On Tax, But Perhaps Not As Dull As It Seems

As I suggested here the other day, some time the bill for all this, paid by the State and running into trillions, will land. Furloughing, support for small businesses, the inevitable bail-out of the banks… the public finances will have to be reimbursed.
There are various ways this can be done but they all require some sort of unprecedented increase in taxation. The options:
1) My earlier suggestion, a straight wealth tax. Anyone with money in the bank above, say, £25,000 to prevent taxing the less well off, has to hand over ten per cent. This includes pensioners like me whose cash balances have to help fund their retirement. Advantages: raises a lot of cash. Disadvantages: politically unpopular with core Tory voters, and the rich stash much of their wealth overseas.
2) A land value tax, or LVT. This is an idea that was being bounced around by economists and generally attributed to one, Henry George, well before the virus. The value of land, not buildings or other property, is assessed and a percentage has to be paid, as a one-off. Advantages: not hard to levy. Progressive; the value of land tends to rise as other development takes place nearby, funded by other people. It also hits the rich, such as owners of large estates, who have the choice of funding it out of their own resources or selling off some of that land. Disadvantages: few.
3) A Tobin tax. Named after the economist James Tobin, this envisaged a levy of, say, one per cent on all speculative financial transactions. Tobin thought to limit it to currency dealings but since his time a huge speculative trade in derivatives and other financial instruments has been created. It could even be extended to share dealing on the London Stock Exchange. Advantages: raises huge amounts of capital while at such a low level unlikely to affect the volume of such trades. Politically popular. Disadvantages: hard to police, given how much of such trade is global. Could arguably, though not in my view, threaten the City’s leading position among world capital markets.
4) A total crackdown on tax avoidance. The non-payment of tax at the appropriate rate, at 40 per cent for the wealthy, becomes a strict liability offence, no matter what legal or financial mechanisms are put in place to offshore earnings through tax havens. Strict liability offences include speeding, for example; travel in a vehicle above 80 mph and there are almost no excuses. Advantages: pretty obvious really, hitting the people who can afford to pay and levying off them what they should pay. Disadvantages: given that almost all the printed media companies, including the saintly Guardian, or their proprietors employ tax avoidance mechanisms, this will not be terribly well written up in the editorial columns. The rich will flee abroad. Except that they had better choose somewhere with no extradition treaty with the UK, which limits the choice of attractive boltholes. Plus, their UK assets can be seized and sold.
5) The nuclear option. 4), but retrospective. Earlier tax avoidance to be repaid, on pain of criminal prosecution and a jail sentence. Over a set period, going five or even ten years back.
Advantages: some of the country’s worst slime bags get to pay their fair share at last. Disadvantages: see the above. They flee abroad. Would we miss them?
All the above is constitutionally and legally feasible. Alternatively, we could attempt to repair the public finances by freezing nurses’ pay. Yup, that could work.

On How We Get Out Of This

So where are we now? It is hard to assess where we will end up, and I am no cleverer than anyone else in this debate, but two forecasts.
One, there will have to be a huge amount of debt forgiveness by the banks. To be specific, a 25 year old who has lost his or her job and owes, say, £10,000 on their credit card, a debt they have been encouraged to run up by said banks, will not in the immediate future repay it.
There will be few jobs for that person to return to. The banks will never see the money again. They might as well write it off.
The consequence is a hit on those banks running into, in global terms, trillions. 2008 all over again, and central banks’ rescue of said private banks, at a massive cost to the state.
This can be funded by printing money. Issue and purchase of government bonds, eg. This generally fuels inflation, cf Zimbabwe, Venezuela. Except that at a time when the oil price, a big element in any measure of inflation, is negligible and retailers are being forced to cut prices, this is unlikely.
The result, as I understand it and my involvement in economics was tangential, is called stagflation.
The second forecast, and this is where it gets controversial, is that all this can be put right by a one off wealth tax. This is an idea gaining traction – there was a good piece by Edward Conway in The Times the other week about this, though he focussed in the difficulties and rowed back from advocating this.
People like me, retired, sitting in valuable properties and with money in the bank, will have to turn over, say, ten per cent of their net worth to the state. A one-off payment. To even out that inter generational unfairness.
This would pay, on Conway’s arithmetic, for all the above, the bank rescues, the support of employees on furlough, the other measures needed. The paradox is that Corbyn could probably have done this. For Johnson, it would alienate his core supporters.
I think, forecast number three, OK I overrun, that Johnson will not be in place within weeks. His behaviour, that bizarre “Now, now, now we need a virus” the other day, suggests he is unravelling. And I suspect there are other issues, for someone whose personal life has always been chaotic. His successor – Rishi Sunak? – could hammer through such a measure.
It you are prosperous and middle class, or elderly
with a good pension, you are going to pay for this.
There is no obvious other option. Think of it as an investment in our children’s futures.
If any economist wants to tell me why any of the above is untrue or wrong, feel free.

