Axe the fat tax

The idea of an extra tax on high-fat foods has been in the news lately, since David Cameron suggested that the idea was worth looking at. Now I've argued before against activism through the tax system. I think most of the time it creates too much administration cost and avenues for avoidance for any good that it does. And I am skeptical of the psychological value of small incentives to do the right thing, which it turns out can often be counterproductive.

In this case the fat tax is intended to tackle the "epidemic" of obesity. But it is not a tax on fat people, but on selected foods deemed to contribute to obesity. Why? I'm pretty sure that it is possible for a thin person to eat doughnuts, and for an obese frame to be maintained with sufficient quantities of muesli and semi skimmed milk. More specifically the argument is precisely that fattening foods are a problem, because it is a problem that people are fat. So a tax on fat people would surely be much more to the point. Yes, there are practical difficulties with a tax on fat people. All that weighing. But let's park that for now and just consider the principle.

The problem is that a tax on fat people would be grossly unfair, offensive and discriminatory. Thus the attempt to levy an extra tax on fat people by proxy, in the hope that we thereby don't notice that the policy is grossly unfair, offensive and discriminatory.

I've had some feedback on this argument from @IanEiloart, @beccaet and @MsNoeticat, which I will address here without attributing particular views to any one person. Thanks for your comments, by the way.

First is the question of whether a fat tax would produce a social benefit by incentivising food manufacturers to change their recipes in a lower fat direction, i.e. to make their regular products more like "diet" products. You know diet coke, diet yoghurt, diet ready meals. All the bulk of the regular product with little of the flavour. There's a reason I don't buy diet products: they are horrid. Making food in general more horrid is not something I would count as a social benefit. Just as starving sailors lost at sea would fill their bellies with sawdust to quell the hunger pangs, the modern body-image conscious person is supposed to fill their belly with a modern food-sciencey equivalent such as cellulose (which may be made from sawdust in fact).

Second is the point that pushing diets in the right direction will benefit everybody. Will it really? Will it benefit people who are underweight? How many borderline anorexics will be pushed over the borderline because they are eating food with more cellulose and less food in it? The problem here is that we are looking at the average person - who may be overweight - and imposing a food policy for everybody, as if everybody was the same as that average person. Many people eat too little fat or too little cholesterol, or too little proper food of any kind. Should they be sacrificed on the altar of the average? Top down, one-size-fits-all policies fit very few.

Finally the suggestion that revenue from a fat tax could be help people who are struggling with weight issues. This is true. And it is fair to say that weight is a very big problem for some people, causing a great deal of distress and poor health outcomes. I do think a fat tax would have to be very high indeed in order to help everybody in this kind of need, which raises the question of why isn't this kind of health support more of a priority anyway? Why should it rely on a hypothecated tax? We don't hypothecate tobacco and alcohol taxes to particular health interventions, and nor should we.

And I would say that a large part of the distress surrounding weight issues is a result of social pressures to conform to a perceived weight ideal. Now what is the fat tax, but another kind of pressure to conform to that same perceived ideal? On the one hand we are campaigning against unrealistic body images in the media; do we really want to turn round and try to impose unrealistic bodies on people through the tax system?

Update: see also freakonomics.

Cuts and opportunism

Ed Milliband was again emoting if not explaining his alternative economic strategy on radio 4 this morning. If only we were to borrow and spend more money, that would be good for growth, and therefore good for debt in the long run. It has enough plausibility for people who want to believe it to give Labour cover to proclaim themselves anti cuts, to go on ukuncut demos where by rights they ought to be lynched.

The reality is that Labour's plans are to cut the deficit more slowly: in 8 years rather than 5. That is reaching the midpoint in 4 years rather than 3. (The coalition reaches the midpoint of deficit reduction in 3 years, rather than 2.5 because the first year (this last one) saw only token cuts.)

What this means is that whenever Labour score political points by "opposing" a cut, they have a policy that would demand that same cut is made, on average, only 1 year later. Not "save our libraries" but "keep our libraries open for one more year then close them" would be an honest slogan. Ditto every other cut.

