[Stubbs]

I've been waiting for you to start a thread about Trident, guess I might have to do it instead.

[tomtom]

I wonder how wealth fits a power law distribution - or whether there's a considerable lump in the middle making it more exponential..

Anyway.. What about scrapping / reducing Vat and raising income tax?

[slackline]

I read The Spirit Level :  Why More Equal Societies Almost Always Do Better and aside from the fact that they didn't actually explain very well what they claimed to in the title (they mainly just presented lots of correlations and said "well we should be striving for greater equality"), one thing that really annoyed me was that they were very selective about the way they chose their data to compare.  To an extent there isn't a great deal wrong with this, you need complete (or as close to) data as you can get from all countries you're going to include, and if its not available it is often folly to try and include them.  What irritated me though, as a quantitative statistician, was their cherry picking of the top and bottom deciles to compare and contrast for a lot of the outcomes.

Its well known that categorising continuous data is less powerful than using the raw quantitative data (you lose precision, it assumes that the top of a category is the same as the bottom of a category when thats false; cut-points are arbtirary and can be manipulated; if "optimal" cutpoints are chosen they don't replicate in independent samples, see link if interested in more details).  Further taking two extremes of a distribution overemphasises any difference you observe, so its a distorted picture.

This is one of the problems I have with the whole "1%" Oxfam report and others of that ilk, they're chopping up the data to fit their narrative.

This graph popped up on my twitter "statistics" list the other day and made me think a little....



It still supports the idea that the rich are a lot richer by virtue of the type of scale on the x-axis, but it also demonstrates two other important points which are commonly ignored in the "1%" type arguments, the mean wealth has improved for everyone over time, but also theres more money to go around these days.  Naturally there are more people whom that has to be shared between, but the amount of money far out-weighs the number of people otherwise the mean of the distribution wouldn't have increased.  Maybe an economist could explain this in greater detail?

The chart, as it states, is from here.



That said I do think wealth should be more evenly and fairly distributed, a couple of examples off the top of my head are that private companies being bailed out by tax payers shouldn't happen, there are risks involved in a capitalist free market and those who choose start such companies and those who choose to invest in them should accept the losses when they happen as readily as they accept the gains.  Secondly and more importantly (to my mind) tax loop holes should be closed so that profit earnt in the country it was generated is taxed within that country to the benefit of the population who spent the money in the first place.

I thought this was an interesting breakdown of where income comes from taxation in the UK A brief guide to the UK public finances from The Independet Office for Budget Responsibility.  Flick to page 3 and a whopping 42.1% (£271.9 billion) of the total £645.8 billion revenue is derived from Income Tax, second highest is VAT at 17% (£110.1 billion) of the total income. Corporation tax rolls in to third place at 6.46% (£41.7 billion), slightly less than half that of revenue derived from VAT and more than six times that derived from income tax.  To me and my non-economics trained mind this is the wrong way round, this hits those without oodles of cash the hardest, and twice over, whilst the rich ferret their money away in off-shore tax haven accounts.

If we took the few $Tn and distributed it amongst the poorest 50% it would make virtually no difference.

This is folly, the additional $Tn wouldn't go to help the poorest 50%, rather the opposite extreme of the distribution from which it is taken, so the poorest 1, 2, 3, 4 or 5%, those who really need it rather than those in the middle who don't.

The people living in mud huts with no clean water aren't concerned about whether Ambramovich is now worth a or y $bn nor does it make any difference to their lives.

Conversely Abromavich wouldn't notice a few less billion in his coffers, and if it were used to help the poorest percentages then those in mud huts could have clean water and even a small solar panel to replace the kerosene burners that are slowly killing them.

All pieces like this do is give middle class lefties something to be concerned about, well I suppose it makes a change from fracking, sexism in Hollywood etc

And all you do with posts like these is patronise people rather than engaging them in intellectual discussion.  Why not listen to what people are saying and respond with coherent and intelligent discussion backed up by facts rather than denigration?

[Sloper]

I've been waiting for you to start a thread about Trident, guess I might have to do it instead.

