Nichola Pease, a top City executive, caused a stir last week when she said that state-enforced maternity leave “rights” for women – and for that matter, paternity leave – was a cost that had a bad consequence. If you tell a company that it must pay a woman her full salary for a year while she is not working and raising her child, say, then, other things being equal, fewer women will be employed in the first place, however hard one tries to enforce so-called equal opportunity hiring practices.
This is a simple fact. If you raise the cost to a company of employing a person or increase the risk that employing a woman will be more expensive than employing a man, say, then fewer women will be employed. It is a fact as undeniable as a the laws of gravity. Unfortunately, one of the driving characteristics of many politicians down the ages is a petulant hatred of such facts, and a desire that 2+2 could equal five rather than four. Consider this reaction to Ms Pease’s comments by a Labour MP. It is not so much an argument as a tantrum:
“I am absolutely horrified to hear such an old-fashioned view expressed by someone who should know better.”
In other words, a City executive has said something that this MP considers to be unsayable. There is no argument given, no attempt to explain how driving up costs will not have an adverse result. End of discussion.
What needs to be pointed out is that every time the government creates some new “right” to such things, such as paid long holidays, long periods of paid leave for child-rearing, or whatever, there is a cost of some kind, that is borne by someone, often those more vulnerable than the group intended for the original benefit. The honest answer is for such MPs to openly admit as much rather than to pretend otherwise. For example, it would be refreshing if defenders of minimum wage laws could state that they prefer a bit more unemployment to the sight of people working on very low wages. Of course the argument is still bad and involves coercively arranging affairs to benefit some groups at the expense of others, but it would at least be preferable to what we usually get.
Correct. It’s what I refer to as “one-sided-economics”. People focus on one side, e.g. NMW does push up hourly wages for a few marginal workers but makes five times as many unemployed.
The Daily Mail are world champions at this, on page one they bash “reckless bankers” and on page two they bash them for not lending 90% mortgages to FTBs. One page three they bash the banks for paying such miserly interest rates to pensioners and one page four they praise the government for keeping interest rates down, superficially to ‘help hard-pressed home-owners’ (while cheerfully ignoring the fact that all this does is push up house prices and not really benefit the real economy at all).
It’s the same if you suggest reducing taxes on productive activity and increasing them a bit on land ownership; they’ll just focus on a small number of ‘losers’ and ignore the fact that, as a whole, we’d be better off if we did this…
Another interesting factoid: hiring older executives is also risky, because the chances of serious illness, and thus absense from work, are higher than with twentysomethings. Experience counts for nothing; it’s all the bottom line.
I’m not complaining (unlike the feministicals and their camp-followers); I’m just pointing out a fact of life.
If the state wants to give women a paid year off from work, why not just have the state pay for the year’s salary? And benefits, etc.
They could do, joel, but last time I checked they didn’t have any money and were sticking their hands in my pocket to steal mine.
It is not a ‘tantrum.’
It is an Argument from Intimidation.
The Argument from Intimidation dominates today’s discussions in two forms. In public speeches and print, it flourishes in the form of long, involved, elaborate structures of unintelligible verbiage, which convey nothing clearly except a moral threat. (“Only the primitive-minded can fail to realize that clarity is oversimplification.”) But in private, day-by-day experience, it comes up wordlessly, between the lines, in the form of inarticulate sounds conveying unstated implications. It relies, not on what is said, but on how it is said—not on content, but on tone of voice.
The tone is usually one of scornful or belligerent incredulity. “Surely you are not an advocate of capitalism, are you?” And if this does not intimidate the prospective victim—who answers, properly: “I am,”—the ensuing dialogue goes something like this: “Oh, you couldn’t be! Not really!” “Really.” “But everybody knows that capitalism is outdated!” “I don’t.” “Oh, come now!” “Since I don’t know it, will you please tell me the reasons for thinking that capitalism is outdated?” “Oh, don’t be ridiculous!” “Will you tell me the reasons?” “Well, really, if you don’t know, I couldn’t possibly tell you!”
