economic activity so that tax receipts increase in volume but not as a proportion of national income. And sensible government action would always include prophylactic elements – such as investing in skills so that people are less likely to need unemployment benefits, or legislating for a minimum wage which obviates the need for in-work benefits or tax credits. I don’t think many supporters of the Robin Hood Tax actually DO believe in tax for its own sake, whatever opponents may say!
Night night all!
You really don’t understand the nature of “subsidy” do you Geoffrey?
First, you stop subsidising rent. That will cause rent to fall so more people can afford it anyway – right through their lives – and be able to save more too for the hard times because their most basic costs of living are permanently reduced.
Second, you have to ask yourself whey are there people unemployed and not earning *anything* to put towards those costs of living – because we tax and regulate low income employment out of existence and by our subsidies make the marginal benefit of work negligible for a whole raft of such people.
Keeping people unemployed in such a way also depresses wages, as there will always be people bidding down jobs that come up – allowing employers to exploit labour even more. Our tax and subsidise policies are not oriented to full employment. Full employment is the situation in which labour then has the upper hand over capital, able to ask more of its fair share of the product of their labour, enabling more to gain financial independence, to put something by, to have the basic dignity of paying their own way in life.
Then there are building regulations. Building regulations have for two hundred years (and no doubt much longer) been created with the admirable aim of forcing the market to increase some standard or another, when in fact they have more often than not pushed the cost of building above the level the rental market can bear and caused building for the poorest to stop altogether.
When the Webbs were doing their infamous study of the East End of London the squalor they so often found, the overcrowding, the dilapidation could in almost every case be put down to the previous Building Act having driven builders out of the “industrial housing” market into the middle-class areas where the residents could afford the new standard, driven landlords not to replace, upgrade or repair buildings because to do so to the new standards would have incurred a loss on the going rent, and then driven families to move into sharing with each other as their houses became unfit through lack of this repair.
This in turn affected their ability to get work, to make incremental improvements in their income with which, over time, they could steadily have afforded improved housing, to demand more from their landlords.
Oh, but it made some people happy. Because the timber they specified was timber that attracted fifteen times the tariff that timber currently being used attracted. How many people ultimately suffered because of such well-meaning legislation one can only guess.
Lloyd George knew it, when he said “It is all very well to produce Housing of the Working Classes Bills. They will never be effective until you tackle the taxation of land-values.”
Adam, it will mean that poorer people will have to move out of London to cities where there are less jobs. Assuming they can afford to move of course, otherwise they will be destitute. How can councils expect to meet their statutory duty to provide housing if there is no affordable housing available for people on such low incomes? As for paying off the debt, there are obvious things that can be done; get rid of Trident and don’t replace it, cut defence spending, withdraw from Afghanistan. Beyond that it gets harder. I would rather redistribute wealth than make peoples lives a misery, so taxing the rich more, maybe via LVT is an alternative way of raising income.
Making the poor poorer is a false economy, as I mentioned before and on that point you have not responded.
By the way Geoffrey, the *purpose* of LVT is categorically *not* to “make the rich pay more” though because of the stupid tax system we currently have and seem intent on adding to as this thread and our own party’s policy proves it quite possibly would have such an effect.
It is in order that owners do not get to monopolise the economic rent of land they hold but do not create. Anyone. Any land. If Bill Gates decided to come and live in Blackbird Leys, he would pay next to nothing in taxes. As it happens there aren’t any 4,000 square meter earth sheltered properties available in that area at the moment, so I think it unlikely.
This is decidedly not free money. I would recommend reading the Centre Forum Economist on this. He’s written a lot on it on his blog, but here’s one link http://freethinkingeconomist.com/2010/02/15/robin-hood-part-deux/
Jock, there is no law of nature that says that removing benefits, whether housing or unemployment, that that will automatically create full employment.
That libertarian paradise Somalia has an unemployment rate of 66%.
See http://www.isn.ethz.ch/isn/Current-Affairs/Security-Watch/Detail/?id=97585&lng=en
No, getting rid of benefits will cause people to obtain an income by any means necessary, and will often be by crime. The very opposite of what i consider to be a Liberal society.
