The National Diet: Fat Wallets and Fat People

Along with a whole host of other disturbing announcements that have been coming from the Coalition government recently, Health Secretary Andrew Lansley has put Britain on a diet. A 5 billion calorie a day diet. This announcement follows Denmark introducing the world's first-ever fat tax. However, unlike the fat tax, which is a clear policy that uses basic economic assumptions to disincentivise the purchase of foods high in saturated fat, Britain's diet (like so many individual diets) is a "ambition". Better still, it is an ambition that will be fulfilled with the help of food and drink companies in a "responsibility deal". That is, a voluntary deal.

Why is it these companies are viewed as benign partners in the war on obesity by ideologues whose entire philosophy is based on self-interest? It is fundamentally contradictory - these companies spend countless billions of pounds promoting their unhealthy foods and their entire business model is premised upon making people fat. They have no incentive to change the current system where both their wallets, and the British people, get fat. They have no incentive to provide and promote food that actually matches the needs of our increasingly sedentary lives. They have the exact opposite incentives, which gives us two choices: either change the incentive structures through taxation, or change the structure of the organisations through strict regulation - the time for gentlemanly agreements with the promoters of crap food is over.

Once again we see craven, gutless politicians unable and unwilling to hurt the corporate bottom line; even when the corporate bottom line is hurting us.

50p Tax and Competitiveness

The current Tory-led coalition government, alongside economists, is currently pushing for a reduction in the highest bracket of income tax. Their argument is plain: the 50p income tax rate curtails growth because it works as a disincentive to entrepenuers, investors and talented workers, who would, consequentally, go abroad.

Frankly, their argument is little more than ideological cant and only engages with problems to the extent that solutions are ignored. Thus, I would like to present three points that covers a few of the basic errors in their view.

First, there is no consensus among economists (that is, academic economists) about the optimal tax rate, which is what, when we get down to it, we're actually talking about. The optimal tax rate, which is often explained by way of the Laffer Curve, is the highest tax rate that doesn't work to disincentivise investment, production and, well, work. The problem is that no-one knows quite at what point people become disincentivised (the highest point on the Laffer Curve.) Politicians and economists like to claim that it is lower than where we currently are, but studies vastly disagree and many point to an assymetric Laffer Curve with a optimal tax rate of 70% (although, mostly, it should be pointed out that work on finding the optimal tax rate is riddled with problems.)

Second, decisions to invest or to continue living in a country are, or at least I hope they are, not based solely on tax rates. Even if we were uncompetitve internationally (which we're not) there are many reasons why people would choose to invest or work in Britain. The motivations of people, like people, are quite diverse and not based solely on financial well-being. It may work as a disincentive, but we've got plenty of incentives so that it won't "wreck the economy."

Final point - and it's an important one - is that there are already systems that tax citizens regardless of which country they live in; it does not matter if people choose to go abroad. In particular, the US uses such a system. That's right - the system that many who oppose the 50p tax would like to see us emulate, has the solution. So, the threat to "go abroad" could easily be neutralised by policy change.

So, to sum up, even within economic thinking no-one really knows if a 50p tax rate hurts an economy by disincentising the population, non-monetary incentives exist and, in line with already existing policies around the world, it is an option to tax citizens regardless of state residence. The argument, then, for reducing the 50p tax rate has little foundation, but, in contrast, the argument for keeping the 50p tax rate, maybe even increasing it, is well founded.

How the Political Focus on GDP Growth is Harming Society

It has long been held, in an unqualified manner, that economic growth is good. That is to say, that increases in Gross Domestic Product (GDP) - which is the aggregated market value of all the final goods produced/sold in a country during a year - are beneficial to society. As such, increases in GDP have become a central goal of political action, and decreases in GDP are seen as signs that an earlier policy was harmful. The logic has some merit to it: increases in GDP equate to increases in the economic activity in a country, if there is greater economic activity there are more jobs and more products, people are thus materially wealthier and there is more work for the unemployed - society is better off.

However, the focus on GDP growth and the logic supporting it is mistaken on several counts. Firstly, GDP was never intended as a measure of the good of society. Indeed, it's inventor, Simon Kuznets, on presenting GDP to the US Congress said that "the welfare of a nation can scarcely be inferred from a measurement of national income." To do so is to reduce the good of society to purely economic, market measures.

Secondly, as a consequence of the first point, that which is outside the market (i.e. not sold) is not considered. Instead, many things which are beneficial to society are not included. So, informal childcare arrangements, family housecare, home-made/grown produce, neighbourhood watches, charity support groups, sports teams, youth groups, etc are not included; are not, by users of the metric, counted as beneficial to society. Equally, many things that are harmful to society - crime, inequality, environmental damage, etc - are also not included in GDP. For example, an increase in GDP could be caused by a few people (say, bankers) getting significantly richer, rather than a more general increase in the welfare of society. Put together, increases in GDP could accompany a reduction in non-market factors that are beneficial to society and an increase in non-market factors that are harmful to society - GDP simply does not reflect them.

