October 13, 2007

What do we mean by Wealth?

You may have noticed an argument about inheritance tax going on on this blog, there were a couple of comments on a post of mine, and a couple over at Mr Sinclair's. I think some of the regulars might have got involved as well. Anyway Matt has kindly responded to my post over at his place and raised several interesting points. Today though I want to focus on one point that he raises which is about social mobility and really is about what the word 'wealth' means in a capitalist society like the one that we live in. This issue, about what the concept of social mobility means, lies right at the heart of modern politics and it is essential to keep in mind when thinking about economic issues.

There is a problem with the way that our society defines the word wealth. Wealth can be an absolute concept- for example it is clearly sensible to say that someone who has a three course meal every day is more wealthy than someone who can't afford to eat. There is a clear sense in the argument that especially when defining destitution, adequate wealth to survive should be understood as a basket of goods but to define wealth solely in absolute terms misses another important use of the concept. Lets take an example, by the mere fact of owning a computer I am incredibly wealthy, I can project my pontifications to the world. However just because I own a computer doesn't mean that I feel rich, the BBC reported three years ago that in 2002 half of the households in the UK owned computers. Owning a computer makes me absolutely very wealthy (in that I can do communicate across the globe with anyone I choose) but I don't feel that absolute wealth, rather I feel a more modest sense of relative wealth to my own society.

Its worth thinking about wealth in terms of other words that are similar. I'd use the word fast. When I say of someone that they are a fast runner, I am actually using a term that has both absolute and relative components. A fast runner might say run a mile in 4 minutes. Absolutely if he took his entire life to move a mile he would be very slow and very confined in his surroundings. But also if everyone else can run a mile in 2 minutes, then what sense does it make to say that the man who runs it in 4 is fast. In truth the word fast has both an absolute component and a relative component. There is an absolute sense in which a human being is slow- ie taking 73 years to run a mile- but most judgements about how fast a human being can run are relative judgements. Nowadays Roger Bannister's four minute mile would be slow for an athlete- but at the time it was a world record.

Lets come back for a moment to wealth, if wealth has both absolute and relative components, does it matter that we understand both of them. In my view it does. It matters a lot that we understand the importance of absolute wealth. The most equal society on earth is the one in which everyone is starving to death! Everyone would in that society be relatively wealthy, compared to each other they are all equal, but it would be absurd to say that they are wealthy. To structure our entire society around equality, might end up making everyone equal in poverty. However to dismiss relative wealth is equally silly. It is to insist that the kid who can only run a 6 minute mile, as opposed to his mates who run a five minute mile, is fast because he can still run. It doesn't really help him when he is stuck a minute behind! To put that in economic terms, somebody is poor if they can't afford certain things which the rest of us can afford- and Matt in his basket of goods understands that point- poverty is intrinsically relative and so is wealth. And those concepts are more relative the further we get away from the situation of absolute poverty.

Lets come back to the concept of social mobility. Matt says that the idea that social mobility means that some must go up and some must go down is 'pretty silly' and obviously on one level he is right. If I get richer, that doesn't neccessarily mean that you get poorer- in absolute terms what I earn is irrelevant in assessing what you earn. But wait a minute, that is not entirely true if we leave the realm of numbers for a moment. What I earn is then very relevant to what you earn. If my stately home is the only one in the country, then I am the richest person around, but if everyone owns one or if more and more people own one my comparative status diminishes and hence in a sense my wealth diminishes, despite the fact that I may be earning more than I was before. Hence if some people go up the social scale, others come down because they are less well off compared to the rest of society than they were. Hence social mobility has to go both ways. That is true whether people are losing money or whether society is becoming more equal. It is the differentials that matter- the rich are those who are wealthier than the rest of society. Social mobility means people from the bottom join the rich, therefore the rich must get larger as a class which means that the differential between them and the mean person shrinks or rich people must become part of the mass below them- hence social mobility has to go both ways.

