Category: Politics

In the aftermath of Children In Need I thought I would post on charity.

What is it with charity that we now need someone to do something, i.e. sit in a bath of baked beans, to convince us to donate? Is the thinking here: “Obviously I was upset about the child with cancer, but I couldn’t help until someone sat in a bath full of baked beans”? Was charitable giving always like this?

We no longer see need in our own society, so someone has to make a performance to draw attention to it and stimulate us to give. Charity stunts are a proxy for the begging bowl on the street.

My post is also prompted by Peter Tatchell’s proposal that there should be a 20% one-off tax on wealth applied to the wealthiest 10%.

Hold on!

That means me, or at the very least close enough to make me worried. I fall pretty much on the boundary of the 10% in terms of income, and well inside in terms of wealth, based on the value of my house and I imagine on the basis of a couple of pensions pots. (see here for income and wealth distributions in the UK). Obviously I find this fairly objectionable. It’s not so much an objection to paying any amount more but being singled out whilst most people don’t pay any more.

I’m not alone, Adele (a popular singer) got herself into a degree of trouble for her comments on paying tax at a rate of 50%, this was in part because of the way she chose to express herself but in part it’s a very good point: she is seeing 50% of her (substantial) income being taken away and it doesn’t sneak out in PAYE fashion. She receives the money and then very obviously hands it over, PAYE makes the process of taxation almost invisible. You’re not paying anything like this rate, and neither am I, my rate of tax on income is approximately 27% (see this post). Her observation was she made relatively little use of the services the government provides and paid a great deal for them, so felt aggrieved. For your own private provision for full replacement you’re probably looking at spending £10,000pa on health insurance, £12,000pa schooling per child and £40,000 provision for your own pension which covers off the major areas on which government spends, and you’ll get a much better service.

The principle of progressive taxation, i.e. the wealthy paying not only more in absolute terms but more in percentage terms, is well-established (Adam Smith was an early proponent) but a focus on simply the wealthy misses out the wider point that everyone contributes something according to their income. So when times are hard it shouldn’t simply be a case of “soak the rich”.

There is an odd parallel between the Daily Mail reader and the Occupy movement, the Mail reader seems to believe that if only large scale Benefit Scroungers could be stamped out then all would be well and the Occupy movement believe that if only the 1% (or 10% if you’re Peter Tatchell) paid their “fair share” then all would be well.

The link between tax and charity is in seeing tax as wide-scale enforced charity; in the past services and support for large parts of the UK population were paid for by charity. This worked poorly because the provision would have been patchy and in many cases below what we would consider a minimum level.

When Britain created its welfare state it subsumed a lot of charitable giving, the state was saying – “you don’t need to give to charity now because we will carry out those activities once covered by charity.”

The Big Society is much derided but it is about something important: it is down to us to care and help, we don’t lose that responsibility by paying tax to the state. The problem for the individual donor is where to spend our charity pound, everybody wants to help pandas and kittens but the unemployed, not so much.

None of the above is an argument for reducing taxation or reducing the size of the state, it’s an argument that the state doesn’t care – we still all have that job.

It’s been a while since I last had a good rant but the sanctimonious pontificating of bishops on wealth has set me off, that and the wine!

The Archbishop of Canterbury was going on about it earlier in the week, and today the Archbishop of York says that we should see the very wealthy in the same terms as we seen racists and misogynists. He doesn’t think the very wealthy should receive honours from the Queen. He is, of course, an unelected member of the House of Lords something which is a very high honour which is utterly unearnt on his part. He writes:

Over the last few decades racism has lost its respectability and is seen as unacceptable.  The same applies to homophobia (the irrational fear of homosexuals) and discrimination against women. 

Hold on! the Anglican Church only appointed it’s first female bishop in 2009, the Catholics still don’t allow it, and the Anglican Church will only allow a homosexual to be a bishop if they are celibate.

Apparently the Vatican has had a go too, at this point my irony meter explodes. Leaving aside their rather generous treatment of those clergy that sexually abuse children, there’s also the question of their absolute refusal to countenance contraception even to combat disease.

I’m not theologically trained but I believe there is something in the bible along these lines:

And why behold you the mote that is in your brother’s eye, but consider not the beam that is in your own eye?

Of course one could argue that the Anglican Church’s attitude to woman and homosexuals and the Vatican’s casual approach to child sex abuse by it’s clergy are not relevant to their opinions on financial matters. However these are both very wealthy organisations, they became wealthy because for a very long time they have collected tithes from their flock. They are also treated favourably in tax terms, perhaps we could ask the Archbishop of Canterbury what fraction of their income goes on charitable work.

This follows the Anglican Church’s deep confusion as it failed to realise that it’s view of St Paul’s Cathedral (entrance £14.50) as a major tourist attraction and revenue stream was a little incompatible with it’s vague support of the equally vague OccupyLSX movement.

Thank you for hearing my rant.

Ed Miliband has decided to open the Labour conference with a policy! A policy to reduce the cap on tuition fees from £6000 to £9000, you can read all about it here, in the Observer. I wrote on my feelings on tuition fees back here.Miliband’s is a somewhat surprising move; Liberal Democrats battered by this issue, will be bemused to discover that all that ire could have been deflected by the simple expedient of only doubling the tuition fee cap, rather than tripling it. The BBC has helpfully been starting their reporting of this issue with the words “Labour, who introduced tuition fees and then tripled the cap…”.

The policy is to be paid for by not cutting corporation tax on banks, as it will be for all other companies, and by increasing the interest on the student loans for those earning more than Miliband believes his supporters will earn.

The policy odd for a couple of reasons:

• Is this seriously the most important policy area to address? I’d have thought ideas on “going for growth” would be far more important. Or maybe undoing one of those many “attacks” on vulnerable groups.
• It really doesn’t represent a change in principle to the policy being implemented now, just a fiddling with the cap.
• It’s quite transparently another attempt at a political kick at the Liberal Democrats.

My personal opinion on “going for growth” is that there is relatively little government can do to boost growth in the medium term, it can spend in the short term to produce a transient increase but with a deficit as high as ours then is this really a good idea? If we could reliably produce growth by policy, then don’t you think we might be a tiny bit better at predicting growth given known policy? As it stands predicts of GDP growth by pretty much anyone are about as good as could be expected by a monkey throwing sticks at a board.

To me the big problem for Labour is the quote later in the article:

 

He [Ed Miliband] insisted he would stick to his central message that the coalition is cutting too far and too fast, without providing more detail of where Labour would withhold funding.

An observer would be entirely justified in thinking that Labour’s policy is for no cuts, and tax-raising solely on banks and the unfeasible wealthy, both ultimately rather small sources of income even if you jack up rates to very high levels. Given this, and the “revelations” that the Labour top team fought like ferrets in a sack over deficit reduction before leaving power it is unsurprising that they have little economic credibility.