Equality of misery

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French economist Thomas Piketty, author of a celebrated book “Capital in the 21st Century”, has refused an honour from the French State.   He argues that the State should not be honouring individual citizens (Why not? you ask.  Dunno.  Better ask Mr. Piketty).  But the move is widely seen as a snub to President Hollande, who seems to have lost the support not only of the French Right, but of the French Left as well.

Piketty has argued that the French Tax System is far too complex and requires radical simplification.  It has too many allowances and loopholes.  So far so good.  He’s probably right, and the same comments certainly apply to the UK as well.  But where we (and most rational economists) are calling for simpler and flatter taxes, Mr. Piketty favours a “more progressive” tax system.

That is, a system which imposes punitive and confiscatory taxes on the rich.  And because such attempts at revenue-raising always fail, the definition of “the rich” is stretched and stretched until it includes middle income earners — as has happened in the UK with the 40% tax rate.  We have had the perfect example, in France, of the failure of punitive taxes.  The BBC said this morning (Dec 2nd) that Piketty was “probably in favour” of Hollande’s flagship 75% tax rate on the rich.  But that tax proved such a disaster, it had to be abandoned.  Its main effect was to drive high-earning French people to London, where mayor Boris Johnson was only too happy to roll out the red carpet for them.

The effect of “progressive” taxes — higher taxes on the rich — is that the better-off move elsewhere, and there is a negative impact on prosperity, growth, investment and jobs.  The effect you don’t get is higher tax revenues.  Piketty’s prescription is totally self-defeating, and if he doesn’t know that, he shouldn’t call himself an economist.

To be fair, he calls for a global tax on wealth, and that at least would prevent the migration of wealth (though it would still be a disincentive to enterprise).  But of course a global tax on wealth is about as likely as a global deal on CO2 emissions.  Don’t hold your breath.

More generally, I think we worry too much about wealth inequality.  Of course it is right that we worry about poverty, and that we do whatever we can to alleviate it.  But concern about wealth inequality implies that we’re as worried about people being rich as we are about people being poor.  That is a basic failure to understand the motivation behind investment and entrepreneurship.  And redistribution, which is the solution of socialists — including Mr. Piketty — has been tried and has failed over and over again.  It aims for equality.  All it ever achieves is equality of misery.

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18 Responses to Equality of misery

  1. Brin Jenkins says:

    It will always be a thorny question, who is rich and who are the poor? I see National Income more as a wealth cake created by all who have worked, the problem is always one of entitlement over greed. Those who shout the loudest, versus those who just toil.

    The last in the cake queue (or should it be bread?) are always yesterdays toilers who are now retired with little voice or power. Our modern big society has become akin to badly behave children grabbing the largest slice, and at the head of this group are our far from illustrious leaders who need horse whipping. Our wealth should not be lavished on a multitude of immigrants who contribute little or nothing, and their forbears not at all. But then as a Nationalist I would say that wouldn’t I.

    • Ex-expat Colin says:

      It was said (logically believed) that the majority/masses possess the money bulk…think the troughers are trying to reverse that. Perhaps its a success?

    • The wealth may nhave been created by all who work, but that doesn’t make them all of equal value. There’s supply and demand in the labour market, and some command higher salaries than others. And wealth is created not only by labour, but also by capital — and there’s a market for that, too!

      • Brin Jenkins says:

        I believe this was true when money was backed by gold, but now its printed and backed by nothing other than confidence. Clever beggars who manipulate and produce money by counterfeit used to be executed. Now it seems Governments and Bankers are rewarded greatly for their valuable contributions!

  2. Ex-expat Colin says:

    O/T (H/T WUWT – Willis Eschenbach)
    …..for someone to consider themselves a “climate expert” they would have to be an expert in all of the following fields from A to Z and more—atmospheric physics; bacteriology; biochemistry; biogeochemistry; biostatistics; botany; chaos theory; climatology; computer science; constructal science; crop science; cryology; dendrochronology; electrometeorology; environmental bacteriology; environmental chemistry; evolutionary biology; geography; geology; geophysics; glaciology and hydrometeorology; helioseismology; high-energy physics; history of the climate; hydroclimatology; limnology; marine biology; marine chemistry; mathematical modelling; meteorology; microbiology; oceanography; paleoclimatology; parasitology; physical chemistry; plant biology; plate tectonics; population dynamics; soil science; solar astronomy; solar physics; statistics; stratospheric and tropospheric chemistry; volcanology; and zoology. (With thanks to the folks at the Global Warming Policy Foundation for portions of that list.)

    That lets me out ! Just imagine the number of game players (CO2 sniffers) in that stuff though. And of course the likes of the BBC had to get the Universities inclusive within their political analyses (whatever). Add that to the “round the table” shrieking matches they produce.

  3. Jane Davies says:

    I’m taking it you meant Jan 2nd Roger, not Dec 2nd in your comment. I’m wondering how long it will take me to stop writing 2014!

  4. tapestry says:

    The purpose of taxation isn’t to raise money for governments to spend. Its purpose is the destruction of wealth. This is to ensure no competitors emerge to challenge those who currently control the world. The ultra rich pay no tax. Tax is for those who are dumb enough to believe all the crap about paying their way, fairness etc. Government is not the servant not of the people, but of the ultra rich. Most government is interference. 90% would not be missed for a second.

