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Barlow Is Not To Blame!

By Sara Scarlett
May 13th, 2014 at 11:35 am | No Comments | Posted in Economics, Tax, UK Politics

I can’t quite get my head around the outrage over the Gary Barlow tax avoidance (note: not tax evasion) story. Margaret Hodge MP has actually suggested that he should give back his OBE! What a joke!

Let us be under no illusions. Loopholes exist because politicians put them there. Holes in the tax code are created by politicians and politicians alone. Politicians are fully responsible for them and could get rid of them if they wanted to.

For politicians to heap all the blame on Barlow is incredulous. The thing about loopholes is this: why would anyone pay more tax than the tax code says they are legally obliged to? Shouldn’t we be more outraged by the politicians who have been poking holes in the tax code for years? The more complex and convoluted the tax code becomes the more it becomes a Swiss Cheese that is easy for the rich to navigate – they can afford expensive accountants – but a nightmare for individuals and small companies.

The outrage directed at Barlow is a very sad thing because it is a distraction from a proper discussion about tax code reform and the people who are responsible for the disastrous state the tax code is in.

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If Baristas Were Like the RMT…

By Sara Scarlett
March 14th, 2014 at 11:23 am | No Comments | Posted in Economics

Mark Steel fundamentally fails to understand how competition works, or in that regard where Bob Crow got his power from – the absence of competition in London for fast travel.

Suppose as Mark wishes the Pret-A-Manger and Starbucks baristas organised like the RMT, shutting down their respective chains on the public grounds that the steamed milk dispensers represented a serious health and safety threat to their members, while negotiating behind the scenes for more pay and pensions. Their employers might give in from time to time, and wages would rise.

Their employers would also stop investing in new shops. Practically because free cash was now going into current staff benefits and pragmatically as their London outfits were now less cost effective than stores elsewhere. Why invest in jobs in London if you can make better returns for shareholders investing in Birmingham or France? Prices in turn, in London would rise, leading to customer defections to Costa Coffee and Eat. That is those customers prepared to remain loyal despite the shops being closed for large parts of the year.

In time there would closures and headcount reductions. Presumably followed by more strikes and vocal denunciations of the boss class on the BBC. Campaigns would be launched urging consumers to pay more for their coffee and sandwiches in solidarity with staff already earning 2-3 times what they do. The campaigns would be ignored. Labour MPs would claim the Government has betrayed the barista community leading to the destruction of a once great British service industry.

On the Underground meanwhile none of these levers are available. Buses are not a practical alternative for many routes, nor do they have capacity to cope with the increase in trade during a network strike. Cars and taxis are even less useful, the conflation of all three leading to gridlock. In the long-run automation is an alternative to over-paid staff.

Bob Crow’s success then was to note the power imbalance between tube workers and their customers and extract rent from them for as long as possible before the inevitable, much like a mafia boss pending the end of prohibition.

That model happily cannot work in many areas of life, not even many public services, where alternatives can exist. What does work is what most of the working world has which is the free movement of labour from bad employers to good, and the facility to be rewarded for the effort you make using the skills you have, through negotiation and reason, and without strife.

Libertarians Suck At Marketing

By Sara Scarlett
May 31st, 2013 at 12:37 pm | 6 Comments | Posted in Civil Liberties, Economics

Honestly, I’m beginning to think it’s even worse than I originally thought.

It’s almost become a cliche that when you say you want a Libertarian state people turn around, laugh in your face and say ‘Move to Somalia!’ So much so that Libertarians have started to make memes mocking this phenomenon. And even though there were roads, railways, health care, education and infrastructure hundreds of years before any government in the world spent over 12% of GDP (1914), people act like were it not for our lords and masters we would all digress into illiterate cavemen and then die from lack of health care the minute government is removed.

The thing is this: Libertarianism is wonderful. Look at Hong Kong, look at Estonia and look at the UAE. Even though none of them are perfect, and the UAE is socially conservative and not secular, since the 1950s and the 1980s respectively they have all clawed their way out of poverty and today their residents enjoy a higher level of prosperity than ever before. Even though Hong Kong is probably the closest thing to Libertarian state, I still have to deal with morons coming up to me and throwing Somalia in my face. A strong, low-tax state is obviously not the same as a failed state.

Imperfect libertarian leaning states look like Hong Kong. Imperfect socialist states look like Venezuela. We don’t even have to hit the target of complete purity and people still get pulled out of poverty.  How else could an idea as bad as socialism be so popular even though it’s consequences are a litany of woe and misery? They are just better at marketing their ideas. Libertarians need to acknowledge this and take some responsibility for it. Socialist ideas are emotional, not rational and human beings are emotional creatures rather than rational ones. The powers of the market are strong and on our side, but unfortunately so is public choice creep. We are at a disadvantage and we need to up our game.

Abstract Concepts Don’t Pay

By Sara Scarlett
May 28th, 2013 at 10:00 am | 3 Comments | Posted in Economics

One of my pet peeves is a particular brand of wooly-political thinking whereby individuals denounce the ‘commodification’ of things that, according to them, shouldn’t be commodified. It’s usually things like health care and/or education which said individuals wrap in soppy, emotional rhetoric and reams upon reams of abstract concepts because those things are far too important to be treated like mere commodities.

It may very well be the case that health and education are so much more than commodities – in fact, I’m pretty sure they are – but that doesn’t change the fact that it requires huge amounts of commodities to be mobilised in order to provide health care and education. We don’t pay doctors, nurses or teachers in the warmth of human kindness; we pay them in cold, hard cash. Whilst many doctors are motivated by more than just their earning potential after graduation – it is nonsense to suggest that there is no mercenary consideration. The fact that being a doctor is more-often-than-not a highly paid job must make the prospect of, at least, seven years of study considerably more palatable. In a similar vein, medical equipment doesn’t grow on trees and a childhood’s worth of school books doesn’t magically appear once you declare education a sacred, profound and noble art.

My problem with this type of thinking is that whilst it does motivate various parties to action, it can just as easily justify action that doesn’t bring us health care and/or education that is higher quality, more accessible and more abundant. It can also justify action that is unhelpful and downright harmful. If health care is a human right then by slapping that pack of cigarettes out of someone’s hand – aren’t you merely upholding their human rights? I know this ties in to negative rights versus positive right but what I’m talking about here is a distraction from finding the solutions to the problems of public policy making. How best do we treat health care and education in a way that mobilises the resources we need to provide them? That may mean treating them like commodities.

Human beings need food before they need health care and education but we are more than happy to treat food like a commodity. A healthy, nutritious diet means so much more to an individual than just food – but treating food as a commodity, despite the distorted state of the global agriculture market, has meant huge and continuous increases in the abundance, quality and affordability of food.

If treating things like health care and education more like commodities means they become more abundant, more affordable and they increase in quality – wouldn’t it be worth dropping the soppy rhetoric?

Renewable Energy vs. Shale

By Sara Scarlett
May 23rd, 2013 at 10:44 am | No Comments | Posted in Economics

Um… if these figures are correct (£29bn investment = 30,000 jobs) then by implication it costs £1,000,000 to create 1 job in renewable energy?

Contrast with shale gas where £50,000 = 1 job (£3.7bn investment, 74,000 jobs).

Maths is fun.