Social mobility involves people's wealth diminishing as well as increasing because ultimately social status is a relative concept. Part of social status is wealth and I think we can show that wealth itself is a concept that has two meanings: there is an absolute sense of wealth, but there is also a relative sense of wealth. The problem both on the left and the right of politics often consists in saying that a concept is only this or only that, the problem is that people try and fix language into arbitrary definitions without realising that concepts overlap and often contain different but related meanings. Its a good debating tool- its not good politics. Social mobility does involve people falling as well as rising- and you can't conclude otherwise as soon as you look at the logic involved.

Conkers


The Today Program just went mad. They had a whole item on Conker Championships- whether keeping a Conker for a year, maturing it in vinegar and other nefarious tricks harden up your conker to win a Championship. As someone who played conkers as a kid (for those who have no idea what I'm talking about the rules are here and an explanation of the game is here). I was about to write a post on relative and absolute poverty- but as the world has gone mad I thought that this blog should join it.

October 12, 2007

The Nobel Peace Prize


Al Gore, the former US Vice President and Presidential nominee from the Democrats, has received the Nobel Peace Prize. Mr Gore is obviously a distinguished public servant for the United States and as American interests often coincide with the interests of the rest of us, for the world. His campaign on Global Warming is one with whose broad outlines I sympathise. But to award him the Peace Prize seems to go too far to me. Global warming could cause conflict, but Mr Gore has not stopped global warming nor moderated it, he has made a film about it which raised awareness of it. Mr Gore has not actually achieved anything politically at all yet, beyond creating a constituency. I don't underrate that acheivement but it should not be the subject of the Nobel. I'm not sure to be honest who this should be awarded to but I don't think it should be awarded just as a demonstration that someone has started a campaign. It should be awarded for achievement not aspiration.

October 11, 2007

Inheritance Tax Again

I have already argued, a little down the page, that cutting inheritance tax is unwise. It appears the Chancellor disagrees with me. Well I don't merely think that what he has done is bad policy- it is but that's a question for another thread- it is also bad politics. I've summarised the reasons why in this article at Bits of News, the key passages are these though...

The worst thing though about Mr Darling's new announcement though wasn't the bad policy- most governments have many bad policies. It is awful politics though. Mr Darling and his friend, the Prime Minister, Mr Brown are both on the backfoot. They have yielded the leadership of the debate to the conservative party. Mr Brown was humiliated at Prime Minister's Questions on Wednesday, assaulted by his opposite number Mr Cameron. One Tory MP asked Mr Brown whether his imitation of Tory policy was flattery for the Conservative party or a belated attempt at salvation for his political soul. Quips flew across the chamber and the dour Scot in the centre looked unamused by the affair.

He doesn't have anyone to blame though but himself. After-all Mr Brown could have followed his predecessor Mr Blair's strategy. Mr Blair as soon as the Conservatives announced a policy, would describe it as the next thing to National Socialism. Every MP and minister would go around the country repeating the exact form of words in the same way and pressure groups would be invited to write reports substantiating the charge. Then once the Conservatives had been humiliated, bashed into submission, Mr Blair would walk off with their policy if he thought it was a good election winning (sorry sensible and prudential) policy. He perfected the art, and Mr Brown had to do nothing else but follow the template. But he didn't. The Prime Minister panicked- he decided to follow the winds and grab the policy before the Tories had lost the advantage of first proposing it, now he merely looks stupid.

These events undermine two of Mr Brown's key strengths on coming into office. He has a reputation for being a gloomy, boring calculator of a man. However he also has the reputation of being a serious thinker with good ideas about policy and being consistent and determined. He has the reputation of being an adult as opposed to Mr Cameron's adolescent. Well the events of the last week have seen the adolescent start proposing policies that the adult has taken up. Mr Brown's seriousness has taken a blow, if this is a good idea shouldn't he have come up with it by himself. Mr Brown has been shown up as inconsistent as well- attacking a policy minutes before adopting it.