We should not be maintaining our nuclear capability.

[Sloper]

Slackline,

Have you read 'why nations fail'? If not well worth it.

In terms of some of your specific posts:

Private companies that fail should not be 'bailed out' with public money. The 'banks' were in many ways a very strange case where the negative consequences of doing the "bad" thing (per 1066 and all that) (bailing them out) were very much better than doing the "good" thing and allowing them to fail.

With respect to extracting the wealth of the £billionaires and it doing no good in the long term. You only have to look at any of the truly desparately poor areas of the world to see that a few $100 isn't the root of their poverty, it's a lack of democratic political institutions with respect for the rule of law.  Not only can you see this where there is an absence of such structures you can see the +ve effect when they are introduced and the -ve effect when removed.

Not only that, there are only so many times you can extract the few $bn from the wealthy before they're not wealthy any more.

As for my comments about articles like Oxfam's just giving bed wetting liberal do gooders something to feel self righteous and smug about, well it may be harsh but in effect that is precisely all they do. These articles do not educate or move towards a resolution of the real problems i.e. abject poerty, disease and the abuse of human rights.

The reason you find my comments uncomfortable is that you recognise the fallacy of the arguments and the flawed logic but still, a la those who believe in homeopathy: *want* to agree with 'inequality is bad' meme even though you recognise the very poor foundation for the same.

Engaging in considered debate with the bed wetting liberal do gooders is incredibly difficult as they tend to a, try and shout down any form of counterpoint as if it is a heretical statement, b. they have a very poor grasp of facts (for example the usual estimate of the cost of bailing out the banks is x50 the actual cost) and lack the logical faculties to understand what they're actually arguing for.

But in your case of course none of this is correct: so perhaps let's start off with a simple question: what is actually wrong with inequality per se?

[tomtom]

But in your case of course none of this is correct: so perhaps let's start off with a simple question: what is actually wrong with inequality per se?

That sounds a bit like saying what is wrong with pain.

Its a useful/vital function of human physiology - but you sure as hell don't want to have any yourself...

Unless you are a tory politician who likes paying people £500 an hour to whip them and shove lit candles up their arse (sorry - I had to post some reposte to bed wetting liberals... )

[slackline]

The reason you find my comments uncomfortable is that you recognise the fallacy of the arguments and the flawed logic

No its because you're fucking rude.

But in your case of course none of this is correct: so perhaps let's start off with a simple question: what is actually wrong with inequality per se?

Nothing, but as humans we have the capacity to move away from 'survival of the fittest' that has resulted in our evolution by means of natural selection over millenia and is the ultimate source in disparity between individuals and show compassion, care and understanding for others who are relatively worse off than us.  I'd like to think that this apparently unique feature* makes the species slightly different from all other organisms and that thanks to our mental capacities we could improve everyones standards rather than looking out for number one (with a dash of nepotism of course since genes are the unit of selection).

If you were to dare to suggest to people that their behaviour isn't that far removed from animals a fair proportion would think you're talking nonce sense, but it happens all the time, petty triablism and worrying about borders and the 'invaders' trying to steal resources.  Inflicting suffering on others as a consequence of these arguments, viz. huge numbers of people persecuted on the basis of false religions or just being in the wrong place when some power crazed crackpot comes along and thinks he can make a quick buck.

By the sounds of it I should probably ditch these...

[Jaspersharpe]

A lot of the problem with this 1% stuff is that people don't realise who it's actually referring to. In income terms you are in the top 1% in the world if your net income is over about £25k, so it's not just Russian criminals by a long way.

[slackline]

A lot of the problem with this 1% stuff is that people don't realise who it's actually referring to. In income terms you are in the top 1% in the world if your net income is over about £25k, so it's not just Russian criminals by a long way.

Quite... http://www.globalrichlist.com/?---

[psychomansam]

A lot of the problem with this 1% stuff is that people don't realise who it's actually referring to. In income terms you are in the top 1% in the world if your net income is over about £25k, so it's not just Russian criminals by a long way.

