The self-employment option

The ASI has today published as a paper a proposal first made on this site.  The paper ("The Growth Agenda – the Self-Employment Option") suggests that the wider use of self-employed status can overcome much of the regulatory burden that stands in the way of enterprises, especially the small enterprises that create so many of the new jobs.

Although the Treasury has spent nearly three decades trying to shoehorn people our of self-employed and into employed status, the ASI claim this acts as a barrier to enterprise and growth.  For its convenience HMRC prefers to have employers calculate and collect PAYE and National Insurance for them, but in doing so, says the ASI, it imposes burdens that thwart the creation of hundreds of thousands of new jobs.

The Treasury cites costs as well as convenience if it had to collect from directly from people newly classified as self-employed, but it fails to count the supply side effect of taking people from unemployed dependency on state funds into new jobs in which they earn money and pay taxes.

The ASI proposes that small firms should be encouraged and helped to be able to classify their workforce as people self-employed under contract.  This sidesteps the burdens not only of PAYE and NI, but also of unfair dismissal, discrimination suits, maternity and paternity leave, statutory sick pay and holiday pay.  All of these might be affordable to large firms, but to small and medium enterprises they act to prevent people being taken on in the first place.

The new report says that "allowing self-employed status for SME staff is the single most powerful tool that could unleash the private sector and boost growth."

More competition is the key to limiting executive pay

In a BBC interview, UK Prime Minister David Cameron indicated that shareholders will be given more power to decide the pay of top executives. It is a welcome acceptance of the fact that government regulation of executive pay has not actually worked, and that it is better to leave pay up to the markets and to the shareholders who actually own businesses, and for whom the executives – supposedly – work. And it is good that Cameron has taken up the arguments on this that were voiced by the Adam Smith Institute back in November.

Executive pay has long been a contentious issue in UK politics for decades. In the early 1980s, Margaret Thatcher's 'big bang' deregulation of the financial sector led to sleepy UK banks and broking houses becoming major international players. It made the UK capital markets much more efficient, and much more international, and gave UK businesses access to fresh capital for expansion. With the technological improvements in communications and transport, it made the UK a truly globalised economy. Firms became much more productive, and many of the top stock market companies became much bigger. And executive pay increased to reflect that new scale and efficiency.

But high pay attracts envy, and soon there were calls to rein in 'fatcat' salaries. The Cadbury and Myners commissions were set up, and the upshot was that, to make pay more 'transparent', firms had to set up remuneration committees with non-executive directors, just to make sure that executives were worth their money. But that new regulation proved catastrophically counterproductive. Boards just chose directors of other companies to sit on their remuneration committees. So it became an endless round of 'you sit on my pay board and I'll sit on yours' and, not surprisingly, boardroom pay soared – arguably well ahead of growth and efficiency.

This is the absurdity that Cameron now proposes to cut through, by giving shareholders much more power to decide executive pay. It is a power they should never have been stripped of in the first place, but that is politics for you – politicians think they can run businesses better than markets and competition and real ownership can. Indeed, the Adam Smith Institute argued years ago, in a report Competition in Corporate Control by Elaine Sternberg, and most business policy 'problems' would solve themselves simply by boosting competition, reducing regulation, and letting owners run the enterprises they supposedly own. 

Want a stagnant economy? Then keep the 50p tax!

David Cameron said today that he will not scrap the 50p tax rate, because “it would be unpopular”; because “the broadest shoulders should do more”; and because it would not be appropriate now that the economic situation has deteriorated.  Let us dissect the arguments one by one.

Cameron approaches the argument from the wrong end.  He wants to balance the books.  But these are the books of a socialist state.  This government is spending the most money any government has ever spent in the UK.   Arguably, a government which merely seeks to finance such an excessive state is not Conservative.  The question is not whether 50p raises money; or whether it is popular.  The question is: will this 50p rate produce growth and therefore prosperity for all?

Of course 50p is popular with a majority in the land: they are not paying it.  Something is not right because it is supported by the majority.  It is possible that expelling hundreds of thousands of immigrants would be popular with a majority.  It is possible that banning travellers would be popular with a majority.  It is possible that expropriating anyone who owns more than, say, £500,000, would be popular. Democratic majority rule must always be subject to rules which limit what the state is allowed to do.  In effect: limiting coercion by the state to an absolute minimum.  Key in the limits to government stands the protection of private property rights –  the ownership of one’s body and the fruits of one’s labour.  Property must not be made subject to majority rule because it is of enormous benefit to all – including those who don’t own anything.

