Free markets are better for fairness and equality than the state

Yet again we have evidence of how systems dominated by non-free, constrained or licenced systems (or else directly controlled by the state) are less fair and equal than free systems:



Business - that's the free market - is by far the best sector for social mobility. Rather than as with the law (what a surprise) where the man at the top being ten times more likely to be privately-educated, he's only four times more likely in the private sector.

This is because, unlike state-controlled systems like law, medicine, the army and the civil service, the private sector doesn't have the luxury of relying on Daddy and thereby ignoring 90% of the population. If you're good, your chances of getting to the top in private business are far higher. As a result private business is more innovative, more diverse and more creative than the public sector. This is because without that innovation and creativity businesses fail. And without diversity you miss out loads of people who'll bring to the skills, talents and originality you need to succeed.

Every time we look at the world, we see that free systems - markets, trade, speech, assembly, choice - deliver a more equal society. A society that can't be gamed so much by the wealthy, well-connected and fortunately-born. As I've observed before, it beats me why the left has such a down on freedom when it delivers the goods on fairness and equality better than their preferred state-directed utopia.

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Extortion, theft and fairness - the idea of taxation

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"Abracadabra, thus we learn the more you create, the less you earn. The less you earn, the more you're given,

the less you lead, the more you're driven,

the more destroyed, the more they feed,

the more you pay, the more they need,

the more you earn, the less you keep,

And now I lay me down to sleep.

I pray the Lord my soul to take,

if the tax-collector hasn't got it before I wake."

There is no moral basis for taxation. It is, as the dictionary says:

...that part of the revenues of a state which is obtained by the compulsory dues and charges upon its subjects

This is an imposition that many argue is straightforwardly theft. Here is Rothbard:

For there is one crucially important power inherent in the nature of the State apparatus. All other persons and groups in society (except for acknowledged and sporadic criminals such as thieves and bank robbers) obtain their income voluntarily: either by selling goods and services to the consuming public, or by voluntary gift (e.g., membership in a club or association, bequest, or inheritance). Only the State obtains its revenue by coercion, by threatening dire penalties should the income not be forthcoming. That coercion is known as “taxation,” although in less regularized epochs it was often known as “tribute.” Taxation is theft, purely and simply even though it is theft on a grand and colossal scale which no acknowledged criminals could hope to match. It is a compulsory seizure of the property of the State’s inhabitants, or subjects.

Now it is also the case that the state, having extracted its income from us through compulsion, then spends that money for the betterment of society. Even the robber barons perched in their Rhineland castles didn't extract money with menaces from river traffic solely for personal gain. They provided services in their demesne (most importantly security and protection from other robbers).

In our modern democracy we even have the ability, through the ballot, to decide just how much we will take in taxation - we act, some would say, as if we are a club where the rules (including those about tax) are set through the political process. In this context the existence of taxation is axiomatic - the debate isn't whether we should have tax but the scale, nature and system of that taxation. We do not ask often enough whether taxation is necessary, appropriate or right.

The main argument justifying tax is based on how the tax is used not on the fact of the tax:

Unlike protection rackets taxation gives us something in return, namely public goods which benefit all citizens. Studies have shown that it is unlikely for people to organize to provide public goods by themselves (see the free rider problem), and thus it is in everyone’s best interests for the government to provide these goods and to support them with mandatory taxation.

The problem here is that this argument takes us no nearer a philosophical justification for taxation. A further concept - the 'free rider' - is introduced but that fact seems to be something of a red herring. After all, unless your tax system is a simple poll tax, there are plenty of free riders - taxing people does not, in and of itself, eliminate this problem.

Nor can we use the idea of 'public goods' to justify taxation - this is the 'roads, who will build the roads' argument that we know is false. The roads - the precursors of the freeways and motorways of today - were built with private finance on a voluntary basis despite that 'free rider' problem. Nor can we make this argument for health, housing, welfare or indeed most of the things provided through taxation by the modern state. All of these things can (and have been in history or are somewhere in the world today) be provided on a private, voluntary basis.

It seems to me that the crucial issue - if you reject Rothbard's simple 'tax is theft' argument - isn't some sort of theological discussion of how progressive tax is or isn't but the degree of consent to taxation. And there are two ways to assess this - firstly to look at the extent to which people avoid or evade taxes and secondly to consider whether people consider themselves to be overtaxed. A further question might be the extent to which taxation undermines the taxpayers ability to make personal choices - are we taking too much to fund 'collective' decision-making leaving to little to fund 'market' decision-making.

