Do Mediterranean search-and-rescue missions cause more drownings?

Earlier this week, a ship chartered by far-right activist group Defend Europe entered Mediterranean waters: apparently in a bid to support the Libyan Coast Guard's reconnaissance efforts, prevent human trafficking, and monitor humanitarian NGO activity. On its website, the group states that humanitarian NGOs are “responsible for the mass drowning of thousand [sic] of Africans in the Mediterranean.” The UN Refugee Agency (UNHCR) estimates that from the beginning of this year to the end of June, 2257 people have died or gone missing while trying to reach Europe by sea.

Defend Europe describe themselves as “Identitarian”: a label used by those who wish to preserve European culture by drastically cutting immigration and combating what they perceive to be Islamization. Although they claim to be partially motivated by preventing the suffering of migrants and refugees who drown attempting to cross the Mediterranean, they are at least honest about their primary goal. But immigration concerns notwithstanding, do those who claim that rescue missions incentivize dangerous Mediterranean crossings have a point? The key question here is whether the lives saved by SAR operations outweigh the lives lost as a consequence of irregular migration incentivized by them; the evidence suggests that they don’t.

One argument used to criticize the impact of SAR missions is that they increase the mortality risk of Mediterranean sea-crossings: independently of the overall number. An internal report from the European border agency Frontex, obtained last year by the Financial Times, argued that search-and-rescue (SAR) missions in the Mediterranean may incentivize riskier methods of smuggling. However, Médecins Sans Frontières (MSF)—one of several humanitarian organizations working in the area—have cast doubt on Frontex’s reasoning for this claim. Furthermore, Blaming the Rescuers—a report released last month by Forensic Oceanography—highlights more compelling explanations for changing smuggling practices in 2015-2016:

...the increasing involvement of militias in the smuggling business, the shift in composition of migrant nationalities, and the increasing interventions of the Libyan Coast Guard...have contributed to a downward spiral in the practices of smugglers and conditions of crossing over 2015 and 2016. The dynamics of Libyan smuggling are deeply shaped by the fragmented political landscape in Libya, which constitutes a causal factor in its own right. While difficult to measure, the influence of these trends on the increasing danger of the crossing in 2016 is undisputable. While Frontex has analysed smuggling networks in Libya, it has kept these factors out of the analysis of the causes of the deteriorating conditions of crossing offered to migrants, blaming them instead on SAR NGOs...

These criticisms stack up with recent analysis of mortality rates in relation to different periods of SAR activity:


The authors of this analysis also anticipate an objection to the use of Triton I mortality figures:

The high mortality rate during Triton I is largely the result of two large accidents on 13th  and 18th April 2015, with estimated casualties of 400 and 750 people respectively. However, it would not be appropriate to consider these accidents outliers that were unrelated to the (absence of) SAR capacity. The excellent ‘Death by Rescue’ investigative report by the University of London’s Forensic Oceanography department analysed the circumstances of both accidents, using multiple sources such as photos, interviews with shipwreck survivors, rescue vessel crews, statistical data, GIS locations and internal reports by national authorities. It concluded that the deaths could have been prevented, had a more intensive SAR mission been in place...

The data referenced above casts doubt on the other main argument used by SAR-detractors, since it shows that migrant arrivals in Europe significantly increased despite the end of Mare Nostrum. Whilst it’s reasonable to assume that SAR operations may have some causal effect on irregular migration, the fact that arrivals were highest in the low-SAR period casts doubt on the strength of this effect and the likelihood that it outweighs the lives saved by SAR operations. Push-factors such as conflicts in Libya and Syria seem to have a far greater impact on the number of attempted sea-crossings than any pull-factors, as echoed in a 2015 International Organization for Migration report:

...the current migratory flows across the Mediterranean, from sub-Saharan Africa and the Middle-East to Europe, seem to be driven much more significantly by push factors that cause migrants to depart their homes, than by the pull factors that draw migrants to Europe.