Private property (including the fruits of one’s labour) does not need protecting because of a “belief”, but because it advances society and therefore civilisation as a whole.  Pay, profit, and resulting wealth shows which behaviour should be imitated and which shouldn’t: go out to work, or stay in bed?  It shows which methods are the most effective, thereby leading to innovation and progress.  It sends signals to everybody else as to which goods and services are required where and when: when the Soviet Union abolished private property it resulted in long queues and shortages.  Accumulation of property and capital allows investment. Exclusive products become mass produced because wealthy people pay too much for them initially.  Countries with no respect for private property stagnate or decline.  Is it a coincidence that this government coerces us through taxes to part with the biggest share of our private property ever; while at the same time its country produces no growth whatsoever?

Should the biggest shoulders do more?  They already do, of course.  When I last checked, shoulders were situated on top of a body that can walk away.  This is precisely what is happening in the City right now.  Those biggest shoulders are moving to Switzerland and Dubai and Singapore and Hong Kong – and the rest of us will eventually have to pay for the shortfall in tax take.  HMRC enthusiastically reports that the 50p brought in hundreds of millions in the first year.  Presumably, it takes a while before people start fleeing.  Perhaps the 50p payers even hang around for a bit longer while Osborne dangles the prospect of the future abolition of the 50p in front of them?  What the increased revenue does not show is how much tax take is not achieved because those high-end employees never arrive on our shores; or because entrepreneurs decide to invest outside of the UK. What that increased revenue does not show is what harm it does to the economy.  This government of the 50p is also the government of no growth.  Countries which slashed their taxes always experienced a high growth as a result. 50p tax seems to be part of an Agenda for No Growth.

It is said that we could not cut the 50p, because the economic situation has deteriorated.  Has anyone in Osborne’s department ever wondered whether the one does not (in part) cause the other?

In this whole debate one very strange argument popped up.  According to The Telegraph. “Ministers are also thought to believe that the decision effectively to extend the public sector pay freeze until 2015 has postponed the removal of the 50p rate”.   Perhaps they mean to say that everybody should tighten the belt.  To me and mine a public sector pay freeze comes not even close to approaching effective measures to reduce the size and therefore the cost of our bloated state.  How about firing half of all the public sector employees so we can cut taxes to jump start the economy?  Firing half of our public sector employees would have the added advantage that there would be fewer around to harm our economic endeavors with their rules and regulations.

Demanding that people part with 50p in tax is excessive.  Add to this social security contributions, VAT, stamp duty, fuel tax, flight tax, and a myriad of other taxes, and you reach levels of 70 or 80% of taxation.  Such taxes are not characteristic of a free people.

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Actuarial truths

An actuary isn’t where dead actors are buried; it’s someone who tells you about a problem you never thought you had and in a way you can’t understand. Actuaries are the butt of  jokes that they’re dull folk – accountants without the charisma. Their function is to assess the financial impact of risk and uncertainty, thinking through everybody’s worst nightmares – accidents, catastrophes, injury and death. In short, they talk about things we’d rather not.

Last Tuesday, the Association of Consulting Actuaries (ACA) released its 2011 Pensions Trends Survey, detailed numbers on the demise of the defined benefit pension scheme. Ninety percent of such schemes in the UK are closed to new entrants while 40% are closed to future accrual. Right on cue, Shell UK announced a couple of days later that it’s closing its defined benefit scheme to new hires and this by one of the best-run schemes around.

Both underscore the reality of the modern world – we have collectively failed to adequately save for retirement and to recognize huge changes in employment practices. Defined benefit schemes are a nostalgic relic of a bygone era when employment was for life and that life was relatively short. This led to the assumption that pension provision is the responsibility of employers, reflected in the joke that General Motors was a huge pension fund with attached car-making facilities.

As the ACA survey shows, market forces are tearing this notion apart with employers switching to defined contribution schemes – bunging a chunk of cash into a pension pot from which the employee arranges a pension when the time comes. This is a brutal but inevitable response to the real world.

The regulatory regime is now scrambling to keep up but little forward-thinking has gone into the issue beyond affordability: the employer as pension provider is still the working assumption. These days, life-time employment with one company is rare. Indeed, more and more people don’t even work all their lives in one country. Many now have a plethora of small pension schemes, perhaps even in different countries. This is costly to the worker from an economies-of-scale perspective or from scheme consolidation costs. Meanwhile, employers are still burdened with the costs of running a pension scheme.