More could be done by raising taxes of course, but when Evan Davies put the question about not capping council tax, Milliband rejected the idea, saying, rightly that an increase in council tax would squeeze many at a difficult time. (An apology for Labour's record on council tax might have been in order, particularly to pensioners, who didn't even have an earnings link as they do now.)

And that story is repeated. Despite having the policy of somewhat higher taxes and therefore fewer cuts, no tax increase is supported or proposed, save the "jobs tax" that would have raised only about 2% of the deficit.

We are told that Labour's plan would be better for growth. Growth is the answer to everyone, even the Greens it seems, confusingly enough. Of course I would hope they do think their plan better for growth, rather than adopted just for the cheap point-scoring value of pretending to have an alternative to cuts. But believing your plan to be better is one thing. Spending the difference is quite another.

Borrowing to spend is right during a recession to blunt the hard edge of the downturn. It will temporarily boost growth, but at the cost of a long term deadweight of debt dragging the economy down. So as Keynes said, such debts should be paid back when times are good. Now the recession ended in 2009, and we are still borrowing. We will still be borrowing 5 years after the recession, hitting balance in the 6th. Labour's plan is to still be borrowing 8 years after the recession. This is not Keynsianism, just borrowism. Borrowing not just during recession, but all the time, hoping some other party will be in government when it has to be sorted out.

So on the one hand we have lower corporation tax, enterprise zones, apprenticeships, university technical colleges, cutting red tape, part of a comprehensive strategy for growth in the private sector. On the other hand the strategy to borrow and spend in the public sector for 8 years, creating a massive long term dead weight of debt, and neglecting the private sector that could actually bring us the tax revenues we need.

All this for an average 1 year delay to cuts, and the chance to play the good guys.

Caroline Lucas' U-turn on taxes

Channel hopping between Question Time and 10 O'clock Live, I caught the following exchange...

David Mitchell: The key is that ultimately, surely to save the environment things have to be made more expensive - the things that are destroying the planet have to be made as expensive monetarily as they are to the environment and that's going to involve a lot of sacrifice, don't you have to be honest about that?

Caroline Lucas: Well I will be honest about that, what I think it needs is a shift in taxation, not an overall increase in the burden of taxation, but if we taxed carbon instead of taxing income so much for example that would be a very good thing, we'd get more people into jobs, we'd also tackle the environmental crisis, so it's not rocket science...

This is a far cry from the Greens' general election manifesto that called for massive tax increases to close the deficit.

Whatever happened to "left wing plus"? Don't get me wrong here, I agree with the policy - but it is not a left wing one - the left much prefers taxing income to taxing consumption. I also agree with the question - if the Greens can't be honest about the sacrifices they expect, it is a bit rich to accuse other parties of being all talk and no trousers.

But more significantly, whatever happened to the Green Party being the last bastion of big tax and spend politics, appealing to the disaffected left? Is it really quite so shallow as to switch its whole politics from the hard left to the centre now it thinks there might be more mileage in attracting disaffected Lib Dems?

And has this monumental step really happened in an interview on a comedy news and politics show? Does the rest of the Green Party know anything about this? What do they think?

I am feeling a little stunned here.

And Labour's cuts begin

Yes Labour cuts. These cuts were inevitable when Labour spent all of this government's money during the last government. Tax rises are also Labour's fault - they have already spent all the money any new taxes will raise.

Yet to hear them, you'd think this was all unnecessary. We could keep spending. Deficits don't matter. Cuts are ideological. Well maybe they are for some, but it is hardly a criticism you can make when you have £44bn of cuts in your own fiscal plans.

To be clear, Labour do not have a leg to stand on when they criticise the first £44bn of cuts. Their objections are cynical duplicitous cant.

And if £44bn were the limit of their ambition for deficit reduction, they would be avoiding some cuts now for much greater cuts in the future as debt continues to balloon.