I don't see how that's a problem.

[Sloper]

But in your case of course none of this is correct: so perhaps let's start off with a simple question: what is actually wrong with inequality per se?

That sounds a bit like saying what is wrong with pain.

Its a useful/vital function of human physiology - but you sure as hell don't want to have any yourself...

Unless you are a tory politician who likes paying people £500 an hour to whip them and shove lit candles up their arse (sorry - I had to post some reposte to bed wetting liberals... )

Sorry Tom, that's feeble (the reference to pain) as for £500 per hour, sounds about right.

[Sloper]

Slackline,

If you hadn't noticed we've moved massively away from 'the survival of the fittest', we accept the construction of the state, payment of tax and so on, aid and development (except for some of the loonies) isn't controversial and foreign investment (again absent loonies) recognised as a 'good thing'.

The problem with the 'inequality' debate is that it is a stinking pile of shit.

There are a few roads not far from where I live where the price of a flat is £1m and a house £4m, is the person in the £1m flat disadvantaged by the fact that his neighbours property is worth x4 as much? Of course not.

Is the person on benefits (gross £18k pa)  very well off because people in North Korea eat grass? Of course not.

As for me being rude, no, I am being insulting but not rude and it is necessary to pierce the pompous fuckwitted group think that proponents of this drivel impose.

I cannot recall how to do calculus, molar calculations and a lot of other stuff, but that's all due to inequality I'm sure.

[hamsforlegs]

There are a few roads not far from where I live where the price of a flat is £1m and a house £4m, is the person in the £1m flat disadvantaged by the fact that his neighbours property is worth x4 as much? Of course not.

Are you sure? What if all of his local shops are taken over by delis where you can't buy a sarnie for less than £12?

We've already identified here that the issues of global, national, regional and local inequality are various and different. Looking at the national/local scale, I would say that many more of the things that make life worthwhile are of limited supply than gets recognised in some discussions. Of course those with more money get, on average, to live in a nicer area, to go to the more interesting cultural events, to use the best transport links, to have the most engaging holidays and leisure pursuits etc etc. One of the problems of an increasingly polarised distribution of wealth is that it tends to mean that the same small group 'gets the good stuff' every single time, gradually squeezing out the small opportunities and pleasures that might otherwise have found their way to others.

It's important to recognise that having 'the nice (haircut/lunch/commute/holiday)' is part of what makes people feel their lives are worthwhile. The 'objective' utility is only part of the picture - it's position in the hierarchy is important.

This is particularly pernicious when this spills into areas that would normally have been protected (perhaps unevenly and ineptly) by local government, for instance by creating huge financial incentives for social housing or subsidised local commercial spaces to be sold off for development. Again, people see little hints of the good life being syphoned off for the benefit of a small group with lots of capital.

Being a pretty centre right sort of person, I don't have a great ideological issue with all of this, but I do think it's a bit facile to dismiss inequality as not posing a problem in and of itself.

This isn't even addressing the fact that inequality has been shown, as well as we can reasonably tell, to cause a variety of social and economic ills in its own right. I would agree with you that this is fraught with interpretive difficulty due to the number of variables and correlations to be controlled.

[slackline]

If you hadn't noticed we've moved massively away from 'the survival of the fittest',

In a general sense is that not how capitalist free markets operate?  The 'fittest' companies (or individuals who own them) 'survive'?  This has a trickle down effect where those with greater assets pass them on to their off-spring who survive them, affording them an advantage (which I won't attempt to quantify) over others who do not have assets passed onto them.  Social mobility may have improved, but that doesn't mean everyone moves.
 

we accept the construction of the state, payment of tax and so on, aid and development (except for some of the loonies) isn't controversial and foreign investment (again absent loonies) recognised as a 'good thing'.

The are perhaps alternatives to the methods that are currently employed, different countries use slightly different systems.  Compare and contrast, use the evidence accrued over time to choose the best option rather than sticking with the status quo because thats the way its always been done.  I don't understand why people can't see this and NO its not a case of going for the complete opposite end of the spectrum and getting all Marxist on everyone.