    • Jane Davies says:

      “Most government is interference. 90% would not be missed for a second.” So true, tapestry. When ‘they’ have time to spare from pushing their snouts in the trough provided by taxpayers they have to re-enforce their control of the masses by thinking up new idiotic ideas like reducing the power of the humble kettle and vacuum cleaner and the latest little gem from Brussels is that coffee machines and TV’s and computers must switch off automatically to save power. What next a dictat as to how much loo tissue one is allowed to use at one sitting?

      • Brin Jenkins says:

        In the mid 1950’s a young RAF Corporal demonstrated to my group, in a squatting position how to avoid wasting paper Jane, I don’t think it ever made youtube though.

      • Ex-expat Colin says:

        Seen similar in the M.East in a big Mosque (Nizwa, Oman). Bog system was blocked due to much use of small stones (scratchy clean?), cockroaches the size of a sparrow!

  5. Brin Jenkins says:

    I agree it’s current purpose is wealth destruction.

    But then, I’m a dyed in the wool Nationalist who actually likes my own race above all others.

  6. Peter G Little says:

    Mr Helmer, Your piece on Mr Pickety seems to be just an opportune grabbing, partial distortion and extension of a story to suit your own purposes (something which you are prone to do). (To keep balance, an occasional tendency also of my local MP (a prominent Conservative) – and I’ve had a go at him about it as well….)
    Mr Pickety refused an honour. ‘Don’t know why’ you say. Well, Mr Pickety said: “I refuse this nomination because I do not think it is the government’s role to decide who is honourable,” according to AFP. Somewhat more neutral than your interpretation.
    So what is Mr Pickety’s basic proposition? According to Wikipedia, in his book, it is that ‘the rate of capital return in developed countries is persistently greater than the rate of economic growth, and that this will cause wealth inequality to increase in the future. To address this problem, he proposes redistribution through a progressive global tax on wealth’.
    Intuitively and from observation, his analysis of cause seems to be reasonably correct (witness the growing disparity of wealth distribution in the UK (& the USA & elsewhere); as additionally evidenced by the increasing number of poor alongside gross greed and distortion by the already wealthy (eg merchant bankers?). Since you imply criticism of this analysis Mr Helmer, does that mean you are happy to accept inequality, as long as there’s a ‘free market’? If so, how does that help the poor farmers / producers in “developing” countries. I see there is nothing in the UKIP manifesto that acknowledges the issue of developing countries. (acknowledging that the EU / USA protective systems haven’t done much to help either).
    Assuming that you (and UKIP?) accept that there’s a disparity of potential to accumulate wealth, both between population segments in the UK, and between rich and poor nations (the latter with their hands tied), then I assume you’d agree that taxation (amongst other) policies should seek to address it. What is your policy? Is it (as seems to be the case) that winner takes all?

  7. Julian says:

    Never mind higher taxes on the rich, it would be nice if they just paid the same as everyone else. Warren Buffet famously said that he pays a lower tax rate than his secretary. This is the inequality that needs addressing.

  8. stallardmike says:

    Down the bottom end, I am told by a Polish friend, the basic wage is being fast eroded by deductions. People are expected to work a long week on £3.00 -£4.00 an hour. Any Union representation is, of course, forbidden. you just get the sack and are not asked back by your Agency.
    As to the very rich, I was reminded by a farmer friend of mine that nobody can eat two dinners.

  9. Peter Little says:

    Mr Helmer, Your piece on Mr Pickety seems to be just an opportune grabbing, partial distortion and extension of a story to suit your own purposes (something which you are prone to do). (To keep balance, an occasional tendency also of my local MP (a prominent Conservative) – and I’ve had a go at him about it as well….)
    Mr Pickety refused an honour. ‘Don’t know why’ you say. Well, Mr Pickety said: “I refuse this nomination because I do not think it is the government’s role to decide who is honourable,” according to AFP. Somewhat more neutral than your interpretation.
    So what is Mr Pickety’s basic proposition? According to Wikipedia, in his book, it is that ‘the rate of capital return in developed countries is persistently greater than the rate of economic growth, and that this will cause wealth inequality to increase in the future. To address this problem, he proposes redistribution through a progressive global tax on wealth’.
    Intuitively and from observation, his analysis of cause seems to be reasonably correct (witness the growing disparity of wealth distribution in the UK (& the USA & elsewhere); as additionally evidenced by the increasing number of poor alongside gross greed and distortion by the already wealthy (eg merchant bankers?). Since you imply criticism of this analysis Mr Helmer, does that mean you are happy to accept inequality, as long as there’s a ‘free market’? If so, how does that help the poor farmers / producers in “developing” countries (acknowledging that the EU / USA protective systems haven’t done much to help either)?

  10. Brin Jenkins says:

    Karl Marx would also agree perhaps.

    Is redistribution of wealth is to be promoted by wealth taxes? I thought taxation was to enable only the services we desire, to be fulfilled. Charity is when I choose to give or help. When Governments do it I see it as an extortion no less. I do have a copy of Marx for reference handy.

  11. dave roderick says:

    off topic what has happened to ukip north cornwall blog

  12. Right wingery says:

    Do you support the Turnover Tax, then?

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