Sunday, September 23, 2012

My socialist rant

Warren Buffett: “There’s class warfare, but it’s my class, the rich class, that’s making war, and we’re winning.”

Interesting article on research indicating the very wealthy will become richer and the poor poorer as we come out of recession here.

As we get older we're supposed to slide politically to the right. I find myself going the other way. In fact, I am now persuaded that the Tory party in the UK and Republicans in the US are, at root, little more than organizations funded and steered by the very rich and big business to act economically always in the interests of their rich backers. They are conducting class warfare. My cui bono test strongly suggests as much, for example.

The real triumph of these organizations is to have persuaded even the less well-off to vote for them. They have succeeded by means of a combination of religion (in the US), a libertarian philosophy of "individual responsibility"(which repackages the naked self-interest of big-business and the rich as a noble bid for human freedom), "trickle down" voodoo economics, and smears and fallacies such as the supposed "culture of dependency" (see e.g. Mitt Romney) and "politics of envy" (and other ad hominem fallacies).

As Thomas Frank (What's The Matter With Kansas?) sadly notes:

“This situation may be paradoxical, but it is also universal. For decades Americans have experienced a populist uprising that only benefits the people it is supposed to be targeting. In Kansas we merely see an extreme version of this mysterious situation. The angry workers, mighty in their numbers, are marching irresistibly against the arrogant. They are shaking their fists at the sons of privilege. They are laughing at the dainty affectations of the Leawood toffs. They are massing at the gates of Mission Hills, hoisting the black flag, and while the millionaires tremble in their mansions, they are bellowing out their terrifying demands. 'We are here,' they scream, 'to cut your taxes.

The trick will be to provide an alternative vision of what our countries, drifting ever more economically rightwards and becoming ever more unequal, could look like.

Sweden, for example, which continues to have a highly successful economy even while taxing heavily and progressively to fund its excellent free schools, excellent free health care, excellent benefits, and so on. Or Denmark, which runs a fully comprehensive state-run school system widely acknowledged to be one of, if not the, best in the world.

These countries also demonstrate comparatively high levels of social mobility, unlike the UK, which beats the United States to the title land of least opportunity among these nine developed countries.


Chris Horner said...

Excellent points, well made. do check out Wilkinson & Pickett's 'The Spirit Level' for more data on why inequality is made for everyone.

Nigel Chapman said...

Could we perhaps have a law passed -- for these things are done by law today -- to make 'Free Education' an anagram of 'Social Mobility'?

Robin Amos said...

I think the main problem with inequality of wealth is that it directly translates into inequality of power (especially political power) and that ultimately becomes inequality before the law.

But if we are going to tackle inequality in the future, we are going to have to find a better way to do it than merely raising income taxes. Income taxation is an inefficient and arbitrary way of reducing inequality.

Also, those of us who share leftish views genuinely have to ask the question of how to maintain equality whilst simultaneously respecting the fact that it wouldn't be fair to give people unequal rewards for unequal contributions/effort. Ultimately I believe inequality can be fair, but it can simultaneously have a negative impact on society.

My own opinion is that land value taxation, which are still existent in Sweden, is fairer than income taxation as land values do not rise due to the efforts of the person who possess the land, but either due to the effects of scarcity or the benefits provided by the surrounding community.

Robin Amos said...
This comment has been removed by the author.
Robin Amos said...

I don't think you can say the "politics of envy" is necessarily an ad hominem fallacy, although the way it is used is often fallacious.

Of course, simply claiming that inequality should be reduced does not imply that you are necessarily envious of the wealth of others. Simply criticising the fact that many people seem to possess wealth which has been gained unfairly obviously doesn't imply you are envious. Otherwise, everyone who criticised Al Capone could be tarred with the 'envy' brush.

On the other hand, arbitrarily declaring support for higher levels of income taxation for no other reason than 'they're rich so they deserve it' as some people do (for example, on the Guardian's comment threads) does tend to suggest the argument is based on envy. The reason is simple: if it's fair to tax the rich more because they have wealth 'they don't need' why isn't it fair to tax the person on 20k a year, or on minimum wage for exactly the same reasons? And being on 20k a year would make 'you' one of the global 10%, so why shouldn't 'your' money be redistributed to those in poorer countries for the same reason?

So whilst I accept there are many good arguments for progressive taxation and against inequality, It's also obvious that for a lot of people the foundations of [i]their[/i] arguments for higher income taxes are based on little but envy.

The Uxbridge Graduate said...

