Monday, 18 February 2013

CONSERVATIVES: A DIALOGUE (REPLY TO JAMES, PART 2)

James took a lot of time to answer my post on Conservatives and my first comments. It's only just that I reply to his criticisms and I do apologise for the time-lag. Real life issues etc... I also hope that the dialogue will be interesting to others. Please jump in and provide your own thoughts...

James said:

[On] The duplicity of conservative politicians:
Left-wing politicians can be every bit as dishonest as conservative ones.Cast your mind back to Blair's claim that Iraq had WMDs, or to his government's assertion that no more than 15,000 Polish people would come to the UK each year. Or to Bill Clinton's claim that he "did not have sexual relations with" Monica Lewinsky. What I would generally say is that politicians of any party are generally very willing to mislead the public when it will help them to pass their agenda (which might come back to incentives, as this is often behaviour which our political system rewards). It’s a stretch to say that conservative voters are being misled more frequently than their liberal or socialist counterparts.

My answer: I wasn't arguing that liberal politicians were of a more upstanding nature than conservative ones (that might only be generally true in the case of Tea Party nutters being elected in the 2010 cycle in the USA). I am rather sure they aren't, on an individual basis. I was arguing that left-leaning politicians don't usually lie about taxes, which is one of the fundamental point of economics within the public discourse.

On this, I think you (conservatives) would possibly better served by trying to establish that left-wingers deliberately lie about, I don't know, the efficiency of government spending or the lack of consequences to lowering retirement age or some-such. 


Republican tax proposals: As for the specifics of the Republican tax policies you mentioned, there's a strand of conservative opinion which favours "regressive" and flat-rate tax systems on ideological grounds (i.e. because we all use the same services, and should all pay towards their upkeep). I’d suggest that this isn’t a case of voters being misled, but rather of Republican politicians proposing policies which are in accordance with the values held by some of their core supporters. Everyone knows that this will lead to people on lower incomes paying more tax - this is, to a certain degree, the point of a flat rate or regressive tax system (i.e. that no one gets a free ride).

My answer: I really do doubt that most Americans voting Republican or approving of Paul Ryan truly understand that point. Most Republican states consume far more in federal USD than Democrat ones.



I have a certain degree of sympathy with this as a means of fixing some of the problems with the current US tax system – which allows large sections of the electorate to vote in favour of ever increasing hikes in government spending in the certain knowledge that they will never be expected to shoulder the tax burden.

My answer: Furthermore, that statement, while sometimes true (California pensions and, generally, California, with your stupidly organized direct voting system, I am looking at you) is far from always true...


"[T]here’s a modest correlation between the likelihood of not paying income taxes and the likelihood of supporting Obama. But Romney vastly overstates the link. Obama has substantial support among households $100,000 and up, and virtually all of them pay income taxes.
(...) Obama is expected to win millions of votes from people who do pay federal income taxes, and Romney is expected to win millions of votes from people who do not pay federal income taxes.

Romney gets strong support from seniors. He led in the CBS-New York Times poll by a 53 percent to 38 percent margin, and a CNN and Opinion Research Corp. poll from around the same time had Romney leading among senior by a 53 percent to 45 percent margin.
Yet being a senior is one of the biggest reasons an American would pay no federal income taxes. Among those who saw tax breaks wipe out their income-tax liability, nearly half benefited from a tax break targeted at senior citizens".

All that to say that, no, it's not all the hard-working people voting Conservative and the spongers voting Left.

It's interesting to note that the Coalition government here in Britain has taken a very different line by raising the Personal Allowance (i.e. by increasing which the number of people who are exempt from paying income tax). Their intended purpose presumably being to show that tax cuts can also benefit the poor.

My answer: Well, at least, I agree with that decision by the Coalition government - even if I am sure I'd disagree with the rest of what they've done. Unless they planned on paying for those cuts by raising taxes on the top 0.1%? Unlikely, I think... :)

The notion that cutting welfare (and moving away from a “progressive” tax system) would be inimical to the advancement of socially conservative values is an interesting point, and I’m going to respond to it in slightly more detail.

Families: Back in the 1960s and 1970s, a common argument was that the expansion of the welfare state was contributing undermining the traditional family by making it financially advantageous for women to have their children outside of wedlock rather than getting married. Here in the UK, there was also a perception that single mothers were being fast-tracked for council housing, and that the best way for a woman to jump the queue and get her own home would be to have an illegitimate child (i.e. that social liberals, whether intentionally or otherwise, were using welfare as a tool to subvert conservative social institutions).

More recently, there have been a number of quite high-profile stories in the news about the small minority of welfare recipients who have been able to milk the system by having large numbers of children (again, generally outside of marriage), and who have therefore been able to secure housing in multi-million pound mansions at the taxpayer’s expense. 

Reducing welfare spending would certainly create hardship for some people who are living in families, but it’s a stretch to claim that it would be bad for families as an institution.

My answer: The housing aspect you mention is extremely UK specific. There, I actually agree with you, generally. The effect might be hard to measure but I think it's a bad idea to incentivise women, especially poorer ones, to have out of wedlock kids by favouring them when it comes to social housing. It may have made good sense when unmarried mothers were shunned and often more or less forced into poverty and/or prostitution. Since this is no longer the case, I think we ought to review the criteria for social housing attribution.

However, my point was more along the lines of "conservative economic policies create hardship, especially for the poorest segment of the population. Since a lack of financial stability is one of the primary cause for the lack of familial stability, conservative economic policies go against conservative social values".


"The survey finds that those who are less well-off are as likely as others to want to marry, but they place a higher premium on economic security as a condition for marriage. And this is a bar that many may not meet."