I’m pessimistic about the possibility of self-styled Identitarians changing their mind about SAR missions in the Mediterranean on the basis of the available evidence. For them, the wellbeing of migrants and refugees is at best secondary to their misplaced concerns about the impacts of immigration. However, I’m hopeful that others—who understandably find the “pull-factor” explanation intuitively appealing—view this argument with a more critical eye.

Money is a veil over economic understanding

One genre of claim I hear a lot on Twitter goes something like this: "more pounds spent in the economy means firms have more money so they invest more", or "more stuff consumed means more confidence for investors". I think this confusion comes partly from half-digested media economics, partly from the fact that the individual claims sound very intuitive, and partly from the fact that money is clouding our judgement. Without money, the issue is much clearer.

Imagine there was no money. Instead, a government plans the entire economy. Imagine for a second that it can easily compel people to do what it wants, and that there are no information problems, it can see inside people's minds to understand their preferences exactly.

It faces itself with a number of inputs at its disposal. First it has land—because economy activity has to take place somewhere, and some places can sustain more valuable economic activity, perhaps because there is oil buried there, the climate makes human habitation cheap or pleasant, or because it is near other areas of dense population. Second it has labour—humans are even now the crucial input for making most things through their dexterity, endurance, strength, and most of all brainpower. Third it has capital—in the past we've invested, producing stuff that did not service any of our demands directly, but made us better at serving them in the future, stuff like machinery, buildings, training, skills, and so on.

This economic planner basically arranges these economic inputs to produce two types of outputs:

  1. Consumption goods. People want medical services, lawyers, restaurants, hotels, aeroplanes, trains, cars, houses, and much much more. You can produce these. We spend 70-75% of our national product on these nowadays.
  2. Investment goods. If we use all of our inputs to produce consumption goods then we can consume a lot, but the amount we consume doesn't go up over time. In fact, if our capital depreciates over time, then the amount we consume actually falls. So we also use people, land, and capital to invest in new capital. We train new doctors, build new shopping centres and airports and factories, design new drugs and machine tools, invent robots. This stuff gives us no reward now, but it gives us a big reward later.

So it's clear that in this planned economy, any consumption comes at the cost of investment. But this is also true, for the most part, with money brought back in. Except for examples where governments (or firms) make terrible calls or restrictive regulations, most our best land, labour, and capital is tied up in producing consumption and investment goods. If our actions result in lower consumption, then they usually result in higher investment—and vice versa.

Now: this is not true when we're in a recession. At these times, lots of land, labour, and capital is un- or under-employed. At these times, you can increase both consumption and investment.

But in usual times more funds for investment lead to more investment. Slightly higher bids for a given financial security means slightly lower yields, making it slightly cheaper for that firm to borrow. Firms are not continuous, but thresholds in their borrowing costs do make a difference to their investment plans, and each infinitesimal shift is equally likely to bring them over such a psychological threshold on both the extensive (whether to invest) and intensive (how much to invest) margins.

It's true that raw correlations between aggregate borrowing costs and aggregate investment are weak. But that's because borrowing costs are usually low when the macroeconomy is weak, because of poor fiscal or monetary policy, factors we can easily abstract from. Controlling for expected economic conditions (as few papers do) would reveal a tight link.

This is why doing economics without a model—what I call "pub economics"—can be so difficult and misleading. Individually plausible-sounding claims can be false when you integrate them together with all the other relationships that are happening in the economy.

We look forward to seeing the pay slips from Julie Walters' next film

It has always caused us a certain amount of amusement that the luvvies, those engaged in one of the most ruthlessly free market occupations in the country, are generally lefties. If they bring in the paying audience they get showered with riches, if they don't then they're working for nothing in off-off-whatever-the-name-of- the-theatre-district-is shows. There are also their comments upon matters economic to consider as well - that they're good at reading someone elses' words seems not to give them any great insight into the subject they then comment upon.

Dame Julie Walters has called for women to be paid the same as men for doing “the same bloody job”.

As the BBC pledges to tackle the gender divide, Dame Julie said the entertainment industry has been underpaying women for decades.