Even if you support abolishing inheritance tax, now was not the time for Labour to do it. They should have denounced the Tories and then waited to grab the policy later. Just like Tony Blair always used to do- how many Labour supporters are wishing that the new man had just a hint of the nous that the old guy used to display in intellectual theft. At least when he did it he wasn't caught red handed, the day after the Tories had bought the policy!

October 10, 2007

The Ultimate Insider

Russell Baker reviews Robert Novak's autobiography at the New York Review of Books this week. Novak is a character who has always fascinated me as a particular kind of reporter and political animal. Novak has specialised for years in picking up the titbits of Washington conversation, hearing the pebbles roll at the top of the mountain which may cause an avalanche further down. What interests me more than the idea of Novak the reporter, and I admit he is almost certainly a very good one, is Novak the caricature.

His recent biography is entitled Prince of Darkness. Novak has been caricatured ruthlessly by many over the years, for Jon Steward he is a member of the undead for example. He is loathed and hated by people who think that he is darkness personified. He himself talks about himself as a political force, a master of the black arts of politics. According to Baker, Novak in this biography sketches out a role as the Machiavelli of Conservatism, backing his sources with judicious discretion and even more judicious leaking.

And yet in possibly the greatest drama of his career, Novak emerges not as a prince of darkness but as a dupe. He has always been a partisan conservative and there is no doubt that Novak opposes almost all Liberal causes. However he was against the Iraq war, for which the National Review blasted him. In 2003 he was given by Richard Armitage, the under secretary of state, the name of Valerie Plame the CIA agent. Novak published it, having had it confirmed by Karl Rove. He thought it minor. It was not and it blew up into a massive investigation, the results of which led to a White House official Lewis Libby doing jail time for the obstruction of justice.

What emerges from this though isn't that Novak knows what he is doing but that he was used. Possibly he wasn't even used, possibly there was just an administrative cock-up in the Bush administration- indeed quite what connection Armitage a leading sceptic over Iraq had to the neo-cons who are supposed to have engineered Plame's outing has never been explained. But the central issue is that Novak was played for a fool, and its not the first time it has happened either. Presidents Johnson and Nixon fed him with false information at times which he believed to be true and published in his column, sending the press off on wild goose chases. He did it inadvertantly.

The real lesson of Robert Novak's career is that actually, despite his sinister demeanour, nobody can live up to being the Machiavelli of the right or left. You can't hold all the strings in your hands and more often than not we are all groping in the dark, unaware of the wider meaning our actions may have. Robert Novak who was condemned for opposing the Iraq war, may end his career with the reputation of having been part of a conspiracy to support it. The Prince of Darkness may end his career with a very un-Luciferian reputation not for evil but for folly!

A lesson to us all in not assuming our own omnipotence!

October 09, 2007

A Grope from the Grave

Matt Sinclair wants us to abolish inheritance tax- at least that is how I read this article. Inheritance tax is let us be clear a tax which only functions above a certain freshhold, it is notable that as the Conservative Lord Sheikh made clear the numbers of people affected by the tax has declined over the last seventy years:

In 1938-39, 153,000 estates were subject to inheritance tax. By 1968-69, that figure had almost halved to 81,000. By 2006-07 it has declined to 35,000 estates, though I accept that in recent years there has been some rise as a result of the house price boom. This is not a tax that is becoming increasingly onerous; it is one that is affecting fewer and fewer people over the long term. We heard in the debate last week that the Treasury predicts that it will continue to be the case that 94 per cent of estates do not pay inheritance tax.


Its worth remembering that the numbers of people actually paying this tax has fallen and according to the Treasury will continue to fall. This is not an onerous tax stopping inheritance (it doesn't do that anyway as it only takes 40% of money inherited above the freshhold) it is a tax which redistributes from the very wealthy to the less well off.