There is a lively debate about the extent to which taxes are avoided - we've read the attacks on businesses like Vodaphone and Amazon around their tax affairs and we've witnessed ministers and shadow ministers outbidding eachother to have a go a 'tax-dodgers'. And stories like this are legion:

The inability of HM Revenue and Customs (HMRC) to properly curb aggressive tax avoidance schemes is costing the UK billions of pounds, a report suggests. The National Audit Office said HMRC was dealing with a backlog of 41,000 cases involving individuals and small companies, with up to £10.2bn at stake. 

Add to this attacks on paying traders in cash, the rise in duty avoidance ('smuggling' and illegal production) for alcohol, cigarettes and other products, and the tightening of rules around gifts, trusts and charities. We have a situation where the proportion of society operating outside the tax system (wholly or partly) has risen:

...the latest estimates showed about 30 million people in the EU performed work that was not declared for tax. "Around half of all construction workers in Germany undertake shadow work; and over 80% of all Danes find shadow work acceptable – at least in some circumstances."

In the UK at least 13% of the economy is outside the tax system - this is some £308bn. We have to add legitimate avoidance of tax by business and individuals into this equation. All of which suggests that the degree of consent to be taxed must be questioned.

YouGov asked last year about the 'fairness' of the tax system:

Thinking about all the ways in which people pay taxation – such as income tax, VAT, Council Tax, excise duties – how fair do you think the system is for taxing people in [country] these days?

The result show that two-thirds of people saw the system as 'unfair' and this is regardless of whether respondents positioned themselves as 'left', 'centre' or 'right' politically. Again this suggests that the principle - taxation by consent - is creaking a little. However, other YouGov research suggests that - for all that we see the system as unfair - the most 'popular' choice is not to change taxes. However, a fifth of the population want to see a reduction - tax cuts with spending cuts - in the size of government.

None of this answers our question although it does suggest that a significant part of the population do not 'consent' to the current level of tax. And this part - whether through behaviour (avoiding or evading taxes) or through opinon - represents the challenge to those who see delivery via the state as the only option.

Finally there is the extent to which the individual is able to make personal choices post-tax. It it a statement of the obvious to say that high taxes - wherever and however they are levied - will reduce the amount of money available for consumers to spend in the market. And that if taxation reaches the point where this reduction is disempowering to the consumer then we can only describe this taxation as 'extortionate' - for want of a better word, as an act of theft.

The problem is where this point of consumer loss sits. For Rothbard it was simple - any taxation reduces the ability of the consumer to make choices. But we have rejected this argument because of the 'equity' obtained from the collective provision of some services (security, health, education). It is true that these things could be provided voluntarily and privately but also true that the guarantee of the state is positive in providing these services.

We also know - although in the UK this is generally not the case - that funding through taxation does not prevent the use of choice within a market as the means of distributing a public service. What using taxation does is make these services -typically health and education - available universally regardless of the means available to the consumer.

If, however, taxation to provide health, education and security results in some individuals being unable to sustain themselves without external assistance, then that taxation certainly conforms to our idea of 'extortionate' - the act of taxation is an act of theft, even if we subsequently give back some money in the form of benefits allowing the consumer to sustain himself.

But what if the result of taxation is to prevent someone having the means to pay a mortgage, have a holiday, buy a car or have a meal out every now and then? Is this level of taxation justified? Are we disempowering these consumers by making it difficult for them, even impossible, to have commonplace things (cars, holidays, a night out)? Stopping people - through taxation - from having things that most of us consider aspects of a regular life indicates, again, that the level of taxation for such individuals is 'extortionate' - an act of theft.

The UK is such a society - we tax the income of people on low wages meaning that for many (probably millions) things we consider normal are precluded and for some that sustaining a basic life is only possible through welfare support. The UK is also a place where millions of people avoid paying taxes, mostly in little ways, and where the majority believe the tax system to be unfair.

The solution does not lie in taxing wealth (although we have pretty significant proxies for such taxation in the form of business rates and council tax) not does it lie in getting companies or the rich to pay taxes. It lies in recognising that taxation lacks any moral basis - it is simply a matter of finding an equitable and effective way to deliver a set of services (security, health, education).

It seems to me that two things are needed:

1. The end to taxing people below the point at which we provide benefits or subsidy
2. Where we can create 'markets' or choice-based systems within public services, we should do so

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How the search for 'fairness' must end - for the sake of the children!

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If we believe it to be "unfair" that the privately educated dominate the best universities, secure the best jobs and influence the wider social and cultural agenda then we need to do something about it. However, the very way to address the problem is itself castigated by the same critics as ‘unfair’. Obviously this is something of a dilemma for these caring, sharing folk – but only because they pursue the crock of gold at the end of the fairness rainbow.

Britain’s state schools are not – in the round – very good. For sure there are some good schools, indeed some exceptional schools and incredible teachers. But the truth is painful – nearly half our young people leave school after eleven years or more of education (that’s around 10,000 hours of teaching) without the sort of literacy and numeracy skills needed to get anywhere in today’s world or work.