“It’s good that we’re talking about it. It should be out there,” the actress said. Male actors have been “earning more money. Why? It’s the same bloody job!”

What actually is the same job? Acting? That would rather mean that Julie Walters should have been getting the same amount as Tom Felton in those movies, wouldn't it? Something which we would hazard a guess at the Famed Dame not having got.

At which point, wouldn't it be interesting to see the payslips for the next production she is in. Why are different actors getting different amounts if it is all just the same job?

Conservatives deserve facts about immigration, not guesswork

Conservatives deserve facts about immigration, not guesswork

Alex Morton (a No 10 policy advisor under David Cameron) has written a piece for ConHome that attempts to show that there is no particular reason for free marketeers to support liberal immigration policies. 

He is not very persuasive and mostly relies on his intuition to make his case. But since he mentions the Adam Smith Institute I feel obliged to respond. Conservatives reading his post deserve to hear more than Morton's gut instinct about immigration policy.

George Monbiot is wrong about chlorine chicken

It’s always good to know that people are reading your work. Guardian columnist George Monbiot has clearly had a thorough look at the Adam Smith Institute’s report on chlorinated chicken, which I authored.

In that, I argue that the UK should consider accepting imports of US chlorine-washed chicken, which could lead to lower food prices and help to secure a better transatlantic trade deal. I draw on existing research from the European Food Safety Authority, the Institute of Environmental Science & Research, and the University of Maryland to show that chemically-rinsed birds are safe for consumption, and that these rinses are effective at disinfecting poultry.

Monbiot does not contest these headline claims. Rather, he disputes one use of World Health Organization figures.

These figures are by no means the crux of the report. Nor are they particularly controversial - the Codex Alimentarius Commission, the body which sets international food standards, has published guidance for chlorine-washing chicken that is safe for human consumption.

And Monbiot does not question the logic behind my use of the WHO data. If chemically-rinsed chicken is ineffective in controlling pathogen spread, then as I write in the report, “one would expect foodborne illnesses carried by chicken to be much more prevalent”.

Here’s what I wrote:

WHO figures reveal that salmonella and campylobacter infections in North American countries are not out of line with their European counterparts.

And here is what Monbiot has to say:

But [the Adam Smith Institute] says that figures from the World Health Organisation reveal that salmonella and campylobacter infections there are “not out of line” with rates in the European Union.

I checked the source: the WHO study the Adam Smith Institute cited. While the incidence of campylobacter is similar, it shows that the burdens of infection per head of population from the two species of salmonella it analyses – Salmonella typhi and Salmonella paratyphi – are, respectively, four times and five times higher in North America than in Europe. I cannot state that this is caused by chlorinated chicken, as the WHO doesn’t provide such detail. But I can state that the Adam Smith Institute’s claim is false.

There is something to what Monbiot is saying. When you compare developed Western Europe, where we use the farm-to-fork approach, to developed North America, where they mostly chlorine wash at the end, the rates of the two types of salmonella seem higher in the US.

But what Monbiot doesn’t report are the actual numbers. Salmonella Paratyphi A and Salmonella Typhi infections are so rare in both subregions that the difference Monbiot highlights is trivial in the context of total infections, which the WHO weights according to the disability-adjusted life years (DALYs) lost to them. The figures are 0.1 and 0.4 DALYs per 100,000 in North America versus 0.02 and 0.09 in Western Europe, respectively.

But even those average estimates are misleading: the 95% confidence intervals on those numbers all touch zero, and include the rates of the opposite countries. That is: the stats are statistically insignificant from each other. When you drill down to two such specific sub-figures, relying on imperfect sources, you can’t draw a clear result.

It’s like rolling two dice three times and arguing the one with the higher number is loaded: you haven’t got enough data to make that conclusion.

Monbiot also neglects to mention non-typhodial Salmonella enterica, which is much more prevalent that the other species mentioned.* In this case, the burden is lower in North America than Western Europe, while the gap between the two subregions is still not statistically significant. For North America the figure is 9 DALYs lost per 100,000 people, and for Western Europe it is 12. The figures for each subregion lies in the confidence interval of the other. However, all in all, it is the European region where salmonella has a higher burden.