What I Learnt From Robert Heinlein

This arrived yesterday. One of my favourite books from my adolescence, which as some of you know was a difficult time.

This is the version with the author’s preferred ending, when the central character dies. (Spoiler alert.) It makes far more sense. Her younger brother’s trajectory, from brilliant but sociopathic 11 year old to a human, requires the death of his sister. Heinlein’s publisher  would not allow her death in an atomic explosion, protecting another sentient creature.

This is how he rewrote it. Heinlein is one of the most misunderstood writers of the 20th century. I learn a lot from him. He started as a pulp fiction writer in the 1940s – Beyond This Horizon is pretty staple, The Day After Tomorrow borderline racist.

By the 50s he was writing what we would now call Young Adult Fiction. Heinlein is not a great writer but I would rank him above JK Rowling. Double Star, Red Planet, Starman Jones, Time For The Stars – these are all books I would recommend for intelligent, questioning tenagers.

By Podkayne, he was trying to move beyond into more adult areas, but the publisher didn’t much like it.

He is best known for Starship Troopers, which I read when I was 12. And again and again. He posited a society in which only veterans could vote, and in which public flogging and execution are the norm.

There was the film, by Paul Verhoeven, that turned it around the other way, making it satire. Great film, but not what Heinlein meant.

There is no evidence that Heinlein thought this was an ideal society. He was a socialist in his youth in the 1930s, not an easy thing to be then. He has depicted societies based on anarchism – The Moon Is A Harsh Mistress, possibly his best. A hippie utopia, Stranger In A Strange Land, a society where any physical violence is punishable by mandatory therapy, even a theocracy. No reason to believe he thought any one a good idea.

His reputation has been equally sullied by by the books published in his senescence, when he was probably suffering from some sort of dementia. Though I would put in a word for Job: A Comedy Of Justice, a satire on religion involving parallel worlds.

And The Door Into Summer is possibly the most uplifting SF novel ever written.

On An Epiphany, And Anger Management

I had something of an epiphany the other day. Defined as “a moment of sudden and great revelation or realisation”.
We had a street party on Friday. Many of our neighbours are quite elderly, quite vulnerable. Some are showing signs of having difficulty coping psychologically with the lockdown. We do what we can to support each other. This is what, as human beings, we do.
There is a new book out by a Dutch academic, Rutger Bregman. Human Kind suggests we are rather better, morally, than we think we are. Expect to read a great deal about it – some think it will be this year’s Sapiens, a breakout book of philosophy.
I looked at my neighbours at that street party and I realised – these are the people our Government would be prepared to see die in their hundreds of thousands as “no big deal”.
That was the policy. I suspect it still is. We know Johnson is a moral imbecile – just look at his private life. Cummings has views that verge on pure evil. Eugenics, the weak going to the wall. It is all in hios writing.
And these people are in charge of public policy in the worst crisis in several generations.
Perhaps, next time you get the chance to vote, you might reflect on this.
Meanwhile, I will continue to reflect the anger, the rage, I feel. Sorry.

On Self-Isolation, And The Stranglers

Every day’s just like the last/On the ship, tied to the mast…” Golden Brown, The Stranglers, English rock band.

Dave Greenfield, keyboard player with The Stranglers, died the other day. He was 71, had underlying medical problems and succumbed to Covid-19. Never my favourite band; I saw them live once and they seemed to attract a lot of violent idiots.

The above song is generally reckoned to be a paean to brown heroin. A drug which, and I do not speak from experience, changes the perception of time, allowing it to seem to pass very slowly but still disappear unmarked.

You probably see where this is going. I am not the first to point out that the actual days, under lockdown, seem very slow but the weeks, months seem to concertina. We are six weeks away from when time stopped, but it seems like much less.

We try to mark each day with an event to distinguish it from others – a visit to this shop, a walk down by the river. The high point of one day might be a conversation with a complete stranger, from six feet of distance.

I am using social media to try to keep up a point of contact with someone, anyone, who is not immediate family. This means I am in touch more with people I do not know – that writer in Belgium, that former contact from my days in the City, someone I was at school with half a century ago – than with people I used to interreact with on a daily basis.

I put out music or random tweets, which are picked up and commented on by those same near strangers. This is the paradox of lockdown, touching from a distance. We are social animals, and we need that contact, however random. That conversation with that stranger, six feet apart…

When This Is Over, and this will not be for a long time, will we be different? Yes and no. No, because we will doubtless revert to being the greedy and selfish people we were. Yes, because we will appreciate other people more. Not just the healthcare workers we will hopefully never come into contact with, but the people who have made a difference. Our unfailingly cheerfully postwoman, the lady who has been delivering plants and compost to us and our elderly neighbours, for some of whom their gardens are a lifeline, about the only thing keeping them going.

