EU Referendum

I’m not particularly enamoured with the EU. The institution suffers from a democratic deficit, with a lot of decision making done by appointed officials who are very tenuously accountable to the people they serve.

Nevertheless, I’m entirely unconvinced by those who support Britain leaving the UK. For the most part, they strike me as a mixture of fantasists and xenophobes.

Just as the SNP promised to be everything to everyone in the Scottish independence referendum, so it is with the campaign(s) to leave. The campaigners tend to hold extreme views and do not like the EU as it blocks them from obtaining the outcome they want. These are usually right wing views but in some cases far-left views too.

Despite some having strong beliefs to the contrary, I'm doubtful that the UK would be turned into a goods-exporting, innovative, tax-haven, socialist utopia if we could only be free of EU shackles.

It is much more likely that leaving the EU would cause huge economic disruption and diminish the place of the UK in the wider world. Some supporters of leaving the EU might legitimately claim that this would be a price worth paying for greater self-determination and democracy. This is one argument I can respect, but I’m not sure how many anti-EU campaigners would really believe this.

This is because I don’t think the political system in the UK is a particularly good version of democracy. Our system of local representation was no doubt the best feasible one in the 17^th century but it doesn’t really stand up to scrutiny in the 21^st century. Instead of horse-drawn carts and mass-illiteracy we now have instantaneous communications and political parties (with their whips).

If the leave campaign were really interested in democracy I would expect the campaign to coincide strongly with those who also campaign for radical changes to our electoral system. To the contrary, I don’t get the impression many anti-EU campaigners really care about democratic legitimacy.

One problem with the democracy-based leave campaign is that if you leave the EU you can’t influence it any more to make it more democratic. Furthermore, the challenges facing the world are increasingly ones that require international agreement and co-operation, such as combating climate change.

I also wouldn't be convinced because I think it is sensible to limit what can be done in the name of the people, whether this would be suppressing the rights of individuals or minority groups, or, in making decisions that will be hugely counterproductive and self-defeating.

There is a pro-democracy argument for leaving the EU. However, I don’t think it is the one that motivates most anti-EU activists and nor is it one that convinces me. 

Transparency of ownership and taxation

I’ve been very busy lately with my day job and doing teaching preparation but I’ve been trying to follow the #panamapapers information and commentary as best I can.

I have only managed to tweet a few things about it but I wanted to outline how I think there should be hugely more transparency about who owns what around the world, but a few limits on this.  

Transparency of company ownership

The system of property ownership is a human institution and should be organised in a fair way. The only way to know if it is fair is to know who owns what and to be sure that everyone is paying as much tax on it as they should. This is never going to be a perfect system – criminals and corrupt officials will always find ways to launder their ill-gotten gains. However, the system should be such that it is made difficult for them to do so and that there is a chance they will be caught out later on.

Many of the resources in the world are owned by corporate enterprises, which is perfectly understandable. Corporations go about the business of producing the goods and services that we all need and want.

But who owns the companies? Companies exist to benefit their ultimate owners, which is again perfectly fine. However, this means that the benefits are going to one or a mixture of the following:

·         Individuals (or family units) – could be sole-owners, partners, shareholders or workers with a stake in the company.

·         Governments

·         Sovereign wealth funds for the benefit of future generations within a country

·         Non-governmental Organisations (non-profit organisations)

The ultimate beneficial owners of corporate entities should be public information. The same should apply to trusts.

Transparency of personal tax records

After the Panamanian revelations politicians in the UK have been reluctantly releasing their tax records in order to prove that they are not receiving funds that undermine their credibility.

Some people are now suggesting that the UK should follow a Scandinavian model whereby tax records are publicly available.

I am in favour of greater transparency of personal tax records but not making full records available as politicians have been. The limited records I would suggest is simply gross income and tax paid in the last year and gross income and tax paid in their lifetime.

My suggestion is that there should be a website in which anyone can find out certain headline information about the taxpayers at

·         Any given address (but without specific names, so it would just list taxpayer 1, taxpayer 2 etc.)

·       The information for any given individual if three or more can be provided to anyone with the following pieces of information can be entered:
Surname
First Name
Address/Post code
Date of Birth
Tax number (National Insurance number in the UK)

This means that journalists or the public could find out information about well-known people as their date of births. 

Are there downsides to this transparency?

Public figures might feel forced to give further information to show where they got their income from. This might be intrusive, but on the other hand it seems important if people have disproportionately more cultural or political power in a society that the public is aware of their financial situation.

Self-employed people might not be happy that their competitors and clients can find out their income and possibly gain an advantage in negotiations as a result. However, I’ve said headline summary figures should be provided about companies and individuals so this wouldn’t necessarily tell you everything required in order to draw absolute conclusions.

Could it put people in danger?