In a small way, the government is moving in this direction with the introduction of NEST, a mandatory pension scheme for small employers who now don’t offer one. But this is a piecemeal approach with all the pitfalls of any other government scheme.

Why not go the whole hog and privatise National Insurance into a dozen or so independent pension schemes? Initially, at least through the transition, mandatory minimum employee contributions would be required, say 10% of income for younger folk and rising by some formula with age. Companies could redirect their current pension contributions to wages, allowing employees to top up the mandatory minimum to maintain their overall pension savings rate of NI plus company scheme.

In the meantime, the government could start negotiating with other countries for mutual recognition of similar official pension schemes so mobile workers can a maintain a consistent savings regime for their retirement wherever they happen to be employed.

And actuaries will continue to be with us, expecting everyone to be dead on time. 

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Are the UK and US really as unequal as the statistics seem to show?

This is one of those slight puzzlers that comes from my long running thought that not all is quite as it seems with respect to official statistics. I'm not entirely convinced that the UK and US are as unequal as looking at the official inequality statistics (the Gini Index for example) would have us believe.

Have a look at this:

But he faces a Herculean task – a recent government study estimated that Italy's black economy, which includes evasion of income tax and VAT, amounts to 275 billion euros a year, or 17.5 per cent of GDP.

In a country where restaurants continue to do a brisk trade and smart new cars ply the motorways, only 72,000 Italians last year declared a gross annual income of more than 200,000 euros – representing just 0.17 per cent of all tax payers.

And then have a look at the Italian Gini, which is apparently 32, and thus lower than the UK's (and much lower than the US). However, casting an eyeball over the difference in living standards between a poor peasant in the South of Italy and the glory of an upper middle class lifestyle in Milan this doesn't really seem quite right.

I have a feeling that these numbers are influenced by the way they are calculated (well, obviously they are but bear with me). We know that the Italian grey economy is larger than the UK's or the US one. We have World Bank statistics on that. We also have semi-official evidence that what those with low grey economies have managed to do is stop the rich, the high income people, from having untaxed incomes. Note please, here I mean tax evasion, not avoidance. That is, incomes entirely unrecorded by the tax office. This isn't entirely true of course, but as a generality it holds.

The grey economy is that which would be legal if everyone was paying tax: we are not talking about the black economy where the activities themselves are illegal regardless of tax payments. We are also talking about tax evasion, people who simply do not declare income, not tax avoidance where clever accountants and the provisions of the law are used to reduce tax bills on declared incomes. We also know that the grey economy in the UK is not in fact rich bankers just kissing off the taxman. It's small traders dodging income tax and VAT. Largely so that is: something which that Italian story shows is not quite so true of that country.

Which leads me to this thought about the inequality figures, the Gini indexes for various countries. These are calculated from the official declared incomes: they have to be, there is no other possible source. But if the grey economy in some places is largely the rich not declaring incomes, while in other places it is largely the poor not doing so, then we're going to see those Ginis, calculated from the official data, diverging from the actual distribution of incomes in the country.

Here is where we get into a difficulty with this idea. It's obviously and clearly true, if there is a difference in who is evading taxes then inequality figures calculated without accounting for that difference are not going to be comparable. The difficulty though is that we don't know how important this is. If it shifts the Gini by 0.1 of a percentage point then it's not really an issuie we need to worry about. If it shifts the Gini by 5 percentage points then obviously it is: Italy would be, for example, more unequal than the UK.

Further, my problem now becomes that I've not the technical skills to go and work this out. This is just a specific example of what I am sure is something of a more general rule. Some of the things we are told about the world around us are a result of the way the statistics are constructed, not actually a reflection of the real world. I've quite a long list of such anomalies that perhaps should be written up as research papers: hmm, maybe I should get myself a research student or two? You know, people who can actually use Excel?

Whistling in the wind

Andrew Lansley has provided a new, from 1st January, independent helpline for NHS staff with concerns about malpractice.  The line (08000 724725) is operated under the auspices of Mencap and is already very busy.  The questions though are whether the whistleblowing needed to improve the NHS will take place and the NHS be any more transparent as a result.