@Robin Amos

A major shortcoming with LVT, as I see it, is that it does not address the hoarding issue whereby those with very high incomes remove money from circulation and thereby impoverish the commonwealth.

Robin Amos said...


A major shortcoming with LVT, as I see it, is that it does not address the hoarding issue whereby those with very high incomes remove money from circulation and thereby impoverish the commonwealth."

Firstly simply removing income from circulation does not necessarily impoverish the commonwealthy. In better times, before banks were allowed to create money out of thin air, loans to businesses and individuals were made using that saved money.

Also, if people cannot save money in banks, for example, they will save by buying property or buying into commodities, thus driving up prices.

In fact, a lot of people hoard wealth through property speculation. LVT undecuts this kind of zero sum activity.

Sunrise said...

Actions speak louder than words, Stephen!

Josh Kutchinsky said...

Bill Maher puts it in his inimitable brash way, but heck you know he's totally on the ball here

wombat said...

You have got to be kidding here surely - if you were in the position of being very, very wealthy, wouldn't you get someone better than Mitt Romney or David Cameron? This is a decaying orbit round one of those Black Holes!

Perhaps Sweden's real triumph is not how it taxes its citizens but how wisely it spends its money. The French state for example seems to spend about the same percentage of GDP (52% or so) as Sweden but doesn't seem to be such a paragon.

On the tax raising side I have seen claims (e.g. Table in here ) that the taxation in the UK and US is more steeply progressive than in some of the more egalitarian countries. The French again raise more tax from the top earners than the Swedes and so ought to be a more equal society surely.

Leaving to one side the right wing conspiracy theory I think your point about education is the thing. Simply taxing and redistributing wealth seems at best insufficient and may simply be futile in the long term without access to education.

Stephen Law said...

Hi wombat

Nice attempt to dismiss what I am saying as a "conspiracy theory", but it pretty obviously won't wash. Everything I said is well-evidenced.

I claimed that the rich and getting significantly richer and poor poorer. That's well evidenced.

I claimed that the Tory and Republican parties are funded and steered always to act economically in the interests of their rich backers. That's also well evidenced - they are indeed the people that fund those parties, and those parties do indeed always act economically in ways that advantage those rich people, often disadvantaging the less well-off (see the cui bono test).

And you do not challenge my claim economies that tax heavily and progressively can indeed be economically successful whilst also offering their citizens free health care, education and other benefits and greater social mobility (and less inequality too, of course).

That Tory and Republican parties have succeeded in getting the less well-off to vote for them is also well-evidenced. And that they have done so by means of the kind of methods I describe is well-evidenced.

Nor do any of these claims tick any of the boxes for an IBH.

Great Maher clip thanks Josh. I ended up watching about 15 of them...

wombat said...

Well I certainly agree on most of the factual points, but then all the very best conspiracy theories are supported by facts - at least in some measure.

To my mind the cui bono points if anything to the political parties benefiting not just especially or even particularly the rich. Why are the rich not benefiting much more? It's surely not because they can't afford to hire top talent is it? If the Republicans really wanted to cut the fraction of GDP the rich pay in taxes they would make America more like Sweden wouldn't they. No. The rich are being taken for a ride by the Republicans and Tories too.

For more on why the poor vote Republican there are some suggestions that (1) Certain dispositions are innate (2) Conservatism increases when people are threatened. See Sciam article here

This seems to suggest that in order to keep the Republican votes coming in they need to keep the fear and uncertainty up. Perhaps this fear is the prime source of the donations too rather than thought of economic advantage. Paradoxically ideas of warfare of any sort, class or otherwise, would seem to play to this fear.

James James said...

"'trickle down' voodoo economics"

1. Challenge: can you find an example of someone advocating "trickle down" theory?

2. Even if you can, isn't it best practice to attack the strongest version of your opponents' arguments?

James James said...

"do check out Wilkinson & Pickett's 'The Spirit Level' for more data on why inequality is made for everyone."

It's well documented that this book is one enormous lie.


"I claimed that the rich and getting significantly richer and poor poorer. That's well evidenced."

No it isn't. Perhaps in the last couple of years the poor have gotten slightly poorer, but over a time period long enough to draw conclusions (say minimum 20 years) no one in their right mind would maintain that the poor had gotten poorer.

wombat said...

Well it seems the Tory donors are don't feel they are getting enough bono according to this Telegraph columnist -

"Osborne cut the 50p tax to 45p (a compromise with Clegg), but is dismayed at how little thanks he received for such a politically difficult decision. He is disinclined to do much more for the high-paid."

So again - Why, if they are not getting what they are supposedly paying for, do they contribute?