As regular readers of The Kitchen might imagine, the news that Polly was going to be about ten minutes late because she was in a meeting with her Big Norse Chancellor had a detrimental effect on our seriousness and, by the time she arrived (shorter and frailer-looking than I had imagined), the four of us were approaching hysterics.
As the others have observed, Polly spouted a good deal of rubbish; it all hung off her favourite society as caravan analogy. The idea is that society is like a caravan travelling through the desert, and its contituent parts move at slightly different speeds: those at the front will move faster than those at the back. However, if there is too much of a differential then the ones at the back will eventually lag so far behind that they cease to be part of the caravan. Which is a very pretty analogy.
Unfortunately, so bitter and warped is Polly that she concentrates entirely on those in the front and wants them to travel more slowly. The trouble is that if this happens, the whole caravan takes far longer to get where it is going than it would otherwise do.
Polly was right in that it would be better if those at the back did not get left behind, but at the same time she totally brushed aside the issue of marginal deduction rates. So I stood up and asked her, citing the report from the Department of Work and Pensions [PDF] which was highlighted by Chris Dillow. Despite admitting that marginal deduction rates were crippling and that a Citizens' Basic Income was a very good idea (although she rightly pointed out that it would be expensive—more on that later) she still kept clinging to the idea that Tax Credits and other such idiocies were a good thing.
She refused to acknowledge that the abolition of grammar schools had damaged social mobility and, in response to another question of mine, claimed that we had, in fact, tried funding schools—Sweden-style—through a voucher system in 1994! Actually, we allowed some private schools to participate in the state school system and introduced assisted places at those schools; we did not privatise schools and fund them with vouchers. She wilfully ignored this point; it may have been that she didn't understand it, or it may have been that she deliberately refused to answer it. Either way, it was colossally unimpressive.
Having made the assertion that there are some things that the government runs well, Polly attempted to dodge answering this simple question, "What? What does the government run well?" She maintained that the government runs the NHS well, that it gives a good "bang for its buck". Well, it may well do, but as to the assertion that the government runs the NHS well... Hmmm, I do wish that Doctor Crippen or Doctor Rant had been in the room, frankly.
Polly also tried to expand on a theme: wouldn't it be nice if the 30% of the population who aren't homeowners became homeowners? Well, yes, but it would also be nice if I had a million pounds. But, believe it or not, she was serious!
She proposed that everyone in "social housing" should be allowed to take possession of their house after, say, ten years of paying rent; in this way, they would have something to borrow on, etc. Do you see any flaws here? I did so I asked her whether that was fair to those who rented privately and were not in social housing, a question that she brushed aside with "oh, we'd have to sort that out". It was an answer that I found rather ominous: was she proposing that I be sent to live in
As for everyone owning a house, given that our population growth is not even at replacement rate currently, can anyone see a problem with that? Yes, that's right, there would be no market for houses. Those people who had bought a small house and then wanted to move to a bigger house wouldn't be able to because there would be no one to buy their starter home off them. Whoops!
But our Pol strode gamely on; they wouldn't really own their houses, it would be a mere paper transaction, but they would then be able to borrow on it. Er... Doesn't this fundamentally undermine the concept of ownership? And, if they don't really own their house, they cannot therefore sell that house and so they wouldn't be able to raise capital on it because it would, effectively, have no sale value.
For fuck's sake.
By about half way through the lecture, Trixy and The Nameless One were in fits of giggles, and the Dude was barely able to contain his contempt: the whole thing was, if you like, a rehash of Polly columns from the last ten billion years. The USA is bad and uncaring, Scandanavia is the holy land and so on and so forth.
In short: bollocks. As The Dude pointed out, the Scandanvian countries also have far higher rates of per capita suicide than we do. Not exactly a glowing endorsement.
I suggest that you read the others as well, since I cannot be bothered to write up the whole of the lecture. Suffice to say that it was only really informative in one respect: I have found out the answer to the Polly Conundrum (having spouted x load of old shit, is y a liar or a fool?) as regards Polly herself.
She is a fool: I think that she really believes the crap that she comes out with. This is a rather terrifying concept.
However, I have emailed Polly; initially I did so in order to give her the report that I had cited, but it turned into more of an essay.
I saw you speak at the Bow Group last night and asked a question on (amongst other things) marginal deduction rates. I thought that you might be interested in the report that I cited, and have attached it [PDF].