In case you hadn't clocked it I made it pretty clear that I think the "1%" type argument is pretty arbitrary but that "the construction of the state, payment of tax and so on, aid and development" could be done differently and to the benefit, in terms of improving basic quality of life, of more people globally.

There are a few roads not far from where I live where the price of a flat is £1m and a house £4m, is the person in the £1m flat disadvantaged by the fact that his neighbours property is worth x4 as much? Of course not.

You're looking within a tribe (i.e. locality within a country), I'm talking on a global scale.

As for me being rude, no, I am being insulting but not rude and it is necessary to pierce the pompous fuckwitted group think that proponents of this drivel impose.

In my world, and I expect most others, it is rude to insult people and resorting to name calling is the last resort of someone who's got nothing better to put forward to support their point of view.

[Sloper]

Ham

Yep, quite sure.

http://www.rightmove.co.uk/property-for-sale/property-29406019.html

http://www.rightmove.co.uk/property-for-sale/property-29183688.html?premiumA=true

The statement that inequality causes social harm is trite and meaningless unless we consider what we mean by inequality: what causes social harm is not 'inequality' but poverty and a lack of access to what are regarded as highly desireable wants: holidays, the odd meal out / night at the boozer etc. 

Where one person has to travel 1st Class to the Bahamas and stays in a 5* hotel and the other person travels in a private jet and stays on a private island  is a massive inequality but matters not one jot.

Does it matter when the comparators are the private island vs a villa in Corsica, Butlins, no holiday what so ever? 

Are we concerned about scale of inequality or proximation? 

Is inequality relevant to a level of needs/wants and irrelevant after that?

The whole thing is basically a confection for whinging middle class muppets who fail to understand either the issue they're concerned about or the 'real issues' and the likely solutions to the same.

[Sloper]

Slackers,

The desctiption of capitalism being 'the survival of the fittest' is a bit like intelligent design vs evolution: it's still utter bollocks but not quite as fuckign daft as young earth creationsim.

Capitalism has been constrained through social mores, custom and religion since the dawn of human civilisation.  The course of capitalism may vary depending on how wide the channel and how high the banks, but to suggest it is not and has no been constrained since the begining is false.  If you look at the trade in Cornish tin, the sumerian cuniform records of trade and levy etc the historical record is there, laid out for all to see.

Your point about trickle down is an interesting diversion: but in one respect you're wrong, everyone does move, but people move at a different pace or have I missed the pre agrian revolution peasantry (no they're behind you) that remian in Lincolnshire & etc Cambridgeshire fens?

As for your point about the construction of the state and tax ebing done differently and it is this that will improve the lot of the people at the very bottom: yes I think we're wholly ad idem on this, what's needed is liberal democratic market capitalism and enforcement of the rule of law.

Once you've got this the abject poverty tends to dissaperar within a generation and the relative inequality tends towards vestigial.

As for having nothing to put forward to support my view, I have reams of material, numerous citations and a weight of evidence: where shall we start?

North vs South Korea?
Mexico vs Texas?
Zimbabwe vs Botswana?
GDR vs FDR?

[tomtom]

Ham

Yep, quite sure.

http://www.rightmove.co.uk/property-for-sale/property-29406019.html

http://www.rightmove.co.uk/property-for-sale/property-29183688.html?premiumA=true

The statement that inequality causes social harm is trite and meaningless unless we consider what we mean by inequality: what causes social harm is not 'inequality' but poverty and a lack of access to what are regarded as highly desireable wants: holidays, the odd meal out / night at the boozer etc. 

Where one person has to travel 1st Class to the Bahamas and stays in a 5* hotel and the other person travels in a private jet and stays on a private island  is a massive inequality but matters not one jot.

Does it matter when the comparators are the private island vs a villa in Corsica, Butlins, no holiday what so ever? 

Are we concerned about scale of inequality or proximation? 

Is inequality relevant to a level of needs/wants and irrelevant after that?