Some "opponents of cuts" will refer to Krugman, as if to say "look, borrowing is OK". If you are one of these, I ask you this: how much borrowing is OK? Why bother collecting taxes at all? Where does Krugman say that borrowing 10% of GDP year on year is a good idea? If we previously thought that a deficit of 2% of GDP were sustainable, then Krugman might convince us that 3% or 4% would be OK. Fine. All parties went into the election planning merely to halve the deficit, more or less, anyway.

The next defence is that huge reckless spending was necessary to maintain the economy at a time of crisis. Well yes and no. The need to spend money wisely was as great as ever, but I agree that the cuts shouldn't have started in earnest in 2008 or 2009. The problem is that Labour had already abandoned prudence and the golden rule, and was already borrowing over £80bn in 2008/9. Prudence in the good years would have left a lot more room for fiscal expansion during the banking crisis without leaving such a massive debt.

The last gasp defence is about the timing. Make us prudent, Lord, but not today. But the fact is that economic data is never clear or timely enough for the best timing of a fiscal change to be known with any certainty. All we can do is eschew dogma and respond as best we can to the economic data we have. But why do that when there is a rallying cry of "stop the cuts" to be sounded?

Is this sort of cynical opportunist politics inevitable? Won't governments always spend before an election because they might not have the chance afterwards? And won't this always condemn us to higher debt than we might rationally incur?

Well no, there is good news. The evidence suggests that sounder public finances do seem to be a consequence of (not just our) coalition government. Of course this makes sense. If there are two or more parties in a government, it is more likely that one of them will be in the next government, and will therefore be opposed to a scorched earth policy today. Three cheers for the new politics.

Tories beg for more recession

What makes my day is the sweet sound of Tory fury on the economy. It may only be 0.001% growth, but it is too early dammit. "We are badly prepared for recovery" grimaces Osborne. Too right you are, the last thing you want is any recovery before the election.

Now Osborne may have a point that this government deserves no credit. Governments don't fix recessions, they sit them out. It wasn't exactly a grand achievement of Brown to inject a fiscal stimulus - it is no hardship for a government to spend all of the next government's money as well as your own. It is some hardship for the rest of us of course, carrying that extra debt, but that has to be balanced against the benefits of the stimulus.

There is a fine economic judgement to the question of how much a government should borrow during a recession to keep the economy going. But this is swamped by the crude political judgement - spend the money now on Labour priorities: ID cards, dodgy IT, tax credit fiascos, harassing photographers, etc, so there is less for the Tories to spend later on their political priorities: rich, married, dead people.

Let's face it, the public sector deficit is breathtaking, and Labour is to blame. Gordon Brown way before the credit crunch had become less like, er, Gordon "prudence" Brown and more like Ken Clarke. The Tories are quite justifiably furious about it, as we all should be. But they'd rather we didn't think too hard about the difference between the state of the public finances and the state of the economy.

Tax: Labour to copy the Lib Dems; Tories to lose the plot

We hear that Gordon Brown (not Alasdair Darling - what is his job, again?) is thinking about tax cuts as part of a fiscal stimulus package. This is something that the Lib Dems have been advocating for some time, particularly that taxes on people on lower and middle incomes are particularly good candidates for lowering to stimulate the economy. Such people are most likely to spend the extra money, and, if they are homeowners, to keep their homes as a result. This sort of stimulus also has the advantage over extra public spending in that it benefits the private sector directly, not just indirectly. More from Nick Clegg and myself on this here.

Some will doubtless feel offended at Labour stealing our policies, but I rather like it. They are admitting to the world that we were right all along, again, and that if you want the right policies on the economy without months or years of dithering first, then vote Lib Dem.

The Tories on the other hand, well, what can I say. 

The Tories unveil their own plans, aimed at dealing specifically with unemployment, on Tuesday.

They say they would fund tax cuts through existing spending and not - as they suspect the government would do - through borrowing. 