And this failure covers up how we fail brighter children – the ones who could get top grades and places at leading universities but don’t because the system lets them down. Or the middling sort – the children who are ‘OK’, will get 5 or 6 GCSEs and satisfy the school’s need to a tick in the achievement box but could do so much better.

So why aren’t we crying out more loudly for change? Why has it become such a political ‘no-no’ to say that, just maybe, some academic selection might be a good thing? Why can’t we point to success elsewhere – from African elementary education, through the intense systems of Korea and Taiwan to the Charter Schools springing up in poor parts of the USA? And why do teachers, unions, local authorities and educationalists not hang their head in shame at the way they have failed – and continue to fail – so many young people?

The answer lies in those dreadful words – “it’s not fair”. We can’t have selection because it’s not ‘fair’ on the children who don’t get selected. We have to maintain the bureaucratic distribution of money and the centralised allocation of places in order that the system is “fair”. And we have to make it incredibly hard to deal with bad school management and poor teaching because otherwise it wouldn’t be ‘fair’ on those wonderful public servants in our “education system”.

So it’s ‘not fair” to have schools freed from the local council’s oversight – those free schools would take pupils from other schools (presumably ones less popular with parents) and that’s not fair now is it! And this reallocation won’t be fair because mythic “pushy middle class parents” will get all the advantages. Opposition to changing the system is wholly couched in the language of fairness, in the identification of putative ‘losers’ rather than in recognising that a changed system might just provide more winners.

No system is fair – however clever its designers are and regardless of the extent of their commitment to achieving “equality” and “fairness”. And because any system will produce unfairness and inequality, it makes no sense at all to choose the approach that has the greatest “fairness” if that comes with the huge “unfairness” of dumping most poor kids into the work of work without the basic skills they need to succeed.

It does make sense to choose the most effective system – the one that produces the most winners and the highest standards. And such a system will be selective, it will be self-managed (by which I mean not bureaucratically directed) and it will contain a very wide choice of schools, curricula and management styles. Not every child will succeed, not every school will be a good one and there will be constant cries that it’s all unfair. But we’ll see most young people better equipped for work, more children from modest backgrounds getting into top universities and the social mobility once again a reality rather than something in the past.

Much is said and done ‘for the children’ – it is the cry of nannying fussbuckets everywhere. Well just maybe these folks can direct their campaigning effort to our schools. For there is no doubt that breaking up local education authorities, promoting school independence and free schools, and removing the malign influence of teacher unions is the right thing to do “for the children”.

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There must be government of the toddler, by the toddler, for the toddler - a comment on fairness

“It’s not fair!” The shrill voice of a young girl from across the café. “They don’t do hot chocolate with marshmallows.”

After a little smile at this innocent comment from a seven year old, I thought about the big bad grown up world. And there I hear that same cry every day – “it’s not fair” they say. “I have a right”, they say as if the conjuring of rights and of fairness changes anything about the fact that someone else has something you don’t.

There are times when the conduct of democratic politics becomes a toddler-esque bidding war over supposed “rights” and alleged “unfairness”. We are getting the revolution of the five year old – lots of stamping of feet, waving or arms and appeals to fairness. And – if that doesn’t work screaming and shouting, yelling and throwing things about.

One of the things I learned when I was five – and that I was reminded of every day henceforth – is that nothing’s fair and nothing’s right. We get dealt a hand in life and we make the most of it – there are some people who started with nothing who end up with plenty and a few others blessed with plenty who end up down there in the gutter. And it’s not fair.

So why is it that politicians from every direction seem to think that invoking “fairness” or speaking of “rights” is good thing? How did we get to the place where we could set out the appeal to voters as toddlers rather than voters as grown ups who know that we can’t have what we want?

As I heard that little girl’s voice, my thought was that – however her mum responded (and she didn’t say “life’s not fair” like she should have done) – we grow up to believe that we can appeal to Government to make things “fair”. And the politicians promise to make it all OK – to give us our “rights”, to make things “fair”, all the while knowing – as anyone who thinks about it for a second knows – that you can’t make it fair, you have no rights granted by government.

But we still vote for marshmallows don’t we.

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Sometimes it's a tough life...

We don't all get to start in the best place. Sometimes the soil's a bit lacking and the ground rather stony. And that's the way it is - we can sit there and moan about what a hard life it is and how others have a much better deal. We can shout, "it's not fair" at our masters - and watch as they take away our freedoms in the name of a false equality.

Or we can be strong. We can make the most of what we've got. We can get pleasure from growing in the hard ground and the poor soil. And when we're set and strong, we can look around us, smile and tell the world...

...we did it ourselves.