The whole thing is basically a confection for whinging middle class muppets who fail to understand either the issue they're concerned about or the 'real issues' and the likely solutions to the same.

Do you consider it an inequality that, as a proportion of income, taxation decreases progressively with increased income?

(I am of course including VAT - and the capability of people with a significant amount of money to be able to engage in some off shore squirrelling etc.. oh and in the UK..)

[Stu Littlefair]

But in your case of course none of this is correct: so perhaps let's start off with a simple question: what is actually wrong with inequality per se?

Nothing wrong with it per se, but there comes a point where it has a negative effect on growth. http://www.oecd.org/newsroom/inequality-hurts-economic-growth.htm

[Sloper]

Tom, you're wrong.

If you earn £10k you pay 2.5% tax & NI as a % of income
£20k you pay about 17%
£50k about 26%
£100k about 34%
£200k about 41%

For someone on £10k to pay the same % of income in tax as some one who earns £20k they'd need to pay £1500 in other tax.  Since VAT is the highest (full rate 20% compared to domestic fuel vat, IPT, APD etc) they'd need to be spending not less than £7500 net on full vat rated goods or gross with vat >90% of their income.

This is clearly nonsensical.

If you look at the difference between £20k and £50k gross incomes you would need to spend £9k on VAT & etc i.e. more than the gross income.

Even more nonsensical.

I can see whan you depart from PAYE that you can be more tax efficient and if you have non 'employment' income i.e. divis, rental income this can distort the ratio but never to the degree that you suggest i.e. to make it regressive rather than progressive as it is.

[Sloper]

But in your case of course none of this is correct: so perhaps let's start off with a simple question: what is actually wrong with inequality per se?

Nothing wrong with it per se, but there comes a point where it has a negative effect on growth. http://www.oecd.org/newsroom/inequality-hurts-economic-growth.htm

When you say a -ve effect on growth I presume you mean that growth is lower than it might otherwise have been?

Interesting link thanks, I'll read it later (well the 4 page sumamry) but what struck me in the press release is

'The paper finds new evidence that the main mechanism through which inequality affects growth is by undermining education opportunities for children from poor socio-economic backgrounds, lowering social mobility and hampering skills development.

People whose parents have low levels of education see their educational outcomes deteriorate as income inequality rises. By contrast, there is little or no effect on people with middle or high levels of parental educational background.'

Which is sugegstive of the cause being a failure of educational policies and solicial mobility then there being a point at which inequality of wealth (which is the focus of our current discussion) has a retardent effect on growth.

[tomtom]

Tom, you're wrong.

If you earn £10k you pay 2.5% tax & NI as a % of income
£20k you pay about 17%
£50k about 26%
£100k about 34%
£200k about 41%

For someone on £10k to pay the same % of income in tax as some one who earns £20k they'd need to pay £1500 in other tax.  Since VAT is the highest (full rate 20% compared to domestic fuel vat, IPT, APD etc) they'd need to be spending not less than £7500 net on full vat rated goods or gross with vat >90% of their income.

This is clearly nonsensical.

If you look at the difference between £20k and £50k gross incomes you would need to spend £9k on VAT & etc i.e. more than the gross income.

Even more nonsensical.

I can see whan you depart from PAYE that you can be more tax efficient and if you have non 'employment' income i.e. divis, rental income this can distort the ratio but never to the degree that you suggest i.e. to make it regressive rather than progressive as it is.

Its not complete nonce sense...

aside from VAT, there is the huge % duty on Booze/fags & fuel - means that the actual taxation rate on low earners as a proportion of income is much higher..

As incomes rise, sure people spend more, but not linearly more as a proportion of income..

[Sloper]

Sorry To, but you're on a loser here.

Of course if someone on £10k spends £100 on booze and fags the VAT & duty is a higher proportion of their income than the vat & duty compared with someone who earns £20k.

But ignoring the fact that smoking an drinking are entirely discretionary (I mean for fucks sake I didn't smoke or drink yesterday . . . yes I know you're thinking about the end of Angels with Dirty Faces) your proposition was that tax was regressive and simply that is not the case.