Once you put those three specific infections together with all the diarrhoeal and infectious diseases we’d expect chemical washing to reduce you get a clearer comparison. The sum of DALYs lost to these poultry-related diseases per 100,000 in those North American countries is 18.5, compared with 22.11 in those European countries. As I wrote, “not out of line”.

This chart makes it clear: AMR A (North America) and EUR A (Western Europe) are barely different, although if we zoomed in massively we’d see the rate for all four hazards taken together is slightly higher in Europe. Guessing from the confidence intervals they give us, this difference might even be (marginally) significant.

If a cancer affects just 0.01% of the population then large differences in survival rates between countries do not much affect the relative burden of cancer overall between them. Whereas even small differences in survival rates for a cancer that affects 10% will make huge differences to the health of society overall. I think it’s this slip-up that Monbiot has made.

With more context and better understanding of the figures, it should be clear that our initial claim was correct and Monbiot’s “correction” misguided.

*Editor's note: we've updated this section, after a reader contacted us. Originally we responded only on the strains Monbiot raised; now we have added other poultry-related microbial infections.

The Department of Health: an overview of its quangos

Health and adult care services are surely complex matters but the challenges facing the 2,000 Department of Health HQ staff should be relatively simple: persuading HM Treasury to provide more resource and splitting that between NHS England (treatment and cure), adult care services and the technical quangos which address central issues such as the efficacy of medicines.  The more that goes to the Department itself, and its quangos, the less goes to front-line services.

Remarkably, none of the 27 quangos focus specifically on adult care services or mental health – the two big problems of our time.  NICE provides guidance on medicines, medical technology and, since 2013, social care. The Care Quality Commission (CQC) and the National Data Guardian monitor both NHS and adult care provision. The Health and Social Care Information Centre is now called NHS Digital as, according to its 2016/7 annual report, it now aligns itself with the NHS rather than social care. None of the other 23 gives address social care at all.  The DH should, perhaps, have an over-arching public body, equivalent to NHS England, to oversee adult public services, especially since the front line services are largely devolved to local authorities.

As discussed in an earlier ASI Blog[1], NHS England, now an “Executive Non-departmental Public Body”, should become a publicly owned corporation, if only to stop politicians and civil servants messing it up. Remarkably, the DH has eight quangos interfering, or helping depending on one’s point of view, in NHS England’s business: Independent Reconfiguration Panel, National Information Board, NHS Business Services Authority, NHS Digital, NHS Improvement, NHS Litigation Authority and the two review boards for NHS staff pay and doctors/dentists.  Clearly decisions for staff differ from GPs who are independent contractors for the context is the same and the board needs to be fair across both sectors.

Five of those can be seen as services that NHS England would itself need, one way or another.  The Independent Reconfiguration Panel, National Information Board and NHS Improvement, however, exist purely to tell the CEO of NHS England how to do his job in addition to the stream of instructions from the DH itself.  The three should be disbanded.

Six other quangos clearly need to be independent from the NHS: Administration of Radioactive Substances Advisory Committee, CQC, Human Fertilisation and Embryology Authority, Human Tissue Authority, National Data Guardian and the NHS Blood and Transplant.  The CQC and Data Guardian monitor performance and patient confidentiality respectively.  The other four are technical/scientific.

Of the remaining 12 quangos, five should be disbanded and seven have overlapping functions and could be merged into three quangos. Merger does not of itself guarantee better value for money but at least it gives the opportunity for squeezing costs to prioritise what matters most. The seven could therefore be merged into two agencies: Public Health, and Medicines and Technology (NICE).  The public health agencies are Public Health England, Health Education England and the Health Research Authority.  The other four are National Institute for Health and Care Excellence (NICE), British Pharmacopoeia Commission, Commission on Human Medicines, Medicines and Healthcare Products Regulatory Agency.