Thirdly, GDP growth does not necessarily equate to an increased numbers of jobs. GDP can be increased, without accompanying job growth, by increases in productivity or by the increased production of an expensive primary resource or service. Equally, GDP can decrease while the number of jobs goes up by movements from the production of high-market-value  products to low-value products (such as a company switching from financial services advice to growing potatoes.)

The essential point, then, is that GDP is not a measure of the welfare of society, nor is it a proxy measure. In itself, this point does not matter. However, that GDP growth is a central goal of political action means that the weaknesses of GDP have real world consequences, in that by promoting GDP growth negative outcomes can be encouraged. For example, in Canada the tar sands projects, which are destroying and degrading large areas of Canada and its environment, account for about 2% of national GDP. So, according to the "growth is good" mantra and in spite of any serious lasting damage the projects are doing, the tar sands exploitation equate to an improvement of the national well-being.

If we continue to follow this "GDP fetish", then environmental restrictions, consumer protections, mandatory safety features - regulations that can improve societal welfare - will  persist in being seen as costing GDP growth and thus as harming society, and activites that harm society will carry on to be seen as beneficial. What we will continue to do, then, is to set the cart before the horse - to favour "growth" over genuine progress.

World Shocked: Pakistani-born Woman has Critical Opinion of Muslims

In a shocking expose in The Daily Mail, Pakistani-born (actually British India-born) Baroness Flather writes of how the benefits system is being cheated by polygamous Muslim families, delivering line-after-line of body blows to those who support a welfare state and confirming what those who read The Daily Mail have always known.

Course, there's a few small problems with her views (why else would I write about it?) The article's argument starts off with her sketching a hypothetical situation -

For example, a Pakistani man contracts a marriage in his native country, and then brings his wife to England to start a family. Because they have been married only under Islamic law, she isn’t legally registered by British authorities as his wife. Even so, they are able to claim child benefit for any children they have.

But the state handouts do not end there, for under Islamic Sharia law, polygamy is permissible. So a man can return to Pakistan, take another bride and then, in a repetition of the process, bring her to England where they also have children together — obtaining yet more money from the state.

Because such Islamic multiple-marriages are not recognised in Britain, the women are regarded by the welfare system as single mothers — and are therefore entitled to the full range of lone-parent payments.

.....and that's pretty much it. That's her argument on polygamous Muslims ripping the taxpayer off in full. Nothing more. Nada. Zip.

That this hypothetical situation contains many unfounded assumptions (that all Muslims believe in Sharia law/polygamy, that people are solely motivated by claiming benefits, that it would be easy for an unmarried (in the view of UK law) Pakistani woman to move to the UK) isn't the biggest problem with this view. The biggest problem is that it is assumed that because there is a hypothetical incentive in place people will actually do it and follow her line of reasoning; that a hypothetical argument adheres to reality.

Following from her hypothetical argument she moves on to hard empirical facts.

Figures are hard to obtain, but it’s thought there may be around 1,000 polygamous families living in the UK, costing taxpayers millions of pounds a year.

You read that right: all she does, it appears, is pull a statistic completely out of her arse. Also, at this point, we're clearly meant to ignore that the (made-up) statistic doesn't even cover what she's talking about and can't be linked to costing taxpayers. We're meant to ignore that polygamous families could support themselves without the welfare state and that polygamous families could not be Muslim. Instead, we're meant to just assume that the statistic links up with her hypothetical situation.

After throwing in an anecdote (see the line "A friend of mine") she's clearly feels that her point is well-established and so moves on to complaining about how her voice is being drowned out by political correctness and how, in line with her libertarian sentiments, the welfare system should work to limit the size of families. Eurgh.

What really gets me about this article, though (beyond the complete and utter lack of evidence backing it up) is the assumption that being a secular Pakistani-born person makes someone an authority on Muslim welfare dependency in Britain; that hers, because of where she was born, is the voice of truth. It is a crude attempt at an appeal to authority that would be akin to this entire post instead reading "British-born blogger says British newspaper, The Daily Mail, is full of lies and not fit to wrap chips in."

Course, I actually have evidence to back that up.

Welcome!

Welcome to the first (real) post of The Ordinary Times. The intention of this blog is to question the world, (especially British and American) politics and, most importantly, the assumptions underlying political arguments; it intends to cut right to the heart of the matter in a manner to which normal political discourse does not. This approach, particularly the questioning of assumptions, is increasingly necessary due to the dominance (and lack of competitors to) a mainstream neoliberal orthodoxy that constrains thought and comes with a number of received (and highly questionable) truths.

Anyhow, this post is really just a welcome; proper content should be on the way soon.