Taxing the inheritance of the wealthy is vital. Ultimately if you do not tax this, you end up with the groping hands of the wealthy in previous generations pushing their decendents upwards as opposed to anyone else's descendents. You perpetuate an aristocracy. That afterall was the reason that inheritance tax was rightly introduced- to enable people at the bottom of the pile to rise to the top. Large capital transfers can ultimately allow people to leapfrog others- using that capital to invest in setting up companies where others don't have a similar opportunity. It perpetuates an aristocracy of property. Matt's eloquent defence of the value of parental love misses the fact that what he is really defending is the perpetuation of oligarchy and aristocracy.

Lets go further. One of the justifications of capitalism is that it isn't aristocratic- despite accusations from its detractors- capitalism does enable the poorest in the land to rise to become the richest through their own talents and hard work. Well inheritance tax is a classic means which enables that to happen, because it reduces (though it does not eliminate) the advantage that the wealthy have in the game of life. In a time when inequality is rising and social mobility falling, is it really right that we abolish one of the taxes which actually helps social mobility and creates equality.

Perhaps Matt thinks it is- and he thinks it is because he thinks that it is wrong to tax a virtue- well again I think he is wrong- hard work is a virtue and income tax takes 40% of people's income above a freshhold and more people are taxed via income tax than inheritance tax, would Matt abolish income tax. He might- but it would be imprudent to do so if we are going to continue to fund services for the poor as well as the rich. Inheritance tax helps the government financially very little, but it does reduce inequality and gives a more level playing field between the children of the rich and those of the poor.

Nobody is talking about abolishing inheritance and there are ways that the tax might be better structured. Reform is possible. But abolition is totally unjustified. It would help in the creation of an aristocracy of privilege and yes it would make the poor strangers in the lands of their fathers- handicapped by the fact that they unlike the rich were not granted assets gratis by their parents. Ultimately Matt's argument is an argument for privilege, and George Osbourne's announcement at the Conservative Party Conference suggests that the Conservatives are a party of class interest alone and not for the national interest.

In 1909, making a speech on the Liberal budget Winston Churchill, then Home Secretary told his audience that'unless property is associated in the minds of the great mass of the people with ideas of justice and of reason' respect for it might fall. Churchill argued that

The best way to make private property secure and respected is to bring the processes by which it is gained into harmony with the general interests of the public. When and where property is associated with the idea of reward for services rendered, with the idea of recompense for high gifts and special aptitudes displayed or for faithful labour done, then property will be honoured. When it is associated with processes which are beneficial, or which at the worst are not actually injurious to the commonwealth, then property will be unmolested; but when it is associated with ideas of wrong and of unfairness, with processes of restriction and monopoly, and other forms of injury to the community, then I think that you will find that property will be assailed and will be endangered.


The future Conservative Prime Minister was clear, property should be associated with 'services rendered', 'recompense for high gifts and special aptitudes or faithful labour done' and not be 'injurious' to the commonwealth. By all these tests massive inheritances fail- they do not reward labour, they are injurious to the commonwealth by perpetuating inequality from generation unto generation.

Inheritance tax may have bad externalities- and reforming it is a possibility to make it less bureacratic and close loopholes- but its principle is right. It is one of the few taxes that doesn't tax hard work, but taxes privilege and unearned income. Rightly it exists, rightly it should continue to exist. Benificence from parents to children is a good but it produces a bad externality- increased inequality- and it is the duty of the commonwealth to reduce that as far as it can. We should not make the children of the poor more disadvantaged than they are already by abolishing this tax, we should not make them strangers in the lands of their fathers merely because of the incapacity of their ancestors to earn money.

It should not be for us to cement aristocracy, it should be for us to allow talent to prosper and thrive. Inheritance tax should stay!