The existing NICE is far the largest of this last group, with 600+ staff and a budget of £65M p.a.  Its guidance on medicines can be controversial but is unquestionably independent and well informed.  The 2013 tacking on of adult social care seems culturally alien and receives relatively little attention. Much of its social care guidance can be parodied as “all the involved people should be involved”.  This responsibility should be transferred to the new adult social services public body proposed above.

The final proposed disposals are the Accelerated Access Review, Advisory Committee on Clinical Excellence Awards, Committee on Mutagenicity of Chemicals in Food, Consumer Products and the Environment, Morecambe Bay Investigation and Porton Biopharma Limited. The first and fourth of those completed their work some years back and should no longer be listed. Deciding, once a year, which consultants should receive awards does not need a full time DH quango, just an ad hoc committee of the NHS. The Mutagenicity Committee is actually three separate ones which belong in their separate Whitehall departments – the Food Standards Agency for food, BIS for consumer products and DEFRA for the environment.

Porton Biopharma Limited is either the profitable commercial enterprise, as the DH website claims, in which case it should be privatized, or that is a cover for high security research, in which case it should become part of the Ministry of Defence.

Although the idea of “taxpayer value” has now been espoused in Whitehall, comparing the taxpayer value of, say, a destroyer with an acute hospital is somewhat  with an acute hospital is somewhat conjectural.  This overview of the DH quangos has indicated that, excluding the NHS and Adult Care bodies, only about nine of them are necessary.  Divvying the annual budget 12 (NHS and Adult Care England, nine quangos and the DH itself) ways, once a year, and writing a few policy and briefing papers, is not a lot of work: all bar 200 of the HQ staff could safely be stood down and thereby fund another 1,800 doctors and nurses.

The “bonfire of the quangos” promised (again) in 2010 was more of a puff of smoke.  Some were merged but most were unaffected.  The streamlining of quangos outlined in this overview is not so much to save money as to give the NHS a better chance of improving its performance.  No NHS England chief executive needs this many quangos looking over his shoulder and telling him how to do his job.

Well done Polly, except this is rather the point of trade

Polly Toynbee tells us that the very point of trade is one of the terrors of trade which must be avoided. Which is a rather interesting case of entirely mangling reality, isn't it

The American farming industry insists any free trade deal must include agriculture – and Britain must allow in US chlorine-washed chicken, hormone-fed beef and genetically modified crops, all banned here and in the EU. The Telegraph reports Fox sources, backed by Boris Johnson, saying “the Americans have been eating it perfectly safely for years” and it’s 21% cheaper than our chicken. Trade is supposed to mean cheaper imports. But, with echoes of the old Corn Law wars, Gove and Leadsom jump to defend British farmers, expressing “serious concerns”. Not only will UK farmers lose market share, but lowering standards bars us from exporting our food to the EU. Fox dismissed food obsession as media trivia. Maybe the food is safe – but his eagerness to lower standards shows how a supplicant UK will take whatever terms a super-power desires.

It’s infuriating to watch Brexiteers only now finding out basic truths that “experts” told them years ago. Trade with New Zealand? That will wipe out our sheep farming.

If foreigners do the chicken thing better than we do (there is more on our work on this here) then we positively desire to be buying what they do better than we. If foreigners can farm better than we can, perhaps they have a greater or better original endowment of land for example, then we want them to take market share.

If our land isn't very good for sheep growing, as it also isn't for cocoa or banana growing (or even, as Adam Smith pointed out, grapes for Bourdeaux) then we absolutely do want them to be doing that and we to be doing something else.

Something else that we're less bad at, as David Ricardo pointed out 200 years and a couple of months back. Which is surely long enough for even Polly to get to grips with the basic concept? 

That free trade with the world would mean we do less of certain things here in Britain is not a problem with free trade, is not a usurpation by free trade nor a perversity of free trade, it's the entire damn point of free trade itself. 

Neoliberalism at Niskanen

We're big fans of the Niskanen Center here at the ASI. So we were glad to see Niskanen's Karl Smith follow our lead and embrace neoliberalism.

In his post, Karl sets out why he identifies as a neoliberal and sums the ideology up rather well.