It was brought to my attention by the blogger, Chris Dillow.Here’s a question: Take a married couple with two children under 11 and pre-tax earnings of £200 a week. If they get a better job, raising their earnings to £300 a week, by how much does their net income rise?
£60? £50? £40?
Yes. £8.52. That’s a marginal deduction rate of 91.5 per cent.
It is unsurprising that I don't really agree with your assessment; your caravan analogy is OK as far as it goes but if you slow down those at the front (which is essentially what you are talking about) then the caravan will take longer than it otherwise would to get to its destination. We should be looking at how we can increase the speed of those at the back without slowing down the caravan as a whole.
Marginal deduction rates quite obviously do this as they act as a disincentive for people to work. A man interviewed on the street, in London, by 18DoughtyStreet (the internet political TV show) cited his housing benefit as £180 pcw, his Council Tax Benefit as £20 pcw and his dole as £70pcw and said that, although he would like to work he would need a job paying £450 per week or so to make it worth his while.
And, of course, there is a large body of evidence showing the psychological damage (in terms of self-worth, etc.) caused by a lifetime on benefits. The vast majority of people want to work and the routine of work helps to prevent the "haziness" that you talked about.
Personally, I believe that the Welfare State has a great deal to do with the fracturing of our society; whilst it was a noble cause, we effectively allowed people to abdicate from responsibility. "Don't worry about your family," it says, "The state will look after granny/baby/etc." I believe that this has had an immensely corrosive effect on society.
I am one of those loony libertarians, I am afraid, so I am never going to agree with your hypotheses (although it was interesting to hear you advance them). In my opinion, the state does not do anything well. Here is an illustration from blogger, Raw Carrot.The other day I purchased several second hand books on the history of my local town. I was surprised to see quite how bad a job the Left (and other Statists) have made of improving the town over the years. In fact, an objective observer might be forgiven for thinking the council and central government were determined to ruin, rather than improve, the town.
The works display, quite clearly, that long before the “welfare state”, at least as we know it today, came into existence, there was a fairly substantial amount of “welfare” available to residents of my local town.
I also purchased a map of the area dated 1899. With the books and data from the map, I was amazed to discover that the town has boasted the following facilities:
- Several swimming pools
- There is now only one
- Two police stations
- There is now only one
- A delightful town hall
- They replaced it with an ugly expensive one
- A cricket ground in the centre of the town
- It’s not in the centre any more
- A cycle track
- There isn’t one any more
- A rugby and football pitch in the centre of town
- The rugby isn’t in the centre any more
- Two well-equipped and clean local hospitals
- The nearest hospital is now 12 miles away and deadly
- Four train stations served the town
- There are now only two
- Trains to London took 16 minutes
- They now take at the very least 23 minutes, usually more like 45.
- There was once a wide selection of good schools
- There are now just failing state schools, mediocre state schools and private schools.
- The High Street used to have real shops
- We don’t even have a Dixons any more
- The area used to have many real pubs
- We now just have BOGOF-pub-bars
While the loss of Dixons from the High Street may be considered a good thing, it seems pretty self-evident that the town has been ruined. The best bit though, is that the two local hospitals were not paid for through taxation - but through patronage, charity and paid contributions from the local community.
In fact, the larger of the two hospitals was founded in 1879. In 1882, a mortuary, ambulance house and other “conveniences” were added. In 1900 a donation of £10,000 was made by a local benefactor. Additional land was acquired, a new operating room erected and fitted with “every modern requirement” and several other improvements were made to the establishment.
A further £10,000 was left to the hospital by another gentleman and was used to found an extension to the hospital, including the installation of “a complete X ray apparatus”.
To give an idea of how wonderful this healthcare provision was, consider that the hospital was built in 1879 when the population of the town was just short of 8,000 (see graph below). Note how, as the population increased so too did the facilities and size of the hospital. One might say the town had a health care system responsive to the needs of the local community.
Today, with a population in excess of 65,000 people we have one “real” in-patient hospital and it’s located about 12 miles away (a 23 minute car journey). It also happens to be a rather shit hospital (complete with utterly meaningless “Three Star” rating)...
There's more to his post too and it's all worth reading (not all of us bloggers swear and bitch all the time!).
You are right in that the very rich should be more philanthropic but, unfortunately, the Welfare State takes away that idea too: why should you donate when 40% of your salary already goes to pay for these things. If the state cannot provide with the money that they extort with menaces (they think) why the hell should I donate any more?