October 08, 2007

Ian McEwan On Chesil Beach

On Chesil Beach is a novel of missed opportunities, of tragedies reached because of youth and failure to speak out. It is a tragedy of a moment where a call wasn't made, where communication failed, where naivety led to crisis. Its about the wedding night of two young people. Edward a recently graduated student from the University of London who studied history and hopes to write it and Florence a beautiful musician who plays in a quartet and loves her music but has spent her life in the cloistered surroundings of all female company. They met in a pub in Oxford and fell in love walking through fields and talking idly in the summer after they had both graduated. They come to their wedding night, both of them facing their first love alone for the first time in a sexual context and filled with expectation of how good or bad it will be. McEwan is excellent at conveying particularly Florence's nervousness about the act, her fear of Edward's roughness and the way he squashes her as they lie together, her disgust at his semen.

This is a novel filled with uncomfortableness. It happens in 1962, before according to Philip Larkin sexual intercourse began. Taking place in a hotel on the beechfront, just after the wedding, with the accompaniment of the most awful British cuisine imaginable, an atmosphere of mundane tawdriness dresses what should be the most romantic encounter of their lives. They adjourn to their bedroom for the 'act' and hear the radio downstairs playing the news to men, taciturnly listening. Both Florence and Edward come from families, who are unconventional, he has a mad mother, she has an academic mother- but in both their families the mother and father don't communicate themselves. Edward's family is insecure socially, Florence's is effortlessly superior. Edward wants to prove himself somehow, Florence wants to cultivate her music.

The period is less crucial to this than the critics presume. People of my generation who are in their twenties now still feel a great deal of anxiety about sex, not everything is easy. Albert Camus once suggested that inside there is always unhappiness and insecurity, I can't remember his exact phrase but he was right to capture that essential hesitation in the human condition. Perhaps though what is intrinsic to the period is the ignorance of both characters about sex on their wedding night- today people tend to marry later. There are some wonderfully comic vignettes- Edward cannot undo the back of Florence's dress. There are also moments of miscommunication which are filled with a tragic potential energy. One such for example is Florence's arousal as Edward brushes her against a stray pubic hair- he doesn't continue to massage her thigh and thus a moment of connection is lost, a moment when she is reassured enough to have confidence that she will enjoy what is to come.

That moment though is filled with something else. McEwan takes us inside the heads of both his characters. Both Florence and Edward have things they could and should say to each other. Both of them have moments where they are driven less by desire than by the situation to say things which hurt and don't help. Both of them find it difficult to articulate their desires. Florence can't say to Edward that she is fearful and finds the initial sexual contact repulsive rather than attractive. Edward is too busy wanting to be a man to want to be a husband. In that bedroom are all sorts of anxieties and problems with English society in the sixties. From the banality of the cuisine to the ubiquity of desires for masculine affirmation, from the ignorance about sex to issues about class, we can see the scene on Chesil Beach as a microcosm of English society in 1962.

McEwan plays with these strands deftly and also demonstrates how this moment, this fumbling failure is crucial for both of the characters. He reminds us how important our choice of partner in life is and thus how important it is when we lose a partner who suits us. Edward finishes the book as a fashionable failure, having done everything in his life apart from think. If anything could have given him purpose and determination, it would have been marriage to Florence. She would have awakened his talent and turned it to more use than becoming a fop about town. We are presented with Edward's nostalgia in his sixties, his realisation that in later life he has failed to be more than superficially successful and he dates it all back to this moment. Of course age has its delusions as well as youth: and it is the image of Florence the pure that he keeps in his mind refusing to go and see her concerts at the Wigmore hall. For her too, though we see less, we know that there is regret.

Regret is the ultimate emotion that this novel provokes. There is a sense of might have been here which is impossible to capture in a review. McEwan has done it again though, blending the comic and the tragic together. Showing us how even a gesture is vital in the ballet of love and how finding yourself in the wrong position when the music, unexpectedly stops, can be disastrous.

Crossposted at Bits of News.

Britblog Carnival No 138

Ah well the Britblog has rolled back over here from a superb carnival at Philobiblon. Its going to be difficult to acheive anything similar to that wonderful carnival.