Any large organisation hates to have its faults brought to public attention.  Counter to policy as it may be, whistleblowers can be victimised, or fear they may be victimised.  Yet we need the sunlight, the best disinfectant of engrained malpractice.

The NHS management organisation has posted, in line with the new helpline the admirable policy “NHS Employers supports NHS organisations to promote a climate of openness, in which staff feel free to raise concerns in a reasonable and responsible way, without fear of victimisation.”  Note that NHS organisations are free to set their own rules; “NHS Employers” is advisory. As part of that they promote a booklet written for them by the independent charity Public Concern at Work which was set up to help whistleblowing in 1993.  The booklet “Speak up for a healthy NHS” is entirely admirable.

The questions, though, are the extent to which NHS organisations follow those guidelines at the policy level and whether they do so in practice.  Some use the term “whistleblowing” purely to mean internal reporting of concerns.  External publicity is not even considered. Taking three hospital trusts at random, the Norfolk and Norwich Hospital lays out an admirable set of policies on its website whereas searching the Basingstoke and North Hampshire Foundation Trust for “whistleblowing” or “speaking out” produced nothing at all.  St George’s Hospital also appears to have nothing about whistleblowing on its website beyond a concern that the whistleblowing policy should be observed so far as fraud is concerned.

These are just three hospitals.  A full study would require a formal survey and maybe that of itself would help best practice.  Using websites is valid because that it where an employee thinking of blowing the whistle would be likely first to go.

The original trigger for this blog is concern that problems will still be covered up rather than exposed to sunlight.  Yes, it is better that they are dealt with internally, if they are, but serious unchecked malpractice should be exposed.

Chatting with a Mencap helpline responder, it became clear that their advice would never include talking with the media.  They see their more as counselling, including raising the matter with regulators or other helplines if the NHS employee is not satisfied.  But this could simply enmesh the potential whistleblower in a bureaucratic spider’s web.

Lansley’s initiative is the third in recent years: 1993 saw the creation of “Public Concern at Work” and then the Public Interest Disclosure Act 10 years later.  The recent string of cover-ups and the need for the new helpline indicate that the earlier responses did not work.  It is not obvious that the new one will work any better.

The government now needs to get tougher, for example, by requiring Mencap to publish statistics on the calls they receive and the outcomes as well as concerns that need public attention.  Mencap should obviously provide anonymity for whistleblowers that are concerned about possible victimisation whatever their employers’ policy documents may say.  Whistleblowers need to be heard.

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Mass employment in manufacturing just isn't coming back

It's a consitent trope from those over on the mouth breathing left, that everything would just be better if we did more manufacturing in the UK. More specifically, that if we just had more manufacturing then everyone would be employed. Which would be so nice, wouldn't it?

The problem with this is that mass employment in manufacturing just isn't coming back. Ever.

Manufacturing output in the UK kept going up until 2005 or so (with variations for recessions, to be sure). Manufacturing output in the US is still going up and I don't think anyone needs to be reminded that manufacturing output in China is rising. However, rising output does not mean more jobs. Not necessarily at least. Looking at manufacturing output and manufacturing employment from 1992 to 2002 we get the following very interesting figures:

I estimate global manufacturing employment to have been between 150 million and 200 million workers in 2002, with those numbers reflecting a global decline of 20-30 million manufacturing employees in 2002 compared to 1995. I also estimate that China employed between one-fourth and one-half of that global total. Meanwhile, China’s manufacturing productivity growth, estimated at 60% between 1995 and 2002, should have cost China 37 million manufacturing jobs over that period, while China’s even more rapid GDP growth should have added back 42 million jobs, for a net addition of 5 million manufacturing jobs. Yet, Bannister (2004) reports that China actually lost17 million manufacturing jobs between 1995 and 2002—net job losses that approximated the total US manufacturing employment during that time frame.

Yes, China is losing manufacturing jobs. The world as a whole is losing manufacturing jobs. The cause is exactly the same thing that led to the loss of agricultural jobs 80 to 90 years ago: increasing productivity in that activity.

There might be all sorts of things that we could do about this, how to create jobs for people to do, but agitating for a return to mass employment in manufacturing just isn't one of them. Those days are over, dead and gone, and they're simply not coming back.

Which means that those stomping around the political arena calling for that return are just pining for the fjords, sorry, but it really is a dead parrot, not one that is resting.