Geoffrey, is your misrepresentation of what I wrote deliberate or do you just not understand?
It is the combination of benefits and tax and regulation on jobs that set an effective floor on what it is worth people going out to work for; add to that the the housing benefit in particular also creates a floor for housing costs, increasing the costs of living of everyone involved (and of course reducing the incomes of those paying for it at the same time).
It is a bonkers system. It could hardly be better designed if it were intended to keep some people in dependency and for those who do work on the back foot compared with employers when negotiating remuneration.
What has Somalia got to do with it by the way? The only period in which Somalia’s anarchy was vaguely working was in the period shortly after Said Barre’s regime fell and before the “international community” began its several attempts to intervene and prop up one side or another. The result, for the last ten years at least has been disastrous, but because of those attempted interventions rather than the earlier anarchy I’d suggest. It is an affront to the “international community” that anyone should be able to operate without a “state”.
Jock, of course I recognise that your politics are very radical. However if you propose something as you have I naturally ask myself what evidence is there that what you say works? You can always say x causes y and get into very complicated arguments, but where is the evidence?
An ounce of practice is worth a ton of theory, as Fritz Shumaker used to say.
When I consider examples of a lack of state, places like Somalia, or Russia when Yeltzin was president spring to mind.
In your last mail you refer to “working” anarchy, and presumably the anarchy in Somalia today is “non-working” anarchy.
Why does it not work?
It looks to me that the absence of a state is a recipe for disaster. What needs to happen to stop this from happening?
Frankly I get sick to the back teeth of this sort of unrealistic comparison.
First, how do you conclude that the present situation in Somalia is “anarchy” at all – when various factions of the “international community” are hell bent on imposing their idea of a state, supporting their idea of a government and so on? I said the only time Somalia could realistically have been regarded as an anarchist society was in the few years after Said Barre and before the international community decided to take sides and try and impose its various different ideas of order.
Second, did anyone ever claim that Somalia was an example of what anarchy would look like in a highly developed country? No. One can only make a claim that anarchy might be better than the status quo in any given situation. For the few short years before international intervention ended the no-state situation in Somalia it was doing better on many indices than under the (internationally recognised and aided) repugnant regime of Said Barre and his cronies.
Further, so far as I am aware no nation harbours territorial claims to these islands, for example (ignoring the Falklands for the purposes of speaking about the UK), unlike Ethiopia over Somalia, say, such that the absence of a functioning government here would mean armies marching in, and then counter-forces trying to stop them.
Also, I just do not understand why you think Russia or the CIS was an “anarchy” under Yeltsin. Do you think that the ceding of its natural resources to a bunch of oligarchs is evidence of a free for all? It was not – it was a badly mismanaged state “managed” policy of sell off, and as we know, it is states that enable those with influence to get close enough to centres of power to be able to influence such things in their favour. Not unlike much of what happened here under Thatcher but taken to extremes.
But anarchy is not the point here. What we are talking about is public policy that mitigates against the very things it says it wants to do. You cannot make housing cost less by subsidising landlords. I don’t need to give you examples, it is axiomatic. You cannot create full employment through policies that price people out of the labour market. And you cannot begin to secure for labour the greater share of their product that has been the aim of the entire left wing in politics since Proudhon, on both anarchist and state-socialist wings, until you give labour the upper hand against capital.
Yet every policy we have mitigates against this – from the land monopoly, the money monopoly, the tariff system (including taxes on labour).
Even if you believe there is a role for the state in which it can do good without doing the manifest bad states have done, then it surely behoves you to consider how it could do these things correctly to give it the better chance of achieving the ends it claims to want.
“But now we need to find a way to pay for restoring the public finances, as well as tackle the unfinished business of the Make Poverty History campaign (even the pledges on overseas aid made at the Gleneagles G8 have fallen $22 billion short) and make a start on the challenge that the Copenhagen climate conference failed to address. No opponent of the Robin Hood Tax has said how else those challenges can be met, but the answer is clear. Massive cuts to public services on the one hand, or huge increases in other taxes like VAT.”