We will understand the importance of such social interreactions, and we will appreciate them more when they accelerate and we approach more normal times. Some of us are learning how to be human.

But at what a cost. Random thoughts in dark times.

On Covid-19, And Two Discrepancies

I am not a scientist. But I have a good understanding of science, and of statistics. There are two things about this virus I fail to understand. If anyone with a better knowledge, any doctor or a virologist, can put me straight and explain my lack of understanding, please feel free.

This is also not an attempt to spead stupid Internet conspiracy theories. All of this comes from my own understanding, not from someone wearing a tinfoil hat in Peoria. (No disrespect to the inhabitants of same.)

One, this virus kills twice as many men as women. Almost precisely, based on the death rates as far as I can see them and irrespective of age.

We are told this has to do with:

A: Women having two XX chronosomes are more robust, on an immunological level, than men with XY chronosomes. More options for protection.

B: Men’s lifestyle choices, smoking, drink…

All this plays well with the prevailing narrative, women the stronger sex,  men are stupid. Except it makes no sense because female survival rates from other infections, or debilitating conditions like leukaemia after chemotherapy, are not significantly better than men’s. If the above were true, they would be. Like 67/33 per cent.

I am aware of no other pathogen in history that affects the sexes so disproportionately. And I have looked.

Two, it seems the quantum of viral material that sufferers come into contact with affects their chances of survival. Again this seems unprecedented; you get a virus, like a cold, you get it. Doesn’t matter how much viral material there is involved.

This is why front line medical workers are being affected so badly. It is not about re-infection, though this is another uncertain area. It is the amount of virus you are exposed to from the off that affects your chances of survival.

Again, I know of no pathogen for which this holds true.

Correct me of I am wrong. The implications are, to say the least, disturbing.

On Johnson, And The Virus

We knew he was lazy. We knew he was dishonest. Many of us regard Johnson as the worst Prime Minister we have ever had. Yet The Sunday Times’ revelations today, that he failed to attend crucial meetiungs and seemed more concerned about his leisure time than the worst crisis facing the country he thought he was privileged by birth to rule, are still shocking.

Put that aside. The Government he leads has, as I see it, three main problems.

One: Having lied to us for three to four years and having said experts have nothing to contribute to any debate, Johnson and the selection of non-entities he has appointed for their loyalty to the Brexit cause rather than any innate ability are now saying, we are only following the advice of the experts. Don’t blame us. There is inevitably a question over the credibility of the advice we are being given. By anyone.

Two. It is becoming clear that we are not all in it together. The poor, the marginalised, the young, the low paid workers, are all suffering the worst effects of the crisis. As the well-off are seen to be driving off in their SUVs to their second homes, as Government ministers flout the basic rules they insist we ordinary people obey, there is going to be a mounting problem with social cohesion and obedience to those rules. It is pretty clear, from the briefings given the press on the exit from lockdown, that someone at the heart of government has realised this. This cannot go on much longer.

Three. There is the difficulty of handling any good news, on the spread of infection, vaccines, whatever. The balance is between spreading public despondency and losing that support for lockdown and the necessary measures in place and telling people, we’ve solved it. Remember that promise that it will all be over in 12 weeks? If people perceive the crisis is coming to an end, they will start to socialise again and the infection rate will pick up.

In all this, it would be a great help if we had a Government we could all believe in, respect and get behind. Instead we have one led by Boris Johnson.

On The Twitter Mob

Well this has been an instructive few hours on Twitter. Most of you probably know I use Twitter to keep in touch with what is happening in the world and express my own views and/or support for others.

Yesterday I Tweeted a mild message of support for a moderate Labour MP I admire in response to a Tweet she had put out, while also suggesting I spoke for “almost all” of her followers.

The hate mail arrived almost immediately and has continued since. 24 hours later. These Tweets are apparently interlinked, with one Tweet being retweeted from one account to another and back again.

Apparently I do not speak for “almost all”. I made that up. My other failings are that I am unlikely to be affected by austerity. (True.) Which by implication I support. (Untrue.) I am a financial journalist. (True.) I am by implication a supporter of capitalism at its worse. (Untrue.)

And so on, with increasing hatred and rancour. I thought at first I had misspoken and apologised for any accidental offence caused. To such people, in full flood, apologies for accidental offence are irrelevant.

It is quite disturbing. These people do not know where I live and have little idea who I am. Still, you worry about stirring up such feelings.

The stuff is still coming in, even if I have indicated I will not be responding. An investigation of the accounts involved suggests the people involved are at the Corbyn end of the political spectrum, to put it as tactfully as I can.

My own experience is quite mild – as one friend points out, no mention of the C word. God alone knows what that poor MP, and others, have to go through each day, though.

Being observations by a sixty-something financial journalist on business, morality, the morality of business, and things that make me really angry, This blog does not represent the views of my former employer, The Times. Martin Waller.