Now, why women would have kids with men they don't think are good enough to be marriage material is a bit of a mystery (or a testimony to the strength of our genetic imperative to multiply) but the point remains: Poor people don't marry as often and divorce more than richer, more stable people. Thus creating more poor people isn't a good idea from the point of view of family values.


Social values: I also dispute the notion that these sorts of changes would be bad for social values. On the contrary, the proposals you mentioned sought to reshape the social contract in a way which would encourage the values which their proponents believed would be best for America (i.e. hard work, personal responsibility and respecting other peoples’ property rights).

My answer: Personal responsibility, hard work and a general respect for the law are only going to occur when people can see a path, a future for themselves and/or their kids and can see these efforts paying off.

These days, even the classic road to betterment (going to college) is turning into a trap.

How do you expect people to work hard, take responsibility and respect other people's properties when they got no realistic option of bettering themselves?

Naked Capitalism isn't exactly an unbiased source but take the time to look at the graph on what people did/do with their money during this crisis

"People are draining their retirement accounts, neglecting medical care, and relying on food stamps to get by".
 
(I would add: ... keep on maxing out the Credit Cards. That's not going to end well.)

Social cohesion: I’m not sure that this is a concern for most modern conservatives.(or at least, it isn't understood as something which would be challenged by wealth inequality). Historically, it was certainly something which One Nation Conservatives and High Tories bought into, but the mainstream of the modern conservative movement cleaves far closer to classical liberalism in the Thatcher or Reagan model. (And in some cases - such as the US Tea Party movement, goes beyond it in seeking to roll back the state).

So, honestly, I don’t think that the proposals you’ve mentioned were madness (or in any way inimical to social conservatism) – they were just designed to reshape society in accordance with values which are very different to your own.

My answer: And yet, every time they've been implemented, even partially (Thatcher, Reagan) things have gone badly. The US and UK lead the West in terms of teenage pregnancies (Okay, there might be something a bit specific in the UK with the skewed incentive of housing but the US? With its religious framework on top?), the US sees quite a bit of murder (fair enough, guns) and the UK sees quite a bit of assault (question: are they just substituting because the UK has no guns? i.e. both countries are violent but in one case it leads to homicides due to the abundance of guns while, in the other, it leads to 'just' a trip to the ER?). The UK leads the way with alcohol abuse by youngsters... I mean, look at the consequences of Thatcherism on the social fabric of Northern UK...

Bottom line: Either playing by the rules allows people to see themselves (or their kids) joining/staying in "the middle class" or people will not be playing by the rules for very long...


 Poverty: I agree with a lot of what you’re saying – no one’s suggesting that everyone who leaves the unemployment queue is going to jump into a high-paid job. However, even if people aren’t capable of working at a graduate level, I would generally prefer to see them working at whatever level of job they can secure, rather than being permanently unemployed. (Even if this does mean that some people are cycling between low-paid jobs, as you suggest.) And the system needs to reward this.

My answer: Yes, I agree. And I think most left-leaning economists would to. Hence my point that we ought to be able to find something agreeable when it comes to economics between left-leaning and conservative voters. We do want the same thing overall and we all agree that incentives matter...

One other point to note is that even the working poor you’ve mentioned are likely to be in receipt of government benefits (e.g. income support and housing support). For part-time workers, these are benefits which they could lose if they were able to find full-time work. Here’s a link to an article on the poverty trap argument I mentioned, which you might find interesting:


My answer: Thank you for the link. Yes, I don't disagree that the system needs to be designed fairly carefully so that, one, people are always better off working than sitting on their butt (caveat: ... unless they're taking a bit of time to find a job more in line with their past working experience and education) and, two, no one working to the best of his abilities within the existing marketplace should be 'poor' i.e. unable to feed, house and clothe himself/herself.

I don't think the people who designed the present-day system really had other ideas but it certainly can get all screwed up with too many pieces creating the wrong incentives. No disagreement there.

Anyhow, my lunch break’s at a close so I should probably stop writing.The ball’s in your court!

Actually, I’d like to respond to your point about taxes being too high on the 99.9% as well.

You might also find this report by the Centre for Policy Studies (CPS) interesting:

The main thrust of their argument is that most people in the UK receive more in state services (i.e. cash benefits and benefits in kind)than they pay in tax. And that the difference between the two figures has increased substantially over the last few decades.

Only the top 47% pay more in taxes than they get in return (although the discrepancy between the two figures increases sharply with income).

Now, admittedly, CPS is a conservative-leaning think-tank, and attributing spending between different income groups is a sufficiently nuanced topic that you could probably debate parts of their methodology. But it sounds as though the rest of us are already getting an exceedingly good deal out of the rich.

It’s also interesting to note that the top 1% of UK taxpayers paid 26.5% of all income tax in the last financial year, and that the top 0.01% paid 4.5% of all income tax.


This probably isn't proportionate to their wealth, but is certainly a lot more than they're receiving from the government in return for their contributions.

To be clear, I'm not arguing for more tax on middle-class taxpayers - but the evidence doesn't seem to support the notion that we're getting the short end of the stick.


Though, to be fair, I'll need a bit more time to go into the details of the CPS study. I would add that, in the US, the trick of concentrating on 'federal income tax' rather than 'all taxes' is used often to make taxes seem more progressive than they are. The Telegraph does the same - only in the body of the article is it clear that we are talking about income tax alone. What about VAT and payroll taxes? They tend to be highly regressive taxes and so, overall, in the USA at least, the system ends up being only 'mildly progressive'. That's just not good enough.

Over to you, my good sir! :)

In any case, though, thank you, James, for taking the time to read this blog and support it with your comments. I do appreciate!