In defence of obscenity

At Southward Crown Court Michael Peacock was found Not Guilty on six charges brought under the Obscene Publications Act 1959 today. The fact that he was prosecuted at all is illiberal, and has provoked understandable consternation from legal commentators such as David Allen Green.

The charges brought were based on DVDs he sold. The offence is to sell “obscene” things. And the test of obscenity is whether the DVDs will “deprave and corrupt persons who are likely, having regard to all relevant circumstances, to read, see or hear the matter contained or embodied in it.”

When Lady Chatterley’s Lover was tried in 1960 it was under the same act. The barrister prosecuting asked the jury if it “was the sort of book you would want your wife or children to read”. The jurors sniggered. That trial was won by Penguin using the defence in the act (attributable to Roy Jenkins) that it was “justified as being for the public good on the ground that it is in the interests of science, literature, art or learning, or of other objects of general concern.” The book was of obvious literary merit, as testified to at trial by people such as E. M. Forster and Bernard Levin.

However, that defence is not available to films unless there are “interests of drama, opera, ballet or any other art, or of literature or learning.” That pornography can be part of this is contentious; and I don’t think this formed part of the defence. Details can be found on the blog of one of the lawyers involved. The prosecution and defence agreed that Mr Peacock owned and sold the DVDs: the issue was one of obscenity. He was being tried for depraving and corrupting people. Under CPS guidance acts of fisting, urination, and BSSM, which were on trial here, can all be considered depraving or corrupting.

The guidance on the meaning of “deprave” is “to make morally bad” and on the meaning of “corrupt” is “to render morally unsound or rotten, to destroy moral purity or chastity, to pervert or ruin”.

The defence in this case was magnificent. Against the charges about the things done to people’s testicles they argued it was like getting a piercing; against the extremity of the contents (and some of it is really extreme) they point out that people don’t start watching the most extreme things, they build up to it. Charges of whipping being obscene were countered with examples of whipping being used in films at the cinema and being part of religious practice.

They also made the point that the jury have not been depraved or corrupted by seeing the material in court, and so it is absurd to think that someone who sought out the material for purchase would be. That the words deprave and corrupt had different meanings in 1959; that it does not mean shock, but moral degradation.

And that is where this law become illiberal. It is an act that would have people jailed for differing in their sexual practice from others, on the basis that those differences are deemed to indicate lesser moral principles. It is an obvious moral solecism to suggest that voluntarily watching certain things can “turn you obscene” in the prosecution’s words. Don’t forget that homosexuality was still a criminal offence when this law was passed. To an observer this trail raises some topical legal issues.

First is the state of jury trials. It is hard to avoid the assumption that jurors today are far less willing to pronounce a moral judgement like this on someone where the possibility of prison is involved. Tony Blair, who overturned double jeopardy to help ensure a conviction in the Lawrence trial, was in favour of trial without jury in some cases. Notably this was blocked by the House of Lords.

As a point of legal principle I would be horrified if someone could be convicted of something like this without the decision of a jury. The core principle of a common law system is that it marries the law as written with the changes in prevailing social attitudes – clearly demonstrated by the Chatterley case, the fact that it is hard to secure a murder conviction in assisted suicide cases, and the overhaul of the law on marital rape in the 1990s.

Second is the compatibility of this act with Human Rights legislation. Under the Human Rights Act we have a right to Freedom of Expression; but it is a limited right, and can have restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals …

The test for this is neatly summed up in four bullet points from the CPS guidance:

  • Is there a legal basis for the restriction?
  • Does the restriction have a legitimate aim?
  • Is the restriction necessary in a democratic society?
  • Is the restriction proportionate to the legitimate aim to be achieved?

The legal basis is the Obscene Publications Act. So that’s a yes.

But the others, on a common sense basis, and to any classical liberal, should obviously be answered no. No it is not legitimate of the government to aim to prevent people being morally corrupted by something they choose to watch; no it is not necessary to protect public morals for the same reason.

It is good news that this was a not guilty verdict. Although that doesn’t affect the Freedom of Expression point it has meant that the CPS will be reviewing their guidelines for prosecution; and if there is enough public attention the act may be repealed. Sometimes laws such as this fall into disuse. I’ve mentioned assisted suicide, but the better example is abortion. There are still restrictions in the statute on abortion, but these are not adhered to – much to the chagrin of pro-life campaigners. At the time of passing the bill the Wilson government was only trying to prevent back street abortions, not to give people unfettered access to abortion. But social attitudes have changed. Abortion is now seen as a fundamental part of a woman’s freedom.

