Tory Values

Tory Values — from editorial by Fraser Nelson — Spectator 14Sep2018

Loyalty, it used to be said, was the Tories’ secret weapon.
No longer.

Self-discipline has been discarded —-

Along with commitments
• To lowering taxes,
• Being strong on defence and
• Keeping the streets safe

Our UK Social Contract & Taxes

Our UK Social Contract & Taxes

From an  article by — Michael Fry — Sept 2018

Governments spend money, and raise the money through taxes!.

Adam Smith of Kirkcaldy set out 250 years ago what he believed theGovernments’  indispensable tasks should be.

• One was the administration of justice, without which a society could not function.
• Second  was the defence of that society against outside attack.
• Third was a function Smith called police, though he did not mean police in the modern sense.

He was instead concerned with what we would call infrastructure: roads and bridges figured among specifics he mentioned.

When Glasgow got a Police Act passed for itself at Westminster in 1800, it covered such matters as street lighting and clearing the pavements of snow.   Overall, what the term then signified was anything it would not pay an individual to provide, because he could not stop others from making use of it.

The modern term for these things is Public Goods.

They are often tricky to define, and we continue to argue about what is properly a public good even today.

Privatisation pruned the list of what the UK once defined as such.   British Telecom, for example, has flourished ever since, mainly because it needs to compete against commercial rivals that have entered its previously closed market.   We can conclude telephones are not a public good. On the other hand, private railways have proved to be pretty much of a disaster – otherwise, why should a Tory government have just renationalised the East Coast line? Maybe we should conclude railways are a public good.

At the margins, it is better not to be too dogmatic about what properly belongs in the public and in the private sphere.   It is a matter we should judge on experience, not on political ideology, whether socialist or capitalist.   Part of that experience should be financial experience.   If industries are run in such a way as to match their customers’ wishes and expectations, then they will pay for themselves.

It’s a practical matter, in other words, where moral posturing is unlikely to help.   That’s why I always suspect advice in this field from clergymen, among whom the Archbishop of Canterbury is more misguided than most.   He wants higher taxes not so we can apply the money to making the country function better, but because the UK has an “unjust economy”.   How very different from the rest of the world! Different especially from socialist countries such as Venezuela and Cuba and, even more so, from former socialist countries such as Russia and China.

Last week, at the end of my paean of praise to Scotland’s Nobel laureate in economics, Sir James Mirrlees, I wrote that he was a man whose ideas I would want to return to again and again. I had not expected to return to him quite so quickly, but it is worth recalling that the actual citation for his prize awarded it for his work on optimal income taxes.

Optimal taxation is the theory of designing and implementing taxes that reduce inefficiency or distortion in the market, so affecting how much revenue the government can collect.

For example, if we tax people at a level they consider excessive, “till the pips squeak”, they may start evading their taxes or else just stop working because it is no longer worthwhile. Mirrlees thought about how to avoid such undesirable results.

Though Nicola Sturgeon (First Minister of Scotland), in her tribute to the Nobel prizewinner, praised him for his sound advice, she has been less eager to take it.   As her government exercises its new power to tax, it hits that part of the workforce earning over £41,000 a year – including, therefore, bloodsucking plutocrats such as train-drivers, computer programmers and waste disposal managers who on average bring home about that much.

With this change our system becomes more progressive than the English one, taxing the rich harder than the poor.

But Mirrlees argued that flatter taxes, with most people paying at the same rate, brought in higher revenue, because they would be happier to hand over their dough.

Flat taxes are what governments need to go for if they want more money to spend.

It is a lesson our cash-strapped Scottish government has yet to learn as it pursues its ill-defined notions of equality.