The Today programme was suggesting this means tax cuts targetted at people "likely to lose their jobs." Huh? What? How can you measure who is likely to lose their jobs, in a systematic enough way to include this concept in tax law? Or perhaps they just mean tax cuts for bankers. That could be it. But incorporating this kind of nebulous concept in tax law is even worse, and will lead to far more pointless complication of the tax system, than even Gordon Brown's insufferable tinkering. Whatever happened to a simpler tax system?

Bizarre as this is however, it is not the worst of it. They would fund these cuts "through existing spending" [cuts], not through borrowing. So this is not going to be a fiscal stimulus at all. The Tory response to the economic climate is to do nothing. Whoopee.

The Nick Clegg interview

I've been well scooped on this by Charlotte, but I don't mind at all. Sharp and lithe, she said I was and I still can't decide which is the more gratifying. Charlotte was smoking like a chimney - with carbon capture and storage - throughout on her e-cig, and none of us noticed. Ditto in the cafe afterwards, until she 'fessed up. It looks like technology has thoroughly solved the problem of nuisance smoke. But I digress.

So, given the chance to grill Nick Clegg, what I wanted to do was deal with some of the recent criticism, not all from enemies, that our policy of tax cuts for people on low and middle incomes doesn't stand up to scrutiny so well after the latest phase of the financial crisis - or at least that it is no longer so clear exactly what we are proposing. I was hoping to steer the conversation towards how we might restore the discomfort our policy had been causing the Tories, but it didn't turn out like that.

So here it is, and I'm working more or less from Charlotte's transcript, so thanks for that. Nick is in italics.

If you go back to before the latest tranche of the financial crisis, our policy of tax cuts for the poor was causing all sorts of discomfort for the conservatives and their policy of the cupboard was bare was looking a bit foolish. I don't think that's working quite so well now. A lot of people are saying you can't offer tax cuts to people at the moment, and the osbourne attitude to business appears to be picking up a bit. is that fair? is it harder for us now to capitalise on teh position we had?

I think it's exactly the reverse. The one thing people instinctively know you can't do as you head into a recession is jack taxes up. If you look at the number of now serious commentators in the press, who are now saying that if you want to stimulate growth, which is something you desperately need to do if you're heading into a very serious recession, one of the ways, not the only way, but one of the ways is by cutting taxes. in a way - and this is the crucial caveat - in a way which can stimulate spending. Every economist will tell you that if you provide top down tax cuts to people at the top as the tories have done with their only tax proposal on inheritance tax, it doesn't help the real economy because they just salt away the difference. bottom up tax cuts do, they're socially just, they're clear and so helps stimulate spending on the hight street because people on low incomes can have the money to spend it, so the economic logic has got greater. Meanwhile people like [?] saying that tax cuts are now necessary, that puts us on the right side of the argument. 

Look at the Tory position:I think the Tories have backed themselves into a disastrous cul-de-sac. There's no evidence that the Osbourne thing is filtering though. They've plummeted in the polls in terms of economic competence - hardly evidence of a message getting through to the public. What they're doing, which I think is a fascinating but from their point of view a disasterous strategic decision,is they have basically said to themselves, clearly, that their only purpose is to blame it all on Gordon, and that to do that they need to constantly go and on about how's he's spent too much in the past, therefore that allows us no flexibility to do anything now. I think it is a disasterous solution - firstly it's economically illiterate, because they're going on about government debt when the real issue in the British eoncomy is astronically high levels of private debt. I'm not pretending it's easy to make that distinction in public debate, but if you want to get down to the economic fundamentals - and you can argue it's a couple of percentage points to high or too low, but comparitarively speaking it's approximately 40%, it'll probably shoot up to 60% because of the automatic stabilisers and because of the bank bailout thing. Italian debt, if you want an extreme example is above 100%, French and German debt is about 20% higher and it's much, much lower than American debt. It's only, as any columnist will tell you - Government debt is - a compariative science. How are you compared in your Government debt to other government debts is often the crucial thing, because that's what leads to runs on currencies. So I think they're wrong economically, they're picking the wrong target, they're fighting over the wrong bone - government debt. The real problem is private debt. People have got themselves into terrible, terrible trouble. One of the ways you help people get out of debt is putting money back in their pockets.