Since the Obscene Publications Act we have seen the decriminalisation of suicide and homosexuality, and the legalisation of abortion; the definition of rape was changed to include marital rape; theatre censorship was ended; and most recently blasphemy laws were repealed.

It may be that this case is part of a liberalising process in the law. Let’s hope so.

Californian lefties don't understand percentages

The Daily Mail (who else?) reports that reality TV star Kim Kardashian has been used in a left-wing political ad in California, which argues for higher taxes on the rich. The Courage Campaign, which is apparently backed by the California Federation of Teachers, says:

"Millionaires like the Kardashians only pay a tiny bit more in taxes than a middle-class Californian."

They base this on the fact that Kardashian only pays a 10.3 percent tax on her income, whereas a 'middle-class' Californian would pay 9.3 percent.

But hang on a second. 10.3 percent of $12,000,000 comes to $1,236,000 in taxes. 9.3 percent of $47,000 comes to $4,371. In other words, Kim Kardashian pays $1,231,629 more in tax than Average Joe. Is that really only a 'tiny bit more'?

It's also worth noting that California already has the third-highest state income tax rate in the US, with only Hawaii and Oregon taxing their highest earners more. More broadly, the Tax Foundation says that California has the sixth-highest state and local tax burden in the US, and ranks 49th out of 50 states for its business tax environment. And despite all that, the state has been struggling to make ends meet since 2008.

The Courage Campaign might want to ask themselves whether Kim Kardashian is really the problem. Couldn't it be that, in fact, the Californian public sector has simply grown too large to be funded, even with some of the highest taxes in America? It's a story that will be horribly familiar to most European readers.

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Some fallacies are more equal than others

One of the central arguments of The Spirit Level - the Bible of self-styled “egalitarians” - is that income inequality erodes trust and social cohesion. This lack of social capital is blamed for a host of societal problems, including a reluctance to help others. The book’s authors, Richard Wilkinson and Kate Pickett, say that “individuals who trust other people are more likely to give to charity”. This may be true, but unfortunately for their argument, the empirical evidence shows that people in ‘more equal’ countries do not give more to charity. On the contrary, they tend to give significantly less.

Wilkinson and Pickett fill this hole in the theory by focusing on the amount of cash given by governments to developing countries (which is negatively associated with inequality) while ignoring the money given to poorer nations by individual philanthropists (which is positively associated with inequality). When the private and the public are combined, there is no association with income inequality, but the reader cannot be expected to know this since only public funds are discussed.

If income equality leads to trust, and trust leads to charity, then the issue deserves more attention than it receives in The Spirit Level. Recently on this blog, Tim Worstall mentioned the Charities Aid Foundation’s (CAF) latest report ‘The World Giving Index 2011’. In this document, CAF uses Gallup survey data from 153 countries which asked people whether they had done the following in the last month: donate to charity; volunteer for an organisation; help a stranger. These are classic measures of social capital and, by the logic of The Spirit Level, citizens of the more egalitarian nations, such as Sweden and Finland, should should outperform the sullen and withdrawn residents of the USA and Australia.

But when we chart the results on a graph, the wealth gap appears to be redundant at best (as in The Spirit Level, the graphs use Wilkinson and Pickett’s measure of inequality and show the world’s richest countries, with Portugal as the poorest).

We should not be surprised to see high levels to charitable giving in countries such as the USA, which ranks top of the CAF’s list overall. Tim noted in his post that “perhaps it’s the low tax which leads to charity.” This is not wishful thinking. In a previous report, CAF acknowledged that: “Giving tends to represent a lower proportion of GDP in countries with higher levels of personal taxation”.

People in the ‘more equal’ (read: ‘high tax’) countries can hardly be blamed for giving less to charity when the state leaves them less to spend, but what excuse can these supposedly more cohesive and trusting societies have for not outperforming the “brutal” Anglo-Saxon nations when it comes to lending a stranger a hand or volunteering their time? As the graphs show, there is no statistically significant association in either direction.

Data from one report is obviously not enough to torpedo The Spirit Level’s whole hypothesis (that has been done elsewhere). It is just one more piece of evidence that fails to support it, and when taken together with the data showing that people in ‘more equal’ countries are not more involved in the community, are less likely to join social clubs and do not enjoy better social support networks, the evidence that big government fosters social capital is scant indeed.