The best way to make poverty history is to not interfere in the markets and hamper economic growth. The massive reductions in poverty in India and China were not due to Make Poverty history campaigns. There is still a distance to go but it is further economic growth that will get them there, not the pious tossing them a few quid as a band aid. Overseas aid should be scrapped, it is not for the state to take money off people to give as charity, individuals should decide on their level of giving themselves (the only exception is emergency aid so that the international community can react quickly to events such as the Haiti earthquake.
Still believe in Anthropogenic Global Warming after Climategate and all the other scandals of the last couple of months? You must be using it, as it always and only ever was, to further a political agenda.
“Massive cuts to public services” Anyone who proposes this will get my vote if they are talking about stopping funding community organisations and ditching jobs like these:
http://jobs.environmenteast.org.uk/?p=15
The Green Party unanimously voted to support the Robin Hood Tax at its conference last weekend in London. This is in addition to the Tobin Tax, which is a higher tax also aimed at curbing speculation as much as to raise funding for public services, which has been party policy since 2002. It is important as the election comes that the RHT is promoted by all progressives in all parties and not allowed to get lost among the verbiage about Gordon Brown’s temper and Cameron’s skin tone. There is widespread public support for this and at this critical time it would be a crime to let this opportunity to make a long lasting change to the way our world works.
http://yorkshireandhumber.greenparty.org.uk/region/yorkshireandhumber/news/robin-hood-tax-the-tobin-tax-on-banks.html
To characterise this as a “long lasting change to the way our world works” is such utter nonsense it beggars belief. It would appear, from not just this but several other policy “initiatives” that have been discussed over the past few weeks, that “progressive” means one who piles one injustice upon another without looking into the causes of the injustices that have gone before with a view to eradicating them.
It’s the monetary system that is rotten to the core. If we miss this massive opportunity finally to do something about that core injustice, created and maintained by the state to the benefit of a new aristocracy that has been on the ascendancy since at least 1694 and the disbenefit of virtually everyone else because the noisiest voices have decided that Robin Tobin is the “great reform” it just needed to make the world fair would be an utter tragedy, and those “progressives” would deserve to go to their graves with empty bellies still watching with awe the banquets of the new masters of the universe they have helped to perpetuate.
I utterly despair. The handcart in which we all travel to hell with be filled with these sort of “progressive” “long lasting changes” that are in fact neither.
Though I am sneakingly quite pleased that the Greens have done this, for I had once believed that, just possibly, the Green Party might have been the party prepared to adopt “Rigourous Liberalism” (clearly I was focussing too much on the Green Party of Ontario).
Perhaps it is a facet of their getting closer to the corridors of power that policy must now not frighten the horses quite so much, that one cannot go delving around in the history of things to root out the real systemic injustices, or perhaps a belief that they simply cannot be sold to the sort of proportion of people you have to have to get elected.
Either way, I think we should welcome the Green Party to the land of “Progressives” amongst “Privilege” that none of dare, apparently, touch.
Some of the comments here are really quite frightening. I’m really uncomfortable with the impoverished thought and lack of humanity. Am I really reading these comments properly or am I not grasping what is going on? We’ll have slum ghettos full of kids with no shoes next!
Indeed Mary, the poverty of vision that says that Robin-Tobin is such a great advance toward an equitable world is truly astonishing. As that great liberal Josiah Stamp said:
“Banking was conceived in iniquity and was born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits.”
I was meaning the destitution that would happen if the housing benefits were taken away.
I’m glad I invested in one now and didnt bother having kids.
To paint the poor so negatively is frankly appalling. The Royal Navy was sent up to patrol the waters around Liverpool for similar reasons! Have we learned nothing! George Square in Glasgow was given the alternative name of Red Square for a reason.
I know professors, GPs, surgeons, company CEOs, cancer researchers, soldiers, sailors, police officers to the rank of inspector, pharmacists, oncologists, chemists, teachers, dentists, politicians, engineers, IT specialists, lawyers who have all been helped at one point or another by the benefit system and am convinced that none of them would have made of their lives what they have with out it. How many of our sick will be living in tents
I have a niece and a brother who both served in the armed services. Both of them completed their contracts and both of them had difficulty in finding work. They both found work, given time, but were dependent on benefits. I wonder how easy that would have been for them with no housing benefit? And would they have regretted their decision to put their lives on the line for a country where the poor are held in so low a regard?