If you add take the burden of taxation as a whole, it is progressive rather than as you suggested.

If you stuck to saying VAT is regressive you'd be limited correct on one metric but wrong generally in that VAT reductions benefit  higher earners more

[Fultonius]

Can the clever people of this parish indulge me in a thought experiment?

Let's assume that the current income tax situation (for PAYE workers) is about right. It's not vastly different from most other EU countries and wages reflect take home pay (IMHO) rather than gross pay. (i.e. if a company wants an employee of "X" experience in "Y" place, they have to pay "ZZZ"/ year to attract this person. If income tax was higher, then wages would probably rise to mirror this).

The previous assumption could be argued to death, but let's just take it as an fixed starting point.

Now, society is never going to be truly "equal" that's communism and in most people's eyes this has been shown to be ... well ... slightly ineffective. Ahem.

But, I don't think many people would argue that it is "fair" for the super rich, non PAYE earning, elite to get away with significantly less tax (as a percentage) than someone earning say £20,000, £50,000 etc. etc. And there's mechanisms like the non-dom rule that allow crazy rich foreigners to live in Mayfair for a paltry £30,000 a year with all their foreign wealth insulated.

So. Back to the original point.

Labour have proposed the popular sounding, but IMO flawed mansion tax - any accountant worth his salt should be able to fiddle around with ownership and valuations to dodge this. To me it's hot air and an attempt at vote winning, but will not really address the major issues. Simon Jenkins suggested just using more bands of Cooncil Tax but that ignores the fact that the money from (mainly London) should be redistributed to more needy areas, rather than in the already wealthy areas it would be raised.

So how do we take a "fairer" cut of tax from the very wealthy?  Ideas? 

Also, how do we stop successive governments sidling up to like big businesses and allowing them to get away with tiny corporate tax bills? 

VAT, Fuel Duty etc, fag duty, booze duty etc. are regressive so I don't believe increasing those will result in redressing the balance.

[Sloper]

The mansion tax is a dud.

If it were to raise anything like the sort of money that Labour say it will then it will be onerous enough to avoid by simply moving the ownership of the property offshore.

If CT were expanded to include bands up to say z for properties >£50m @ say £100k per year then the revenue would go to the LA but the government could reduce the central funding to the LA by a commensurate amount therefore allowing those monies to be used elsewhere, perhaps more funding to LA with high levels of deprivation?

As for how do we get the ultra rich to pay more tax without damaging the wider economy, a good start would be looking at the general anti avoidance principles (GAAP) introduced by this government and the closure of a large number of tax loopholes and the new regime where you have to notify HMRC of your avoidance plans in advance.

In respect of big business & government, hmmm a tricky one: one wants big high value businesses to be domiciled or operating in your jurisdiction but others like stayfucks aren't I think in the same class as google, big pharma etc.

[Oldmanmatt]

The mansion tax is a dud.

If it were to raise anything like the sort of money that Labour say it will then it will be onerous enough to avoid by simply moving the ownership of the property offshore.

If CT were expanded to include bands up to say z for properties >£50m @ say £100k per year then the revenue would go to the LA but the government could reduce the central funding to the LA by a commensurate amount therefore allowing those monies to be used elsewhere, perhaps more funding to LA with high levels of deprivation?

As for how do we get the ultra rich to pay more tax without damaging the wider economy, a good start would be looking at the general anti avoidance principles (GAAP) introduced by this government and the closure of a large number of tax loopholes and the new regime where you have to notify HMRC of your avoidance plans in advance.

In respect of big business & government, hmmm a tricky one: one wants big high value businesses to be domiciled or operating in your jurisdiction but others like stayfucks aren't I think in the same class as google, big pharma etc.

I rather like your CT proposal.

There is though the problem of the Middle bands in high property value areas.  It's hard to see how this wouldn't hit those, essentially in a shitty, overpriced house, in London (for example); who's income might not reflect the value of the property?