He writes:

There is something fundamentally hybrid about neoliberals. I embrace the term, yet my intellectual background and native sympathies lie on the right, not the left. Neoliberalism most readily brings to mind a certain type of libertarian who never quite bought the discarded philosophical case for liberty. It’s someone who was more enamored by Milton Friedman than Murray Rothbard; liked Nozick but preferred Rawls; and saw the failures of Eurosclerosis as just as relevant to the case for free markets, as Cold War-era anti-communism. It’s the cast of mind described in a Medium post by Sam Bowman, the executive director of the Adam Smith Institute.

Crucially, it also connotes the type of libertarian who saw free-market liberals as heroic bedfellows. Their heroism lies in the courage to overcome the anti-market bias of the left. Ours was in embracing them and so transcending the anti-left bias endemic to the right. Together we are a muddy middle of liberal philosophy and libertarian policy solutions.

In practice, this implies that we’re suspicious of regulation, but embrace redistribution. I often tell my more conservative friends that I’ve made my peace with the welfare state. That, however, isn’t entirely honest. The truth is that I wholeheartedly embrace the welfare state as a tool for empowering people to live happy, fulfilling, self-directed lives. My primary concern regarding the welfare state is making it less intrusive in the choices of individuals, families, and communities.

Read the full piece.



When your funding sources do & don't matter

The most common response we got to our Monday ASI paper on chlorine chicken is that our view was driven by a monetary interest. It wasn't: we don't accept any funding for specific projects—everything comes out of general funds—and as far as I know none of our general donors stand to benefit from such a move either. The actual inspiration for the paper came in a facebook chat in January between ASI staff, screenshotted below. But the interesting question is: would it matter if we did get our funding that way?

There is a popular view, perhaps derived from a Marxist-materialist worldview, or more mundanely from a economicsy self interest perspective, that opinions are just outgrowths of economics. Everyone cynically supports the perspectives that stand to contribute to their narrow, mostly financial, self interest. The rich like property and the poor like redistribution. Sometimes, in a more vulgar version of the theory, the holder will argue that self interest is for thee, but not for me, and all views except theirs are a sort of false consciousness.

It's certainly one model of the world. But as Sam says very well here: political error is driven by complexity, not greed. In fact, most of the evidence on public choice suggests that people are pretty altruistic and "sociotropic" in their political behaviour. People are ignorant, and that causes great problems. But by and large they are not corrupt or atavistic. I think that jumping to motivational games suggests people are unwilling, or unable, to try and understand the question at hand, and thus need some sort of crutch to explain beliefs, rather than being open to the possibility of honest disagreement.

Look: even if I were in favour of this trade deal step due to Big Chicken or Big Chlorine payouts, how could that affect my work? Scientists working in lab studies declare conflicts of interest because their work is partly dependent on their probity. The recent massive scandals around p-hacking, publication bias, and even straight scientific fraud underline why this is important.

But when I write something I'm not asking anyone to trust me as an authority, and I use publicly available data and evidence created by people completely unrelated to me. This is by definition transparent, doesn't pose problems in the way Monsanto-funded pesticide research might. Does getting payment from corporate lobbies or interested parties make me more convincing? Does it find me better data or cleaner logic? It's hard to see how it could possibly affect the situation in any way.

Interest groups fund people who support their interests. If they didn't fund them, they'd still support those interests, but with less money. If John Stuart Mill were alive today then tobacco firms, brewers, distilleries, and Coca Cola would probably give him cash. But he would be defending the Harm Principle either way. True Believers have a comparative advantage over shills in advocacy.

The only possible reason someone could ask for my motivations is that they can't be bothered to tackle the argument. Perhaps they are even looking for reasons to dismiss evidence that conflicts with their existing worldview (we are all prone to this, because it hurts to admit you are wrong). But neither do their motivations tell me that their conclusions are wrong, just as the fact the IFS gets their funds mostly from governments doesn't tell me they're wrong, and the fact that CLASS is funded by unions doesn't tell me that they're wrong.