How suitable would my brother have been judged for the police if he’d spent 3 months living in a homeless hostel or sleeping on a park bench? If we as a society expected that of him, what incentive would that have given him to continue putting his life on the line every day at work, often with unpaid overtime, handcuffing people we hope to never meet and living with a view of the world that would prevent most of us sleeping?
With a baby now, if my niece lost her partner would we really put her and her baby in dorm, a unit for troublesome single mums or a slum? I’m pretty sure that would make her regret ever putting on her uniform and sailing off to war on our behalf. Would we have condemned her to remaining in the armed services fighting possibly another war and demanding she find a job because if not it is a park bench so best to sign up for more war at sea? No support for her for the two months she spent looking for work, and no strong laws to allow her to sue the first new employer who refused to pay the salary she earned? I’m not sure that would convince her still-serving friends they are on the right side. Are you?
It’s all very well to throw ideas up for discussion; I loved doing that as a scientist. Never forget the numbers in text books are real people and if you want to drive down house prices, then there are ways to do it without destitution. New York has price controls, the great capitalist city took steps! You could simply wipe a couple of zeros from the value of every home in this country, you could build council houses.
Anyone who wishes to talk about policy and being taken seriously has to make an effort to consider the consequences. I susepect that current science will soon show the act of removing benefits and the stress that will cause will have profound effects on long-term health, not only of the people who will become destitute, but on even those yet to be conceived. Evidence is accumulating and seems to confirm the theory that immense stress has profound long-term effects on human genes. Are you ready for the health bill? And are you ready to walk away from UN human rights law because councils will not and do not have the means to comply?
One last thing, do you think it is a good idea to force people who happen to have lost their jobs to pack up and move elsewhere, away from their friends and neighbours, their support network, their communities? Pensioners won’t know their neighbours, they’ll move into single rooms and have to give away all their nick-nacks… And where will they go? I’ll tell you where. The slums, the slums we razed from this country. They are already appearing and they will grow.
The poverty of thought….inflicted on the poor
What a fine answer. A fine political answer. Almost anything to avoid facing the problem that because the state creates so many avenues for privilege to flourish we then pay twice to help the poorest.
If you must know, as a single man now in Oxford who is one pay-check away from the streets as the saying goes, I can take no comfort at all from the benefits system. It would indeed reduce me to a hostel room (at least until I can be considered for sheltered blocks). And it is often the same for new young mothers here too – I fought to get one out of a not abusive but definitely overcrowded council property of three generations together only to find they offered her a hostel place with other young mums). No council housing available, even if it is wanted, so councils end up paying the maximum for the minimum provision.
And all the while I have been here I have watched people luckier than I ten, fifteen years ago now have “assets” worth up to half a million quid.
One day your way of doing things will become completely unaffordable – you cannot allow such privileges wealth to grow and have to find money to deal with the consequences of that wealth imbalance, that immoral wealth imbalance, created by state action (and inaction) for ever.
Rent controls have done almost the exact opposite from what was intended in New York. They help landlords pick and choose the best tenants and foster a culture of getting round the system by those who can afford it paying more by various means than the landlords are allowed to charge in rent.
Mary, surely you take Jock’s point that Housing Benefit simply goes straight into the pockets of landlords and keeps rents high? The connection becomes extremely clear when you’re on it, believe me.
No-one’s saying Housing Benefit should be abolished tomorrow with no thought of the consequences. But it certainly wouldn’t be a part of any fair tax and benefits system I would design from first principles. It’s right that we should consider ways of moving towards a fairer tax and benefits system, it’s what makes us (us on this site in particular) political beings. It’s right that we should push ideas around. We can’t do that if any factually correct statement like “Housing Benefit keeps rents high and benefits the landowning classes” gets howled down with abstract rhetoric. As it stands, yours is not the argument of a rationalist.
And I’ve been in those hostels too. I went there with my mum to escape a murderous father. A roof made possible thanks to housing benefits. Without them she’d have stayed and we’d be dead too. We made out just in time.
