How we know that the tax justice campaign is entirely rubbish

An interesting little whine in The Independent about corporate taxation. Which contains one gem and one great truth. The gem:

So enough of multinationals treating the British state as if it were a charitable fund to which they can voluntarily contribute. … Their vans drive on taxpayer-funded roads, and they frequently avail themselves of a legal system paid for by you and I.

The roads are more than paid for by vehicle and fuel duties, both things which local and foreign companies pay if they do actually use the UK’s roads. And the commercial courts system is paid for by user fees: it isn’t actually true that you and I pay for it, not unless we avail ourselves of its services. but the great truth is this:

At a time when public trust in business is plummeting, tax justice has been called ‘the Fairtrade of our times’ – a measure by which we tell a good business from the bad. And as with Fairtrade, when co-ops were the first to stock the products, co-operative councillors the first to demand fairtrade procurement, and Labour & Co-operative MPs the first to demand political support, it’s the co-operative movement and social enterprises that have once again been ahead of the curve.

We have nothing against cooperatives whatsoever, but we do against Fairtrade. For as we’ve found out it doesn’t in fact benefit those poor producers very much if at all. It’s simply a form of outdoor relief for the dimmer members of the upper middle classes, to whom all the actual money flows. And do note that it’s nor us making the comparison between Fairtrade and tax justice but someone who supports both. And thus we know that tax justice isn’t something either serious nor likely to be of benefit to us all: just as Fairtrade isn’t and most certainly isn’t to the poor.

Reminder to CDC: Women are more than baby-portals

No one likes to receive unsolicited advice; and government recommendations are no exception to this.

But the United States’ Centers for Disease Control and Prevention didn’t heed that warning when on Tuesday it released a new alcohol advisory, aimed at child-carriers (who we in the 21st century have started to call ‘women’).

The CDC has recommended that women of a childbearing age who are not using birth control completely abstain from alcohol intake to avoid an accidental, alcohol-exposed pregnancy.

From the CDC’s Principal Deputy Director Anne Schuchat, M.D.:

Alcohol can permanently harm a developing baby before a woman knows she is pregnant…About half of all pregnancies in the United States are unplanned, and even if planned, most women won’t know they are pregnant for the first month or so, when they might still be drinking. The risk is real. Why take the chance?

Why take the chance? In the off-chance that a woman could get pregnant during 3-4 decades of her life, why wouldn’t she abstain from alcohol (and while she’s at it, cut out raw fish, cured meat and soft cheeses, stop skiing, avoid overheating and sign up to antenatal courses too.)

Those outside the- 4-decade span haven’t been excluded fully from the press release either. While the CDC mainly addressed the effects of alcohol on pregnant women, their infographic suggests far more ambitious plans to cut down on women’s alcohol consumption alltogether. Keep in mind “heavy drinking” is defined by the CDC for woman as “consuming eight drinks or more per week”.

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Fear-mongering much?

Quite rightfully, the Internet went ballistic over the insinuation women should be prioritizing the biological possibility of pregnancy over their daily activities, which include drinking habits.

These recommendations in the States come just weeks after here in the UK the Department of Health changed its alcohol guidelines, lowering maximum unit intake to 14 a week for both men and women, making the UK’s recommendations some of the most restrictive in Europe.

The CDC’s and DoH’s recommendations are different, but the recommendations of both government bodies were created with the same, faulty assumption: individuals can’t be trusted to their own lifestyle choices, and if left to make up their own minds, will engage in risky behavior.

There is indeed an appropriate way to advise women about the potential consequences of drinking while pregnant, but terrifying non-pregnant women out of a glass of wine because of ‘what might be’ falls short of providing an education tutorial.

We have to announce that all modern physics is rubbish

Well, obviously it’s rubbish, eh? Because as Walter Heisenberg pointed out we can’t even pin point the location of a particle using physics. So, what’s the use of it, eh? We can know where an electron is going, possibly even how fast, but not where it is. So, thus, obviously, we need to take an entirely different approach to the whole subject of trying to understand the physical world around us.

At least, this would be so if we were to take Tim Garton Ash on economics seriously:

The Guardian recently asked nine economists whether we’re heading for another global financial crash and they gave many different answers. Yet still we turn to economists as if they were physicists, armed with scientific predictions about the behaviour of the body economic. We consumers of economics, and economists themselves, need to be more realistic about what economics can do. More modesty on both the supply and the demand side of economics will produce better results.

Which is to entirely miss the point over what economics can tell us about the timing of crashes. The physics tells us that we cannot know both velocity and location of that electron. This is a finding from the science: it’s not one of those things open to negotiation nor something that we’re going to solve by using a different evidential or logical approach.

And so it is with the timing of a crash in financial or other markets. We do not in fact say “Oh, economics cannot predict that”. We say that “It is impossible to predict that, we have proven it”. Thus the hunt for a predictive method for a crash is a odd as a hunt for the true location and also velocity of a particle. It’s not that we cannot do it with the current state of the science: it’s that the science has proven that we cannot do it.

Thus, if economics fails on this point then so does all of modern physics fail on the same point. And the silly thing about saying that is that nuclear bombs still go boom even if we cannot tell which particle caused it in what manner, and economics is still, even the current economics we use is still, hugely useful in describing the larger world we live in, even if not accurate to the level of detail that physics is not.