It's simple minded to jump to money as an explanation for all evils. Sometimes people are just wrong, because social, political, and economic questions are often hard to answer.

Fine, clobber the rich, but not with a 100% inheritance tax

Abi Wilkinson has a piece at The Guardian making the case for bolstering the UK's welfare state by raising inheritance tax to 100%. She argues that it would be good to do more redistribution, to fund more and better public services, and that unlike other taxes, it does not face objections of moral desert. Perhaps you deserve the sweat off your back, she argues, but it's hard to see how you've earned a pile of cash that simply fell into your lap through luck. And she argues that we cannot infinitely respect the wishes of the dead.

There are some small points that Wilkinson is simply wrong on: she argues that elderly folk retiring earlier and earning less would make space for younguns to fill those spots. This is the Lump of Labour Fallacy: it's wrong for the same reason that immigrants don't steal jobs off natives, and the entry of millions of women in the labour market in the 1970s didn't cause mass male unemployment. When more people work we just produce extra stuff, consume extra stuff, and invest in extra stuff. But this claim isn't crucial to her case, and there's a more important point here.

Libertarians have always been divided on inheritance. If you think that freedom is important because it lets humans express their free wills, then why respect the non-existent wills of dead people. Jim Buchanan, the public choice theorist who suffered at the hands of Nancy Maclean and supposedly ties the whole libertarian right together, advocated an 100% inheritance tax. Robert Nozick switched towards one later in his life. Thomas Jefferson thought similarly. "Even" Adam Smith was against unlimited rights of bequest.

But unlike both Wilkinson and libertarians, I think we should approach this question pragmatically, not based on moral rules. We want to raise money to fund redistribution and public goods. How can we do this at the lowest possible economic cost? Inheritance tax is an inefficient way of raising money, even if we ignore problems of enforcement and loopholes.

When economists analyse taxes they typically use the visors of incidence and behavioural responses. Behavioural responses are what they say on the tin: how households and families adjust their economic behaviour in response to a tax change.

Incidence is who is made worse off by a tax. Money is there for consumption. If you save it or invest it, it is only to spend it in the future, to insure against an unexpected consumption need you might have, or to give it to others to consume later. A tax's statutory burden falls on whoever hands it over, but a tax's incidence is on who eventually has lower consumption in order to fund it. An example is VAT: shops hand it over to the government, but consumers end up paying most of it through higher prices. Similarly, buyers hand over Stamp Duty Land Tax, but sellers are also made worse off by it: about half of it is paid in the form of lower house prices.

Wilkinson's piece implicitly assumes a higher inheritance tax falls entirely on the deceased and their benefactors. But it only falls on the deceased if their behaviour doesn't change in response, and they generate estates of an equal size in their lifetime even given the tax. This is questionable under a 40% tax, but dubious in the extreme under an 100% tax.

The higher the inheritance tax, the higher the implicit income tax, and the more unbalanced the tradeoff between your consumption and your kids'. At 100%, it is infinite: no matter what you do, you cannot make your kids' lives better off after you die. Your incentive, again heroically assuming we are able to deal with all the practical difficulties, is both to generate less wealth, and to consume any you do generate before you die. Why not live out your days at the Ritz like Thatcher?

Less income created means less for public goods and redistribution, not to mention less for their kids, and less for them. And while more holidays and nicer houses for older people is all well and good, more consumption means we have to switch land, labour, and capital towards producing those things, and away from the things the savings of the old were buying. Nearly all of these savings aren't hidden under beds, but are being put to work: lent out by banks, and invested in equities through pension funds. This investment is what funds productivity growth—and productivity growth is what underlies higher wages.

So an 100% inheritance tax would barely make rich old people worse off, but it would clobber workers with no chance of inheriting. This is why I disagree with Wilkinson and a bunch of smart libertarian scholars, including the namesake of my very own think tank. There are very good reasons to tax the rich to improve the well being of the badly-off. But we should do that through consumption taxes that are guaranteed to reduce their Maserati and private jet purchases, not taxes that destroy their incentive to invest in society.