That situation will never happen to me again. But your proposals will leave others, living that life right now trapped. You make no provision for ensuring people have alternatives. Safe alternatives.
If you want every person to pay their way then find a way of governing that means there are jobs, and jobs that pay a living wage for every adult. Has there ever been a time when there was no unemployment? Ever?
What will you do Jock, chap on doors of housing benefit recipients and ask for volunteers who are willing to give it up? Or just cancel all payments and see what happens over the next few weeks?
You’ll be left having to force people out on to the streets? Would that be the police, or a private agency or will you take it upon yourself to put your theory books down long enough to do the deed yourself? Politics is easy when you are sitting in the office giving orders. So often, those who govern don’t think they should do the actual work themselves. Will you? That’s politics – rolling your sleeves up taking action.
A solution that creates a nightmare is a not a solution.
“And I’ve been in those hostels too. I went there with my mum to escape a murderous father. A roof made possible thanks to housing benefits. Without them she’d have stayed and we’d be dead too. We made out just in time.”
For instance, what you’ve written here about your personal experience would certainly be an argument for better funding for battered women’s refuges. In fact I can’t think of a better solution than more refuges – certainly more secure than regular hostels. What it is definitely not is a decisive argument for retaining Housing Benefit exactly in the form it now exists forever and ever amen. You talk about poverty of the imagination – well, for me, poverty of the imagination consists in being unable to conceive of a better way of doing things, and closing one’s mind to any new idea that might challenge the status quo.
If we took your argument to its logical conclusion there would never be any reform of the benefits system at all. People suffer great injustices at the hands of the current system, as I’m sure you know. So what reforms would you be happy to see? Only the “fair” ones, am I right? Well, that’s our problem, because Jock also takes the view that his proposed reform would lead to greater fairness. I see you’re trying to subconsciously deny this fact by ignoring his own fairly passionate rhetoric about disadvantage, and by a suggestion that he is a politician “giving orders from an office”. But facts are facts – Jock does think his reform would lead to greater fairness, he is not a politician, and you are not the only person in this conversation who cares about disadvantage and fairness.
“So often, those who govern don’t think they should do the actual work themselves. Will you? That’s politics – rolling your sleeves up taking action.”
From what I recall I think Jock will be able to respond rather convincingly to this, and when he does I hope it will help to relieve you of some of the unwarranted assumptions you have made in this thread.
The trouble is in political discourse you (and many like you) seem to think that this is “you versus me”. In fact, it is “you and me” versus the privileged, unjust wealth and the government role in creating and maintaining that privileged wealth that in its turn creates these horrible unjust inequities.
You seem to think that if one is against welfare, or against subsidy, or against restriction in jobs and wages, or against taxation, one must be holding some kind of a brief for the wealthy. It could not be further from the truth.
“So often, those who govern don’t think they should do the actual work themselves.”
I happen to think that’s actually axiomatic. Government *is* the mechanism by which groups of people exploit the economic activity of others so they don’t have to produce for themselves. And by that I mean primarily the rich and powerful. And in their wake they leave dependency.
So founding and running a non-governmental, voluntary, self-startup organisation that is developing affordable housing without dependence on state handouts or state “strings” which so often accompany those handouts, would that could as “rolling up your sleeves and taking action”? A process, by the way, that is made unimaginably more difficult and costly than you might think…by having to deal with various levels of state bureaucracy.
It gap from A to C is the problem I have, and you haven’t explained how that will be dealt with. Reduce housing costs by cutting benefits. Will rents drop over night? No there will be a time lag, and the destitution will appear in that lag. That’s my issue. I don’t see how removing that buffer of benefits will ensure that people are safe. And if your theories don’t give you the results you expect what will happen to the people living the lives and desperate to escape like my mother was?
How long will that time lag be and what happens in the meantime? If you are going to ‘engineer a new society’ then like all engineers, you’ll need to know every step in the algorithm and be prepared for them. That’s why I ask you if you’ll do ask for volunteers or do the deed yourself? Far better to plan so no one needs to? I’ve no idea how anyone thinks that would work. That”s why I am asking.