The following groups could be in danger, but I will suggest ways around this:

·         Spies
But these could presumably be designated civil servants and self-employed business people as they no doubt already are to some degree to cover their identities.

·         Political refugees
Could be given new legal identities or have their addresses supressed under UN orders.

·         People whose lives are threatened (for example people who have stalkers/subject to religious persecution and fatwa’s/ in witness relocation)
Could also receive special protection on their information.

Overall, I think the benefits of greater transparency outweigh the downsides, but I'm keen to hear if there are any strong arguments I haven't considered.

Socialism/Communism and Scale

I've just read a very interesting draft article by Canadian philosopher Joseph Heath.

I don't always agree with Heath, but his work is usually very challenging (in a good way - i.e. interesting).

It is currently available on his academia.edu page, though he may remove this in the future if it gets reviewed and published.

His argument is that just as computer architecture has to be able to cope with the amount of data required of it so social relations must be able to cope with the amount and nature of social and economic interactions.

He discusses GA Cohen's well known short book 'Why not socialism?' in which Cohen points out that camping trips work fine without a market so why can't society? (He even indicates the reasons why it wouldn't in his book so it isn't a very effective analogy in its own terms).

Heath goes to the trouble of pointing out why - small scale societies have methods to work and these are attractive to us. Which is unsurprising as much of our genetic ancestry would have been based in such societies.

However, the way that these societies function is simply not scalable past about 150 people. So attempts to bring about socialism on a larger scale inevitably result in the kinds of terrible things that Mao and Stalin did in the hope of enforcing their utopia.

Heath is certainly no market fundamentalist - all the other work I have read by him has challenged market thinking (Cattalactic bias as he calls it). However, he concludes that on a social scale markets are a very effective method of allowing economies to function on a huge scale and so capitalism is therefore the normatively required economic system for advanced societies.

Heath's argument is a development of the common conclusion most people have reached (that communism isn't viable for societies of more than 150 people) but he has developed an interesting and well-researched way of presenting it.

A journal article by yours truly - Arguing for a New Form of Taxation: Lifetime Hourly Averaging

Great news, my paper Arguing for a New Form of Taxation: Lifetime Hourly Averaging is available for viewing online.

I'm very pleased to have this paper published in the Journal of Applied Philosophy.

In the paper I present my lifetime hourly averaging proposal and defend hypothetical insurance as the best method to determine whether resources in society are distributed in a fair manner.

The hypothetical insurance approach is to consider how much redistribution people would support if they did not know if they had a good or bad upbringing, were highly talented or less talented and whether they find themselves in the right place at the right time to earn more money.

I argue that if people put themselves in this hypothetical situation they would find my hourly averaging tax and benefit proposal the most attractive one to transfer resources from the more to the less economically fortunate.

As I've explained elsewhere, you don't have to take a hypothetical insurance approach to support my hourly averaging proposals. However, in this paper I argue that hypothetical insurance is the best approach to take and that if you take this approach then hourly averaging is the tax and benefit system to support.

The end of big denominations

A new report from a team led by banker Peter Sands has suggested that large denomination notes should be discontinued. This is because the notes are used by those engaged in criminal activities and tax evasion (not the latter isn't criminal).

I'm generally a fan of the cashless society as I think it enables a better notion of who is doing what in the economy, which in turn allows for a fairer redistribution of resources.

It is hard to imagine any legitimate uses for large banknotes. The only time I can recall coming across one was seeing someone having theirs confiscated when trying to pay it into a bank - they had been conned in the pub.

Carrying around or otherwise transporting large amounts of cash seems very unsafe to me - for some reason I feel really on edge if I have over £50 in my wallet (do I think people can tell or something?)

Some people, including many commentators on the guardian article on the report, suggest that as the author used to be a banker it is clearly part of a bank-led plan to further take over. One worry is that we will be too dependent upon banks to go about our lives, where these banks might go bankrupt or whose service might be disrupted.

This is a worry and we need governments to ensure that they are ready to step in to ensure that banking services are working for all citizens. But then this leads people onto the next concern: banks and governments are two parts of an elite that wants greater control over us and blocking access to anonymous cash will give them that power.

One response would be to deny this possibility but I won't take that line. The threat of an Orwellian state which controls all resources via client banks and can monitor or shut down any individual if they get out of line is perfectly plausible. But the un-sexy response to this is to demand openness of government, to hold politicians and bureaucrats to account and to be very careful about who we vote for. (I.e. not the likes of Donald Trump and other populist "strong-men" who show disdain for checks and balances).

There is a real worry that in a social media age simplistic messages and solutions dominate difficult but reasoned analysis. But this makes it all the more important to respond appropriately.

After all, new technology is going to continue to play a larger role in our lives; we just need to make sure it works for all of us and not just a minority. Disrupting criminal activities, particularly tax evasion, is one such way it can.