I'm glad you agree about the Citizen's Basic Income; I agree that there are some troublesome figures (roughly 48 million people over 16 x £5.5k per year = £264 billion) but there must be a way to make it work (current benefits spending is £180 billion so the gap is not that huge). Personally, I also favour a Personal Tax Allowance of somewhere near £9k per annum and a subsequent Flat Tax of 33% or so (income tax and NICs being rolled into the one tax). The point being with both of these systems is that their simplicity means that you can get rid of an enormous load of parasitic administrative public sector workers (and severely decrease the revenue for accountants too).
The simplicity also means fewer loopholes: what Gordon Brown is currently doing, if you'll forgive the crude metaphor, is knitting a blanket: the more rules he puts in (the stitches) the more holes there are between them.
Apologies, this has turned into something of an essay; still, I'd be interested in your thoughts.
We'll see if I get a response or not.
Now, I'd like to address the issue of the cost of the Citizens' Basic Income.
In response to a comment, I'd better explain the concept of the CBI and why I, a loony libertarian, support it.
So, one has to accept that—in a civilised society—there must be some sort of safety net, yes: that people should not be left starving in the streets?
But what you want is a benefit that does not penalise people for working and that, preferably, does not need the intrusion of the state into aspects of what you earn, etc. Apart from anything else, this means that it is cheaper to run because you do not need to do wealth assessments.
Hence the CBI: a benefit paid equally to everyone over 16—whether they are working or not—that can be run, simply, through the National Insurance Database. Just as, when you turn 16 your NI card pops through the door, in this case your first CBI cheque would pop through the door too. You are then paid this until you die (and it effectively replaces all other benefits, including the state pension).
In a post a while back, I calculated the cost of paying £100 per week to everyone over 16 as being £250 billion. This is a fairly large figure to be sure: in 2005/06, spending on benefits was only £170 billion.
Now, the tables in Public Expenditure Statistical Analysis 2006 Table 3.6 [PDF] give an extensive breakdown of what government spent in 2005/06 and it amounts to a total of £530 billion. This is, in itself, a fairly hefty figure, but it can be trimmed.
What I did was to take what might be considered "necessary" spending for 2005/06, rounded up to the nearest £5 billion, and came out with the following.
- Public Sector Debt Interest: £30bn
- Public Order & Safety: £30bn
- Science & Technology: £15bn
- Defence: £30bn
- Transport: £30bn
- Housing: £10bn
- Health: £90bn
- Recreation & Arts: £15bn
- Education: £70bn
- Social Protection (benefits): £170bn
- Total Essential Spending: £460bn
If you take sustitute the £250bn required for the CBI for the £170bn spent on Benefits, then you end up with a total of £540bn. That's still pretty high, frankly.
But is all of this really necessary? After all, health spending has doubled and the quality has certainly not done so. So, I then sliced things even more, according to my deeply libertarian, "governments should do almost nothing" principles, scanning all of these "essential" services for fatty bits and subsidies, e.g. for rail services and local transport.
- Public Sector Debt Interest: £30bn
- Public Order & Safety: £30bn
- Science & Technology: £10bn
- Defence: £30bn
- Transport: £10bn
- Housing: £10bn
- Health: £70bn
- Recreation & Arts: £5bn
- Education: £60bn
- CBI: £240bn
- Total Essential Spending: £465bn
There we are, that's much better. It's still not great, admittedly, but the point is that, by slicing a lot of the existing budget, we have found money for the CBI to be implemented, and for only £5bn more. If the above was more or less the only spending, then we are able to cut tax by nearly £100 billion.
And, of course, we are boosting the salary of everyone in the country (over the age of 16) by £5,200 and we are giving everyone an incentive to go to work, which will hopefully boost the tax take. As the tax take rises, we can lower the rate of tax even further.
Or, of course, implement UKIP's Flat Tax Policy [PDF]: they advocate a £9,000 Personal Tax Allowance and a Flat Tax—incorporating both income tax and NICs—of 33%. This is estimated to cost about £34 billion. A lot of money?
I have just found £70bn by slicing bits off unnecessary and overblown budgets, so I think that it is more than affordable. The only people who might complain are the accountants and lawyers who make their living from attempting to unravel the labyrinthine tax policies of our Cyclopean Chancellor. Oh yes, and the vast swathes of civil servants who are going to be sacked (and the beauty is that you are already paying their benefits through the CBI, so it costs you almost nothing to do so).
Can I rule the country now?