I’m well aware of the spiralling costs, the costs we can’t afford now or in the future. And people just like me are well aware of how much the rich don’t pay tax via evasion, avoidance, and how much welfare we give them. When I moved away from academia and into the world of business I was truly shocked at just how much money was handed over to businesses. Truly shocked. And angry at the huge waste I saw.
How would you make it work? Do you really want to have tented cities for any length of time? If not how will you avoid it? All challenging questions that need thought and answered. I’ve not got them, it isn’t me who proposed it. So think about it and answer them if you can. If I didn’t want to hear your answers I wouldn’t ask.
There will be just as many problems as wiping noughts off the end of property values, of land values or any other policy any of us dream up.
I simply don’t think you have some kind of brief for the wealthy – I don’t understand how you are going to make it workable. Any engineer of any kind would have to explain how they are going to make their theory work. Politics the theories are no different. Explain it to me. What I think is you have a theory and haven’t thought it through fully. There’s a gap that has to be taken care of. If you don’t then I’m left to assume you are aware of it and are willing to smply resort to the Thatcher position of ‘unemployment is a price worth paying’.
Lots of questions Mary, so I will try and do you the courtesy of a response to as many as I can. But to start off with, and don’t take this the wrong way – I am not saying you are a Tory! – it strikes me that what you are asking for is exactly what marks the difference for Hayek between a conservative and a liberal in his “Why I am not a conservative”. He suggests that the fundamental difference between a liberal mindset and a conservative (and socialist) mindset is that the latter wants everything planned. Wants to know the outcome of an action before it is implemented. This in turn implies that it is even possible to plan such change. That any small group of people setting themselves up as “government” or “administrators” can possibly have to hand all the information with which to make any such economic calculation possible. And they cannot. Because every single person’s reaction to change will be different, and will change the outcome. These reactions cannot be calculated in advance.
That said, that is preciely why Mutualism (that’s “big-M” Mutualism, not “small-m” mutualism) is so attractive – in that it is a mechanism which affords the possibility of recreating in private non-state action some of the institutions that so many feel are crucial buffers that only the state can currently provide before whipping away the state’s version of them. That said, there comes a time when gradualism may be too slow. That the problems that are caused by the state are so big that whipping it away quickly may well be the best way to deal with them. Certainly it is not possible to calculate the extent of any additional support in the form of a safety net that some people may still require whilst the privilege granted by the state to so many is still having its effects felt.
Anyway – to try and answer some of your points…
Will rents fall instantly. Well, yes, and no. No, if the landowning classes believe that someone different will come along soonish and reverse such changes. They can afford to hold their property out of use for a while, perhaps even a parliament or more under the current system, knowing that they will be able to persuade someone wanting to run for power that this is all a disaster both for them and for the poor and that reinstating state privilege will be necessary.
If on the other hand we are clear that there is no state any more, that would be granters of privlege will not come along to rescue them, then yes, rents would fall virtually instantaneously. For what purpose would it serve a property owner to turn down *any* rent in the hope of higher rent later if there is not the means to grant him the privilege later.
Similarly if there is no state protection for abandoned land, it will quickly be colonised – this amounts to quite a lot of potential space. In Oxford alone, and only counting those properties that would normally be collecting National Non-Domestic Rates – there is space, roughly, for two thousand family homes. Land. Lying. Idle. Thanks to state policy that protects landowners rights even if they are not making any use of that land.
At the same time, on the income side, you suddenly have probably millions of people for whom suddenly getting a job will pay, and, if you really remove the state so that there are no burdens on business and entrepreneurship forced on people, even existing businesses will be able to hire many more people, let alone the many who could make some business themselves in such a free market. Indeed there is a thriving grey economy already in which people provide unofficial services and goods in return for similar “credit” from others in their local networks mostly, usually, in order to remain beneath the radar – these are partly the people the government thinks are so dangerous they now want to recruit neighbours to spy on – what we might call today “benefit cheats” but partly also (and probably the bigger group) people who trade this way simply because they do not have cash with which to trade.
Humanity can act with great alacrity in a crisis. And sixty million of us acting in our own individual way is far more likely to be effective than a small elite having to have endless meetings about what to do about such and such. In the town of Worgl in Austria in the Great Depression there was, literally, no money. The Austrian government had effectively forgotten about them – no cash arrived in town at all. The townsfolk could see that the alternatives were to starve for want to some Austrian Schillings to circulate or to set up a new currency. They chose the latter. They succeeded. Business in the town flourished and people were rapidly employed where they were being laid off before.