Yes, let us be realistic about what economics can do. One of the things we know it cannot do is predict a crash.

In praise of gentrification

In a column for Inside Housing I’ve looked at some of the data around how gentrification affects existing residents to see if there’s any reason to worry about it. Surprisingly, it doesn’t look as if gentrification really does push out existing residents very much – involuntary movement out of a gentrifying neighbourhood is about 0.6 percentage points higher than city-wide averages:

Instead of displacing people, gentrifiers tend to add to a local area’s population through new builds and property conversions (like warehouses and former industrial buildings). Although rents might rise for existing tenants as overall demand for the area rises, the involuntary displacement rate is very small – in one US study, it is 1.4% compared to a city-wide average of 0.9%. . . .

And gentrification brings benefits for locals, with better jobs opening up:

It often feels like the staunchest opponents of gentrification are other gentrifiers who got there a bit earlier. The evidence from the US and the UK is that gentrification raises the incomes of people living in affordable homes and improves their credit scores.

And this is not even to mention the reduction in crime that usually takes place as well. Read the whole thing here.

Yes, we’re afraid we are this cynical

That the major concerns in economics – or perhaps we should say that major concerns in political economy – have changed in recent years is true to us. But we’re afraid that we are really rather cynical about why they have changed:

I hear frequently that economics needs to change, and it has, at least in the questions we ask. Twenty years go, the dominant conversation in economics was about the wonder of markets. We needed to free the banking system from regulations so it could do its important job of turning saving into productive investment unfettered by government interference. Trade barriers needed to come down to make everyone better off. There was little need to worry about monopoly power, markets are contestable and the problem will take care of itself. Unions simply get in the way of our innovative, dynamic economy and needed to be broken so the market could do its thing and make everyone better off. Inequality was a good thing, it created the right incentives for people to work hard and try to get ahead, and the markets would ensure that everyone, from CEOs on down, would be paid according to their contribution to society. The problem wasn’t that the markets somehow distributed goods unfairly, or at least in a way that is at odds with marginal productivity theory, it was that some workers lacked the training to reap higher rewards. We simply needed to prepare people better to compete in modern, global markets, there was nothing fundamentally wrong with markets themselves. The move toward market fundamentalism wasn’t limited to Republicans, Democrats joined in too.

That view is changing. Inequality has burst onto the economics research scene.

If we are to talk about that political economy then yes, we agree that the change has happened. We do not project this cynicism onto Professor Thoma’s views, of course, but we do think we know why the change has occurred.

Because the answers to that first set of questions were correct. Things like the Washington Consensus (essentially, a list of stupid things you shouldn’t do to an economy) were correct. Don’t do these things, don’t mess with markets where they do work and economic growth will happen. The adoption of those simple rules: let markets alone in those areas where they do work, has led to the greatest reduction in absolute poverty in the history of our entire species.

The questions were asked and answered and the answers to those questions were correct.

But of course that’s not enough for some people. We too are entirely happy to agree that pure unadorned markets do not work in all circumstances. There are interventions, things that only government can do and which also must be done, that must and should be made. However, it’s a very human desire to want to be able to plan the world in one’s favoured image and a societal instruction set which says “intervene in these small and limited areas, otherwise leave well alone” just isn’t going to be emotionally or professionally satisfying for all too many in the field.

And thus inequality. An excuse to do all sorts of societal management, management and fiddling that the answers to the previous set of questions (“How do we make the poor rich?” “How do we make all richer?”) largely preclude, as people who would wish to manage society for emotional reasons would prefer.

As an example we think of the work of Piketty, Saez and Zucman. It’s entirely clear in the economics of taxation that transactions taxes, wealth taxes and capital taxes are to be abjured. They make everyone poorer to no good reason. Yet if we start shouting about inequality then we can impose those things which we know to be deleterious. That is, the concentration upon inequality is simply a result of people desiring to do those things that the previous set of answers say not to do. So, obviously, change the subject and quickly.

Yes, this is cynical: but then we are about the motivations of our fellow humans. Oxfam has spent decades arguing that the only solution for abject poverty is that the rich world transfer more to the poor. Recent decades have shown that the cure for abject poverty is for rich people to buy things made by the abjectly poor in abjectly poor places. But there is still that very strong desire to tax the heck out of the rich: so the same original policy is now proposed it’s just using inequality, not poverty, as the excuse. We are being less cynical about Oxfam there than we are about economics in general.

As it happens inequality is a problem which is going to go away of its own accord. Global inequality, as a result of that fall in absolute poverty, is falling. And in country inequality is going to start falling as a result of the change in demographics. The last few decades, as we added those poor to the global economy, have seen a relative rise in the amount of labour compared to he amount of capital. The returns to, the price of, capital have thus risen. The working age population, globally, started falling relative to the supply of capital last year. Thus inequality will decrease for the opposite reason that it increased. It’s a self-solving problem: but that won’t stop the calls to soak the rich for of course the soaking is the point, the answer whatever the question is.

All we’ve got to keep an eye out for in the future is the next reason they’ll give for the policies they so desire. Who knows, they might even come up with a valid one one day.