Why this has been such a strategic disaster, is because their strategy is one of blame and inaction. They have no proactive menu to give the british people. they've got nothing to say on tax cuts, they've got nothing to say on interest rates. They say piffling stuff on small business, council tax - it's all smoke and mirrors and not serious. so i think they've got themselves into serious trouble. They can't do that for the next two years. "It's all your fault and there's nothing we can do" That council of despair is not going to work with the voters.

This is breathtakingly good stuff, and I am somewhat thrown off course by it all. Go back and read it again.

On a specific aspect of this, they're saying you shouldn't loosen fiscal policy at this sort of time...

They're not even saying that! Osbourne's remark was that he accepted borrowing going up.

The Keynesian line is that you do loosen fiscal policy because it keeps things going. I can see why they're trying to [oppose] that [loosening], because they're trying to reclaim a reputation for being sensible on the economy, which they'd lost to Labour.

I'm not sure about the transcript here, but what I am getting at is this. Osborne seems to be saying (I caught the first 5 minutes of one of his recent speeches), that you shouldn't loosen fiscal policy beyond the automatic stabilisers, because this does more harm than good to eventual recovery. So I am looking for our response to this specific point.

My feeling is that Osborne's point is over-simplified. There is a danger that if you expand the state to make up a shortfall in economic activity during a recession, then there will be no slack for the private sector to expand into, and so the recession will grind on. But to say that there should be no intentional expansion of state activity makes sense only if you do - as Osborne seems to - regard all state activity only as a deadweight drain on the productive economy; whereas if the state also has, through infrastructure, education and security for example, a positive effect on the private sector economy, then some expansion here, during a recession, seems much more reasonable. 

Of course, as Nick has said, tax cuts for the poor are also an effective fiscal stimulus, and one that boosts the private not the public sector.

Anyway, onwards...

Of course you need to be fiscally responsible. But you do that over the cycle. As we're heading into what might be the worst recession in a generation, it is recipe for masochism and greater recession if you spend all the time fighting over actually miniscule differences in government debt. You've got to get growth going. If you don't, there's no revenue there, [...]. That is a priority now. I think what's interesting about the Tories is that they don't understand the enormity of what we're up against. They certianly don't understand the enormity of the knock to the legitimacy of their own prejudices in favour of deregulated financial services and so on, and the don't undrstand the risks of their 'do nothing' strategy - which is what they are, in effect, advocating.

I change tack at this point

Well, Labour on the other hand have already spent all of our £20 billion, therefore we had a policy that was agreed before the latest crisis. To carry on, seemingly unchanged, seems like we're not accepting what's happened, that in two years we're going to have to start again.

First of all, you don't rewrite every pound and pence of your public spending plans in the middle of a vertical decline in the national econonmy. Clearly That's something you resolve, finally, when you go the country before the general election. Whether you like it or not it's a moving target - it's part of the art of politics. what you can do, and what we're rightly doing, is saying at precisely the time when how you spend pulbic money is more important than ever before, because in addition to value for money, and accountability to the taxpayer, you've also got to work out how the money you spend on behalf of the public is helping to stimulate the economy or not.i think we are quite right in saying that in those circumstances, the arguments we've always levelled against certain forms of public spending, 5 billon on id cards, 13 on nhs it system which doesn't work, 2 billion on a whitehall inspection regieme, 12 billion on a new it survilance scheme, that is not intelligence use of money. we object to those allocations of money on reasons of principle and policy, but they are especially daft at at time when you are hoping public is going to stimulate the economy, and so should be spent in different ways. 

I think this is a very important point. Some people who didn't particularly like Make it Happen (pdf),  were saying that it should be thrown out as soon as economic circumstances seemed to change. But the same arguments would apply to any spending policy they did like.

And I think this is a good answer to some of the complaints that we are not clear enough. Any package will have to be adjusted to point in the economic cycle we find ourselves in at election time - not the point we find ourselves in today - but that by making our views on fiscal policy clear, we can indicate today what kinds of adjustments those will be in a recession - largely that the spending/tax cut side will be maintained, but that revenue side will not be expected to fully deliver yet.