Same in Basel – their local network, the WIR Bank, still trades today and is worth CHF2-3 bn in transactions a year. Established, in an emergency because government simply could not help. That is the difference between Hayek’s liberal and conservative. I believe in the power of those sixty million minds to come up with solutions. Often very different ones in different places, but none the less effective for it. If the problems that cause our inequity are so great and are so intrinsically bound up with the way government functions, and that economic calculation by a small elite on behalf of an enormous mass of people is, in fact, impossible, it may be better to destroy the state and see what happens. After all, it is not as if suffering and dependency does not occur even now, with a state system that disburses hundreds of billions of pounds of aid every year.
I am not an engineer. I am an anarchist. I believe in the power of humanity, once free, to bring about spontaneous order. Much more quickly that with turgid government processes and bureaucracy and in a way much more likely to meet more people’s needs, because their needs will be reflected in their actions, not the government’s actions. You know, a “lifetime home” is not something I *need* at the moment. Yet if built by a public body, every home that goes up is required to be one. I can satisfy my needs more cheaply, but with government in charge, I am not allowed to. There was a chap a couple of years ago built a very neat, very sustainable, very comfortable one bedroomed home for £4,000 – straw bales, collected materials and so on. It won’t be for everyone, but right now it’s not for *anyone* thanks to building regulations and codes, and least of all for the poorest if they are dependent on a government provided home because they are the most over-regulated.
But it’s not just what they get *given* either. It is endemic in the systems that form the basis of state privilege granting – land, money, tariffs – all state granted monpolies in which the rich can very quickly garner up huge swathes of economic value. It is in what is imposed – it costs small businesses up to sixteen times more, proportionately, than large businesses to comply with all our tax and business regulation.
Tents may be appropriate for some. Some of he world’s most ingenious civilisaitons lived and live in tents. I have an entire school of architecture here who loves to play around with novel ways of producing very affordable, very sustainable housing. They tend to work with developing countries because, of course, someone in some elite somewhere here has dictated that it’s not good enough for us, that we must have much more expensive housing, much more regulated housing.
Actually, no there won’t. We could repudiate all the debt our government has taken on on our behalf tomorrow and it would not wipe a penny of the *actual* values of things. The *legals* values held by different people perhaps. I could call my flat worth “1”, yours might be two and a half times that value. But it doesn’t actually matter whether that means “1” and “2.5” or “£100,000” and “£250,000”. My “1” would still be worth, if you will, 10 million penny chews, and yours 25 million penny chews. In fact, absent government enforcing those debts, which are inevitably held by the wealthy in general and paid for by the poor in general, the values represented by the assets those debts have bought would tend back to the users of those assets and would amount to a revolution in wealth distribution overnight.
I’ve gone on far too long. The biggest question in my mind nowadays is whether the problems the state has created and continues to assist flourish of privileged inequity are so great and go so unaddressed that the state is itself incapable of solving them. That is what the evidence suggests. And what it suggested 200 years ago to the early anarchists too. Almost all of their predictions of the consequences of these state created problems have materialised. And their critique is if anything more valid today than even it was then. We simply cannot solve these problems by allowing the privilege to flourish and then trying to redress the imbalanced consequences as well-meaning government after well-meaning government has tried to do.
The problem with equating my ideas with Thatcher’s “unemployment is a price worth paying” was that even she, perhaps even especially she, was not trying to address the root causes – she would never have been elected if she was and that therefore she was not putting in place anything that would mitigate that unemployment almost the instance it was created because the barriers to entry and so on were all still maintained.
Now, in the financial and political crisis of our time, in a time of almost unprecedented failure of confidence in these underlying systems creating the inequity, to bring it back to the thread topic, we have people proposing a Tobin-Robin Tax as a great “progressive” step forward. It is a shuffle at best, and fundamentally leaves the corrupt, inequitable system just fine, intact and ready to destroy our production in twenty years time too.