All this is accompanied by raised eyebrows, wide-eyed stares, shrugs, grunts, snickers and the entire arsenal of nonverbal signals communicating ominous innuendoes and emotional vibrations of a single kind: disapproval.
If those vibrations fail, if such debaters are challenged, one finds that they have no arguments, no evidence, no proof, no reasons, no ground to stand on—that their noisy aggressiveness serves to hide a vacuum—that the Argument from Intimidation is a confession of intellectual impotence. – Ayn Rand, VOS.
John W, good points all. But I used the word “tantrum” here because of the sheer lack of any argument here at all by this MP. It was like witnessing a five-year-old.
Mark Wadsworth: the lack of coherence to how the Daily Mail, or indeed other papers, have covered stuff like the credit crisis is a good point also. In one breath, they slag off banks for not passing on interest rate cuts; then slag them off for not paying savers a higher rate, and so on. And then they attack big bank profits, or condemn banks for not putting aside enough buffer capital for a rainy day. It is not just the Daily Mail, it is much of the MSM.
Oh and on your land tax point (sigh), the idea that only a small number of people lose if the allegedly “unimproved value” of land is taxed is incorrect. If one thing truly pisses me off about advocates of LVT, it is the comfortable illusion that one can raise X amounts of revenue by targeting a small minority of folk while enriching the broad majority. As if it were so easy. There is no pot of gold at the end of the tax rainbow.
” But I used the word “tantrum” here because of the sheer lack of any argument here at all by this MP. It was like witnessing a five-year-old.”
Indeed.
The increasing infantilism is one of the most striking and disturbing features of life in Britain today.
The many and obvious historical precedents for this type of behaviour does not bode well…
The scariest thing about Statism is “that which cannot be said”. Whenever attempts are made to show the negative side of the ledger, the ying for every Statist yang, debit for every credit, that person is condemned. And not because they are in fact right if time were taken to examine what they said, but simply that they are being contrarian and that they are in support for Badness (the opposite of patent State Goodness). To even THINK against the State is what is reprehensible and wrong. It is why the Soviets carted people off to asylums for even thinking communism was wrong. It is what made heretics out of rational thinkers who were then excommunicated.
This is what makes the modern era of Statism so scary to me (here in the US and what I discern is the state in the UK) is that we are in full swing into the ease with which skeptics and rational thinkers are tarred and feathered and set upon as some form of unstable. The most manifest of this is how a person of an Old Right persuasion is now cast as some sort of right wing, fringe radical even by the Republicans. Any challenge to the vast bulk of Statist idiocy with facts and a whole analysis of the costs that go with supposed benefits is patently wrong and dismissed procedurally. No argument need even be made.
It’s most frustrating, of course, when time proves such people having been right all along, but the Statist minded actually are so blind that they find a way to blame the very people who had shown them the truth. If you identified the “evil” and talked about it at some point in the past, and it came to be, YOU must have been the one who made it happen. You are the proverbial witch. And when dealing with minds steeped in fantasy, how do you argue with them?
JP, I knew you’d say that!
My opinion on subsidies e.g. for car manufacturing or windmills – there is a small group of winners, a large and amorphous group of losers, but overall we lose out. So by reverse logic, it’s best not to have the subsidies, as tough as that may be for those who lose out.
Maybe I’m wrong, maybe I am indeed labouring under the “comfortable illusion that one can [reduce subsidies by X] by targeting a small minority of folk while enriching the broad majority [who no longer have to pay the subsidies via a higher tax burden on their productive incomes]”, ergo the rest of the non-car, non-windmill economy (which is by definition more profitable, that’s why it doesn’t need subsidies) and that hence the benefit to “the broad majority” far outweighs the static short term loss to car or windmill industry.
By analogy, my opinion on shifting from taxing production to taxing land values is that there would be a small group of losers (people with low personal earning capacity and high land wealth) and a large but amorphous group of winners (people with high personal earning capacity but little land wealth), but overall the economy would run much better, e.g. Hong Kong, Taiwan etc, because low income taxes have a mild beneficial exponential effect on growth rates, unlike taxes on land value which are like rent.