Working time exactness

My hour credit proposals make use of hour credits, each of which is received when someone spends an hour. I'm sure some people doubt the feasibility of my proposal on the basis that employers wouldn't really control the time that workers to the required level of exactitude.

To challenge that I would usually point to time-card systems and computer-log-in-programmes that are used by many employers. I might also mention that the official leaving time where I work is 17.18.

But Morley College have gone a step further, A recent advert for an administrator there specified that the job is 0.700443 full-time-equivalent. So if a full week there is 38 hours a week then this job is 26.616834 hours per week, or 26 hours 37 minutes and 6 seconds.

Perhaps the time divides more neatly into whatever their specified full-time hours happen to be. However, I thought it was an interesting case, perhaps because of its apparent ridiculousness.

Conclusion: Institutionalising the constructed desert base (8/8)

In my previous blog I presented a new form of desert base that I believe is more attractive than the traditional approaches to economic desert. I will conclude my series by considering the institutional implications of this.

1.       Implant and monitoring

If we could insert chips into everyone’s heads to measure reliably how much time, energy and dissatisfaction they are expending at a given point in time. They would also be monitored somehow so it can be known if they are engaging in economically productive activity. This technology could then monitor how much people are expending when they engage in productive activity we would be able to share out incomes accordingly. However, we cannot currently do this, and perhaps would worry about doing so—it might be quite invasive to follow people’s activities and mental states that closely.

2.       An endowment tax.

For the time being it would be easier (though still not that easy) to take account of people’s incomes, the time they expend and their abilities. Essentially, an endowment tax would be the most obvious stand-in for the constructed desert base.

This would tax people differently depending on their abilities so, where this is measured by test results, someone with top IQ and high school test results could be assigned to a higher tax band throughout the remainder of their life than those with lower scores. Even then the practicalities are difficult—how much weight should be given to the different measures such as mathematical vs. emotional intelligence, creativity vs rule-following etc.

Stuart White proposes a system which puts people into three categories to make this easier (see also chapters 4 & 5 of his book The Civic Minimum). However, while this makes the endowment tax much easier to administer and much less controversial it also reduces its effectiveness at taxing people according to the ability and therefore

There are several serious complaints against endowment taxation, such as that it would be invasive to test for this and that it would unfairly limit the talented. Some people have talked of the ‘slavery of the talented’ as talented people would not be able to take lower paid work that would be open to less talented individuals—the low paid work would not be enough to pay their higher endowment tax.

So if endowment is considered too difficult to accurately measure or if endowment taxes are considered unfair, what is the next-best option for the constructed desert base?

3.       Hourly averaging

I would suggest that my hourly averaging proposal is the next closest option to the constructed desert base. This system taxes those who receive large incomes after expending a small amount of time working and provides subsidies to those who work long hours for small rewards.

I have suggested that time spent working should be one of the factors in the desert base as it is something that people can control. One complaint might be that some people who work long hours do so in low-productivity activities which are do not make them deserving. However, in some cases this might be because the person cannot obtain more difficult higher paid work.

It is quite different from endowment taxation in that people with a lot of potential to contribute but who do not do so will not be penalised. However, it may not be that someone who has more potential finds a particular job easier than others and therefore render them less deserving. It might be that someone with the potential to be a lawyer finds being a waitress just as stressful as the person who would struggle to master legal procedure.

I would also add that my CLIPH-rate tax system which combines hourly averaging with a comprehensive tax on personal gains would track the desert base very well. This is because each person’s income would be tied to the number of hours they have worked in their lifetime, and those who have not worked would have their unearned income taxed at 100%.

The downside of the CLIPH-rate tax is that it would not be able to distinguish readily between two people who receive large hourly incomes due to the sacrifice involved vs. earning rents on their skills and talents. However, one factor is the way that prices will react to the tax—those who earn large incomes from rents will not require more pay when the tax would be introduced. On the other hand, jobs which people would be unwilling to do when taxes rise substantially are likely to be those which are both productive and involving a lot of sacrifice.

So a variation of the hour-credit system proposes itself. Those jobs which begin to go unfilled with the introduction of hourly averaging could be ones for which workers could receive ‘bonus hour credits’ as a way to recognise their sacrifice. Dangerous work such as deep sea diving might be one example of this—people might be happy to take these risks if they thereby earn a large net income and have a lot of leisure time to enjoy it.

Conclusion

I began this series of blogs explaining that some people find deservingness the appropriate way to determine how much each person should receive from their society. I explained the existing theories of economic desert which begin either from desert bases or from market earnings and why these are all problematic despite their various attractions. After highlighting the various links between economic desert and markets I proposed a new form of desert base constructed from the intuitively attractive elements of the existing desert bases. In this final blog I have considered the options to institutionalise the constructed desert base. I still remain sceptical of building economic justice from desert but I would challenge those who do to propose a more feasible and less controversial way to give people what they deserve than the CLIPH-rate tax.