I still don’t generally check everything i post up here… but I should… it’s the bloggers responsibility to do so…just because you’re not misinforming your readers about what the other person said, doesn’t mean he wasn’t misinforming his own.
Nothing quite convinces me like a solid econometric model… i will eventually start doing my own but for now… i ran into this famous guy here… a very loud conservative who has been boasting lately about how he was right with his warnings about quitting the euro. I don’t really label myself as a liberal or conservative, i mostly just want a society where people are happiest… and I can defend that in a number of ways.
With the link posted above Daniel Hannan tries to convince his readers to follow his conservative path… let’s see if I’m conservative by the end of this post. So here we go:
1. Free-marketeers resent the bank bailouts. This might seem obvious: we are, after all, opposed to state subsidies and nationalisations. Yet it often surprises commentators, who mistake our support for open competition and free trade for a belief in plutocracy. There is a world of difference between being pro-market and being pro-business. Sometimes, the two positions happen to coincide; often they don’t.
I would have liked a clearer explanation between pro-business and pro-market, though so far it’s fairly neutral… I have always had difficulty buying Keynesian’s arguments.
2. What has happened since 2008 is not capitalism. In a capitalist system, bad banks would have been allowed to fail, their profitable operations bought by more efficient competitors. Shareholders, bondholders and some depositors would have lost money, but taxpayers would not have contributed a penny (see here).
How much does the central bank guarantee from deposits anyway? I think in the US its $85,000 per person. Now about this allowing to fail thing… it seems to me that these banks are profitable again… and it’s not like GM (which was also bailed out and profitable again) where the pieces and set up could just be bought by other entities should it have gone under, since the unique selling point of banks is their people, and going under probably means restructuring and firing, which would eliminate the only unique selling point of the bank. Also i would like to see a complete study on what could have possibly happened to various stakeholders with and without the bailout to make up my mind.
3. If you want the rich to pay more, create a flatter and simpler tax system. This is partly a question of closing loopholes (mansions put in company names to avoid stamp duty, capital gains tax exemption for non-doms etc). Mainly, though, it is a question of bringing the tax rate down to a level where evasion becomes pointless. As Art Laffer keeps telling anyone who’ll listen, it works every time. Between 1980 and 2007, the US cut taxes at all income levels. Result? The top one per cent went from paying 19.5 per cent of all taxes to 40 per cent. In Britain, since the top rate of income tax was lowered to 40 per cent in 1988, the share of income tax collected from the wealthiest percentile has risen from 14 to 27 per cent.
Now this is where i start getting skeptical, the link has no source to back up his point… it’s just someone agreeing with him. Also the numbers he quoting (apart from not knowing his source) are ridiculous, assuming they are true… they don’t tell us jack shit. Could it be that during that period, which is about when real wages started stagnating, the rich were paying a higher proportion because corporations were making record breaking profits? The rich weren’t paying more of the taxes by the magic of flat tax, they were EARNING ALOT MORE.
4. Those of us who believe in small government are not motivated by the desire to make the rich richer. We’re really not. We are, in most cases, nowhere near having to pay top rate tax ourselves; our most eloquent champions over the years have been modestly-paid academics. We believe that economic freedom will enrich the country as a whole. Yes, the wealthy might become wealthier still, but we don’t see that as an argument against raising living standards for the majority.
I’m not sure what to say this except… this, it’s not good enough to just get people out of poverty. What people care about is their relative wealth, and making inequality go higher will cause misery. We always unconsciously compare ourselves to the top, and with the globalized era being televised, it’s even more obvious.
5. We are not against equality. We generally recognise the benefits in Scandinavian-style homogeneity: crime tends to be lower, people are less stressed etc. Our objection is not that egalitarianism is undesirable in itself, but that the policies required to enforce in involve a disproportionate loss of liberty and prosperity.
Loss of liberty and prosperity for whom? The rich obviously right? The video at the end of the link he posted is the most ridiculous thing i have seen this week. If you’re really worried about the small business owner AND about inequality… how about you set up a new system and Tax accumulated wealth, this would mean that if you have a really good year, the high tax rate would not eat it up, there see? Protect the masses, protect the small business owners! Also studies show that well paid workers are more productive workers… imagine if everyone in the economy was well motivated? That would be real prosperity.
6. Nor, by the way, does state intervention seem to be an effective way to promote equality. On the most elemental indicators – height, calorie intake, infant mortality, literacy, longevity – Britain has been becoming a steadily more equal society since the calamity of 1066. It’s true that, around half a century ago, this approximation halted and, on some measures, went into reverse. There are competing theories as to why, but one thing is undeniable: the recent widening of the wealth gap has taken place at a time when the state controls a far greater share of national wealth than ever before.
It’s easy to make such a statement but there’s no evidence of causality, these presumptions are terrible… imagine setting up a policy based on this… read Krugman on this… it’s not voluntary state intervention, the state is taking a larger share because people are suffering…
7. Let’s tackle the idea that being on the Left means being on the side of ordinary people, while being on the Right means defending privileged elites. It’s hard to think of a single tax, or a single regulation, that doesn’t end up privileging some vested interest at the expense of the general population. The reason governments keep growing is because of what economists call ‘dispersed costs and concentrated gains’: people are generally more aware the benefits they receive than of the taxes they pay.
At the expense of the General population? I’m glad he doesn’t use the word Majority because… oof that’s a close one. Let’s be theoretical about this, there’s over a thousand Billionaires in the US. Some of them have more than 1 billion too, that’s a trillion dollars… the cuts they were discussing of making the other day would save 50 billion(just to put it into perspective), with that kind of money you could send 5 MILLION people to higher education(purely theoretical of course).
8. Capitalism, with all its imperfections, is the fairest scheme yet tried. In a system based on property rights and free contract, people succeed by providing an honest service to others. Bill Gates became rich by enriching hundreds of millions of us: I am typing these words using one of his programmes. He gained from the exchange (adding fractionally to his net worth), and so did I (adding to my convenience). In a state-run system, by contrast, third parties get to hand out the goodies.
The state isn’t running the system, its correcting it… its VERY contradictory that he talks about, property rights and free contract… when those are in themselves government intervention.
9. Talking of fairness, let’s remember that the word doesn’t belong to any faction. How about parity between public and private sector pay? How about being fair to our children, whom we have freighted with a debt unprecedented in peacetime? How about being fair to the boy who leaves school at 16 and starts paying taxes to subsidise the one who goes to university? How about being fair to the unemployed, whom firms cannot afford to hire because of the social protection enjoyed by existing employees?
At a time in history the difference between private and public pay weren’t so big… but ever since the private sector started not sharing profits, this has changed. Also the public sector does have job security factored in… The capitalist system is the one filling in debt; private education is draining the poor… Capitalism created poverty which the government tried to correct (admittedly not well done) by subsidizing sub-prime loans and reducing debt.
10. Let’s not forget ethics, either. There is virtue in deciding to do the right thing, but there is no virtue in being compelled. Choosing to give your money to charity is meritorious; paying tax is morally neutral (see here). Evidence suggests that, as taxes rise, and the state squeezes out civic society, people give less to good causes.
See my previous post for this one
Anyways if your still… hope you enjoyed it or at least learned something about critical thinking!