Having to pay rent makes you work harder and/or invest more wisely in non-land assets; and having less tax on income encourages you to work harder and/or boosts returns to your non-land investments (cash or shares).
What’s not to like?
JP, I knew you’d say that!
My opinion on subsidies e.g. for car manufacturing or windmills – there is a small group of winners, a large and amorphous group of losers, but overall we lose out. So by reverse logic, it’s best not to have the subsidies, as tough as that may be for those who lose out.
Maybe I’m wrong, maybe I am indeed labouring under the “comfortable illusion that one can [reduce subsidies by X] by targeting a small minority of folk while enriching the broad majority [who no longer have to pay the subsidies via a higher tax burden on their productive incomes]”, ergo the rest of the non-car, non-windmill economy (which is by definition more profitable, that’s why it doesn’t need subsidies) and that hence the benefit to “the broad majority” far outweighs the static short term loss to car or windmill industry.
By analogy, my opinion on shifting from taxing production to taxing land values is that there would be a small group of losers (people with low personal earning capacity and high land wealth) and a large but amorphous group of winners (people with high personal earning capacity but little land wealth), but overall the economy would run much better, e.g. Hong Kong, Taiwan etc, because low income taxes have a mild beneficial exponential effect on growth rates, unlike taxes on land value which are like rent.
Having to pay rent makes you work harder and/or invest more wisely in non-land assets; and having less tax on income encourages you to work harder and/or boosts returns to your non-land investments (cash or shares).
What’s not to like?
“What’s not to like?”
More or less everything. If you are going to tax land because it is an asset, then why not tax stocks, bonds, and that old painting of your Great Aunt Matilda? They are all assets too. We can’t have the wealthy selling off their land and buying up classical Greek sculptures, can we?
There is much to be said for voting being restricted to taxpayers. Let’s give everyone the opportunity to pay taxes, ideally by having to go down to the Government Office once a quarter, stand in line, and pay them in cash. And let’s require the politicians be there to countersign acceptance of the tax money.
Best of all, let’s minimize the amount of taxes that need to be collected. If the Political Class are broke, maybe they will leave us alone.
JP, why did you open that can of worms again? You knew he was baiting you.
Here’s an even funnier story.
Although it’s not quite clear to me why it says “women”.
i think the reason why anti-discrimination laws are ineffective in these situations is because the corporation will evolve a set of rules that discriminate against women likely to have children by using a proxy. no-one has to even realize what they are doing. they just have to be trying out different rules and observing the results. eventually they will stumble across a rule that indirectly discriminates and they will keep that rule because it increases profits.
That is quite a gem, Pa. Personally I think that men should have the right to bear children just like women do, and to breastfeed them too. And then everyone should be entitled to a maternity leave, whether they had a child or not…My brain hurts now.
Mark, as I have pointed out before, and as you know perfectly well, LVT has not dampened property speculation in places such as Hong Kong. Prices there are often highly volatile, LVT or no.
As I have remarked before also, the supply of land may be fixed but the supply of sellable land is not. This rather basic point seems not to register with the LVT advocates.
Anyway, I have exploded the arguments for your idea enough. Focus on reducing taxes across the board, old chap.
And this argument cannot be allowed to go without a rebuttal:
Indeed. But taxing something involves taking something, by force, of course. A subsidy is about giving someone something that has been taken by force. A basic difference. As we have learned from the public choice school of economics, politicians, competing for votes, will try to promise different groups various favours and also promise that payments for these things will be borne by a minority, usually the rich. Trouble is, as Mr Obama is finding and as Mr Cameron will discover, there are not enough rich to go round.
@ Alice “If you are going to tax land because it is an asset, then why not tax stocks, bonds, and that old painting of your Great Aunt Matilda? They are all assets too.”
I never said we should tax land because it is an ‘asset’, and if you read my comments above, you would note that I said taxes on income/production/non-land investments should be reduced.