Don't be fooled - that false equality is about them controlling you, not you getting a better (let alone a fairer) chance. Take the cards you get, play them well and thank the world. But please don't cry foul if someone else is more successful, taller, smarter, faster or braver. And stop asking the government to make it fair - it can't.

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We need to change our POLITICAL system not our VOTING system

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Today our politicians are obsessing about democracy – or rather about the process of democracy (which for most of is politicians is far more important than what we might mean by the idea of democracy). Central to the debate today will be occult arguments by anorak-wearing political obsessives about the precise mathematics of this or that system of voting. Nuances and semantics of the meaning placed on “proportionality” or “fairness” will be paraded – MPs will feel that, for once, they are engaged in a debate that matters. They are wrong!

So rest assured dear reader I am not going to lay out before you the whys and wherefores of each voting type, to discuss their merits or meaning, to ponder the significance of Arrow’s Theorem* or even to speculate on the motivations behind Gordon’s damascene conversion to the cause of the instant re-run. Instead, I propose to argue that the method of election is a matter of monumental inconsequence next to some other concerns.

And those concerns? Firstly there is the issue of accountability. Secondly there is the matter of selection. And third there is the question of what we elect MPs to do. If our parliament debates the arcane of voting systems it does so without answering the real questions around our democracy – how we allowed MPs to get beyond the law, why those MPs (or most of them) felt empowered to indulge in an exercise of blatant exploitation and why we allow them to create a special, privileged and protected position for the political party.

None of these questions – how we hold MPs to account, how candidates are selected and what we the people want our MPs to do – are addressed by changing the system of voting. That merely creates the illusion of a substantial change without making the real changes we need. And those changes?

Direct election of the executive
Terms limits for all politicians at whatever level
The power of recall
Ending state funding for political parties
Repealing the Registration of Political Parties Act
Restricting all election campaigning to the promotion of individual candidates

Without these changes the voting system – how we choose – is of little or no relevance and will do nothing to restore public confidence in politics, let alone enthusiasm!

*Although I do think that discussing the merits or otherwise of voting systems without understanding Arrow's Theorem and its proofs is like discussing a football match without considering the offside law!

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Welcome to Will Hutton's cuddly fascism - his Brave New World

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Will Hutton wrote an article in last Sunday’s Observer arguing in his inimitable, terribly reasonable way that “class” still matters. And what a piece!

Dear old Uncle Will starts with the usual left-liberal stuff about private education – all of which is, of course, just like Eton (not only an exceptionally good school but an exceptionally unusual one even for the private sector). But Will says:

“Britain is a chronically unfair and increasingly closed society and private education plays a central role.”

And he’s clever and important so must be right (and can afford to move to the posh places that have good schools – even grammar schools - as well). But all OK so far, just the usual left wing, politics of envy stuff, nothing new or momentous.

But Will goes further he wants to pull down those who have had the luck to be born into families with engaged parents, rich parents or just plain bloody-minded parents who insist their kids get a good education. Why? Because it’s not fair! We have to chop down all the oak trees so the maples can get more light.

The truth about Will’s article is that there is only one way to achieve the levelling he desires – to abolish parenthood. To declare that only the state has the power to make life fair – and to do this by ensuring that all children are brought up in the same environment, unaffected by the positive or negative influence of biological parents. Here’s Will:

“We owe it to them to create social structures that deliver that (fairness), not structures that manufacture good luck for those who can pay for it and close down opportunity and openness for everyone else.”

There are the words – “create social structures” – the social engineering that the left loves. What Will Hutton seems to want is little different from the frightening social control of “Brave New World”, where parenthood is either wholly constrained or de facto abolished, where Government defined “fairness” is enforced by social services, the police and schools. Where a tiny elite – dominated by the likes of Will Hutton – believe they are bettering mankind.

Well Will, I don’t want your 21st Century social model, your cuddly fascism – I don’t want private provision and initiative emasculated because the state has failed. I want a free society where people stand or fall on their own. And I will not allow my choice and my freedom to be removed for the sake of your misplaced idea of fairness.

As I said earlier Will – life’s not fair.

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Life's not fair...

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Can I just explain something to Will Hutton, Nick Clegg, Ed Miliband and all the other hand-wringing pundits and politicians?

Life's not fair.

Sorry to disappoint you all but some folk are brainier, taller, faster, sexier and have better hair. It just happens that way. It’s a bugger. But there you go.

Life’s not fair.

And you know it’s always been the case that some folk have richer or better connected daddies. Some people have better health. Some people are unfortunate to get permanently disabling injuries in accidents. Some people just seem to be bloody lucky. I hate it, it stinks. But you know Nick, Will and Ed?

Life’s not fair.

Now shut up and leave me alone to get on with my life. Thanks.

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