Perhaps the most important part of a good carnival is working out what a good blog is. Well a recent effort was made by Iain Dale, and Unity isn't happy with Dale's definition. Ian is worried by the appearance of partisanship in the blogosphere and the way we could lose trust. Never Trust a Hippy suggests why, writing a wonderful post separating political blogging from blogging about politics. Chris Dillow exemplifies exactly the type of political blogger that Never Trust a Hippy is talking about, as this post on inheritance tax, democracy and equality demonstrates. James Hamilton provides another analytical masterclass, with his history of innovation in football. Thinking of use of media- the thunder dragon deserves some kind of acknowledgement for his photoshop of Brown the Chicken and on the subject of having fun at the expense of our courageous PM, just take a look at this video from Nick Barlow!

Analytical bloggers though are only one half of the blogosphere- there are also the gossip bloggers. Iain Dale is off the mark first in this category with this video reminding Tom Watson of a promise he made a year ago. To be fair to Mr Watson he did pay the money he bet to a charity- and there is someone out there doing well out of a blogosphere punch up- now there is a shock! On more serious matters, there is the continuing Usmanov saga. Arsenal News Review suggests that Usmanov has been bribing journalists with trips to Moscow- Tim Ireland has more. Justin has more news of the way that Usmanov is manipulating the libel laws. On a related note, Unity's series on where we all stand with relation to libel law continues. The blogging world always gets riled by threats to free speech, just take a look for example at Stroppy blog who has got all stroppy about government surveillance of unions.

But the world isn't all Usmanov- there have been a couple of political events happening in various seaside resorts recently. This week was the Tory turn. And you'll find a servicable account of what went on from Steve Green who was in the hall, the City Unslicker wasn't but analyses the Tory economic policies. The most eye catching bit of the conference was the pledge on inheritance tax, for Matt Sinclair its better late than never, he argues using the film memento that inheritance tax strikes right at any concept of human kindness. The Tory Diary at Conservative Home finds low tax is the latest fashion accessory, but Don Paskini isn't so sure- he sees it as a tax cut for millionaires. In other political news, Lenin isn't too happy at Lenin's tomb with the occupation of Afghanistan and Dave Cole wonders is the US constitution too federalist. Gene at Harry's Place draws our attention to the common forms that anti-semitism takes whether from rightwing nuts in New Hampshire or Hamas, Jobeda isn't too impressed that the BBC had a program about the political merits of Shariah Law either.

And you'd think the world was all about politics if this was all that I left you- but far from it- there is much else going on. The Early Modern Whale reminds us that coffee was reputed to cure the plague, Ben Goldacre doesn't beleive in South Africans with magic quantum boxes and Professor David Colquhoun isn't too impressed by herbal medicine either. Matt Murrell started a comment thread about guilt and innocence here and on a related note, Crushed by Ingsoc has been thinking about the fashions and music of the nineteen eighties- oh and if that didn't make you feel queesy, then try this where Anne of the Inky Circle talks about what she has in common with cockroaches.

On a completely different line, Richard Brunton isn't happy that BAFTA wouldn't nominate any foreign language films for the Oscars. You can always learn new things about the UK, apparantly Birmingham has a bull ring, honest, here is a picture. All my Vinyl reviews an obscure album by the Animal Collective. On Stage lighting has an interesting post about how to get into stage lighting. Oh and should you feel like writing in a newspaper or anywhere else, be aware of the rules that the internet nomad has drawn up. The singing Librarion though is on his way thinking about parts he would love to take on in the future. Staying on the performance theme, Benjamin Yeoh reccomends you go and see a play in Ancient Greek- Medea is on at the Arts Theatre in Cambridge, one to see if you are around. Continuing with history, Vino has a nice post on the effects of Protestantism on European history- the Political Umpire also tackles a very broad historical theme, looking at the white slave trade in the 18th Century. Oh and anyone interested in more blogging should take a look at the latest roundup from the Blogpower group.

Anyway I hope there is enough there to keep people interested- keep the entries coming into britblogATgmailDOTcom.