But if I had to concede to the “gradualist” viewpoint, my idea would be simple – land tax – 100% of economic rent as soon as proacticable (inside one parliament I’d suggest) coupled with all of that distributed as a citizen’s dividend, whilst at the same time reducing all other taxes by as rapidly as possible divesting the state of much of what it spends money on but, in the process (which Thatcher would never have done properly) revoking any privilege in the succeeding enterprises that would take over.
I’ll not go on with any more questions Jock, not just yet: I’ve a ton.
I don’t see myself as of one political colour or another, others can judge that. I like evidence and plans, thinking through the plans. Same goes for climbing the Cairngorms. All very well getting up to the top for some beautiful views, but when the wind changes, and the rain comes on suddenly, your view is thick cloud. Then it is no good thinking, ‘Darn, should’ve brought waterproofs!’
Now. I’m going to go off and do mysyelf a thought experimet. Let’s see why the Kivu province of DRC is in such turmoil given it is essentially lawless. I wonder what services the locals in Bikuvu or Goma could provide in order that they may have anti-malarials…sewage, that their children can go to school and be children rather than lugging the jerry cans of water as they do etc or the Ghanians who suffer terrible burns in their straw houses. What could they do that would mean they wouldn’t need the training provided by Canniesburn Hospital surgeons? What would make them wish everyone Hakuna Mata each morning…
If you influence power and decisions, I think I best be prepared!
Anarchy, properly understood, is not “lawlessness.” I find it continually astonishing, as Geoffrey did above, that people believe that to remove a predatory state will throw a nation that has a history of civil institutions back to some kind of Somalia/DRC type war of all against all. It’s quite a depressingly Hobbesean vision. I cannot share the view that all that stands between what is essentially a peaceful people and such a war of all etc is a state that creates the circumstances in which one group exploits another.
Quite the reverse, anarchy is a way to peace and to justice in a way that a state, built as it is on conquest and theft cannot possibly provide.
Eh, there is no effective state machine of any description in Kivu.
I’m struggling to think of a society in history that did not have warriors , so until I can think of one, I’ll use Kivu as my blank sheet of paper.
You turf people out of their homes here, and we’ll have riots. If you’ve got no state, alliances will form not knitting circles and uncle George growing pea plants. That’s where my blank sheet of paper is taking me so far. Every thought at the ‘better’ things has a terrible ‘but’; greed, there is always a greedy person.
Plenty of little villages got on quite well in Kivu for years. No effective state (not much in the way of healthcare or plumbing) but they got on with their lives just the same. And then an upstart arrives. Decides he’s in charge. That’s what happens in Kivu, over and over again. That’s what happens. Go and talk to the villagers who moved into towns. Let them tell you. They’ll tell you how their village was organised, how the most respected was the man who sorted quarrels, the diplomat, the organiser. And then the trouble arrives to take over, push the old man aside and help themselves. The country is beautiful, but be warned. What you’ll hear will break your heart. DRC has a history of institutions, many of which we’d recognise as Europeans, many we wouldn’t.
Every little village in Europe, going way back too; he little communities around CAR too. There’s always someone who wants to be the boss, invited or otherwise. That’s where states come from. They begin as the organiser, the guy who manages the biggest herd or the biggest crop of whatever, then the organiser of the warriors.
We have a very short history of institutions. We’ve had wars for centuries if not longer. It was St Columba who declared The Law of the Innocents in 697. He didn’t do that because humans on this island had a tradition of peace! The Vikings were hauling their victims off as slaves, the Romans decided to call it a day and build some walls and join them up in a long line instead.
I’m surprised that people wouldn’t expect trouble without a state to enforce laws or rules of behaviour. We’re too much like chimpanzees in our behaviours and not quite so gentle as the loving bonobo. I thoroughly dislike it. I wish we were perfect, peace-loving primates. But we aren’t. There is always one or two who will enforce their dominance and then look to expand their area, their land, their resources. Chimps do it. Humans do it. I’d guess, mankind has probably been ‘lawless’ before we had farming, fighting one group against another over fruit trees and mates.
I’m sure you’ve had these discussions with many people. I think I’ll end this one here for now.
Yet government is good for you?
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