The argument for taxing land values, which was first advanced by Adam Smith is that land, in particular urban land, only has value because it is a state-protected monopoly and 99.9% of its value derives from “the good governance of the state”, ergo the state is entitled to something in exchange.
In the very same chapter he explained that taxing ‘stocks’ (which is his old fashioned word for other assets, like stocks, bonds, paintings of GAM) would depress economic activity and be an administrative nightmare – remembering always that he wrote that book a couple of decades before income tax in the modern sense was invented. And he was correct on that score as well.
@ JP, I take your point on HK land prices (notwithstanding it does have higher land taxes and lower income/corporation taxes – maybe you’d like to suggest to them that they should cut their land taxes and double their income/corporation tax?) but this is a new one on me:“the supply of land may be fixed but the supply of sellable land is not.”
If you could perhaps explain what you mean then I’ll go and have a think about it.
“Focus on reducing taxes across the board, old chap.”
Yes I am very keen to cut state spending and hence taxes overall, which is half the reason I ended up in UKIP (and at the more rabid end when it comes to reducing size of state), but there is still a sliding scale of really-bad-taxes to actually-quite-good-taxes.
Finally: “there are not enough rich to go round”
What has this got to do with rich-versus-poor? It has got to do with reducing taxes income and increasing taxes on land and not increasing overall taxes. I would be delighted if this went hand in hand with overall reduction in tax and spend. That is a completely different topic and as we are agreed on this there isn’t much point discussing it.
Conditions of work (such as leave to have a baby) are just as much a cost as wages are. Therefore if conditions of work are better (for example people are allowed time off to have a baby) then wages must be lower than they otherwise would be – or unemployment must be higher than it otherwise would be.
Basic logic (on which all true economics is based), but something that government interventionists must ignore – or they destroy all their own “arguments”.
By the way Henry George would have agreed with every word I have just typed.
Mark, of course we broadly share the same small government philosophy, although I suspect I am a bit more radical than you are. But the basic problem I have with your landtax idea is the notion that only a small number of folk get to pay, with the broad, smiling majority getting a cut. That is not really credible. Higher taxes ultimately feed through into higher costs, such as rents. Which get paid by everyone, in some form, through higher prices in the shops, etc.
It is a bit like the argument made by the left that we should tax banks’ evil profits instead of the poor ‘umble worker. No one stops to think that higher taxes on banks will eventually feed through into crappier interest rates for the saver, higher borrowing costs, worse service, etc. The worker gets hit in the end.
@ JP “the basic problem I have with your land tax idea is the notion that only a small number of folk get to pay, with the broad, smiling majority getting a cut.”
Nobody seriously suggested that, and certainly not me. In my perfect world we’d have one flat tax that EVERYBODY pays on ALL land values (to replace Council Tax, Business Rates, Stamp Duty Land Tax, Inheritance, TV licence fee, Capital Gains Tax and Insurance Premium Tax etc in their entirety) and one flat tax paid by EVERYBODY on ALL incomes/profits (to replace income tax, National Insurance, VAT and corporation tax – in their entirety).
Assuming we kept receipts constant to get the ball rolling, the former would be about 1% of property values (which doesn’t seem so bad to me) and the latter would be somewhere in the region of fifty per cent of incomes (at which people would be rightfully horrified).
Those are Milton Friedman’s first and second least bad taxes. As and when taxes are reduced, people can have a good old punch up over which flat tax rate they want reduced. Tenants and people with high incomes relative to land wealth will want income tax to be reduced; landlords and pensioners will want land value tax to be reduced. Quite how that debate plays out is a different topic.
Not sure all would pay LVT, at least not directly, although the knock-on effects of the tax would drive up some prices, so I guess a broader range of folk would pay than initially.
I certainly approve of much of your tax hit-list. CGT is a bad tax for a whole number of reasons, for starters. And don’t get me going on national insurance, which is a tax, not insurance, of course.
But please don’t keep invoking Friedman. He came up with the dreadful idea of withholding taxes when he was working in the US government during WW2, remember.
Just to be clear, a company doesn’t have to pay full pay for a whole year, just part of and even then is refunded the statutory part.