Nick senses what I have been groping for 

There's a slightly wider argument lurking behind your question - is public spending the right way to stimulate the economy? It is one way to stimulate demand, but it's not the only way, and crucially it's a delayed way of doing it. It has a chronology to it. The idea that brown should be become a latter day Anglo-Saxon version of Francois Mitterand , creating huge public projects around the country and this'll put us on the economic straight and narrow is a nonsense. Clearly public spending plays a role, borrowing goes up as the automatic stabilisers kick in, tax revenues go down, benefit payments go up.. i think what we need to do is maintain, as I tried to encapsulate in this week's prime minister's questions, that at precisely the times when millions of British families are tightening their belts, how government spends our money should be subject to even more scrunity than before. They need to be spending it on the right kinds of things. That seems to me more valid now than before. 

Oh, so I was just asking the usual Keynsian v Austrian kinda question. Bit of a wasted opportunity perhaps. In the back of my mind there was a particular political angle to this, some way to pin down what the Tories actually stand for on something. Is Osborne a hardline Austrian, and would this be politically damaging? But Nick, in full flow, is a force of nature, and we didn't get there. Perhaps just as well as I was sitting next to a renowned libertarian who is probably sympathetic to the Austrian school.

Jonathan, Charlotte, Alex, Mat and Millennium Dome himself went on to ask their questions. I needed a rest.

In defence of trickle-up economics

Today saw a great speech from Nick Clegg at the Lib Dem conference, arguing for tax cuts for low and middle income earners to help meet rising food and fuel costs. The left don't like this because it doesn't involve veneration of the state, and the right don't because they focus their occasional tax cutting efforts at the better off - which is not to suggest that they cut taxes overall in the long run.

The left shouldn't object of course, because they should recognise that fuel and particularly food are even more basic and important than public services like ID cards and wars. But now I want to address why the right shouldn't object either, because this policy will benefit the rich too in the long run.

According to trickle-up economics, what happens when the low and middle income earners have more money in their pockets is that they go out and buy more of the things they need, so that money eventually gets recycled into executive bonuses, dividends, and so forth. So tax cuts for the poor benefit us all in the long run.

Now it should be said that not everybody agrees with trickle-up theory. Some argue that it is just spin for the doctrine that what is good for the poor is good for the country, a doctrine that should be resisted because, er, they aren't poor, or something. 

But seriously, "supply siders" argue for cuts in taxation on profits to encourage investment. But as post-tax profits drive investment, these can also be boosted by boosting pre-tax profits, by leaving ordinary people with more in their pockets to spend. The difference is who gets the direct benefit and who merely gets trickled on, er, or trickled under.

Reinventing the State Chapter 17: Reforming the NHS - a Local and Democratic Voice

Richard Grayson helpfully summarises his own argument:

Without [a democratic authority], it will always be possible for everyone to blame somebody else without taking responsibility. Ministers can blame local bureaucrats, when those ministers have give the bureaucrats very little independence. Health care bureaucrats can point to rigid central controls, but can also blame the public for making supposedly unrealistic demands, when the bureaucrats have little incentive to engage with the public. The public can blame 'them' - usually the government or bureaucrats - despite the fact that the system allows the public to make demand after demand for high levels of local service without ever having to face their real cost.

The suggested solution is local democratic accountability.

Crucially, these elected local people need to have the power to raise [or lower] funds for the NHS so that any demand made by the public for higher quality [or lower taxes] can have a real price attached.

I have been a little mischeivous with my additions there. But I am not clear to what extent Richard is arguing that local accountability will make higher taxes more palateable. This is not such a useful line at the moment, when the NHS has just seen a massive cash input, much of which has not led to noticeable improvements. It would seem sensible to pursue efficiency gains to at least pre-splurge levels before seeking higher funding.

Anyway, Richard is at this point about to launch into an advocacy of adopting something like the radically decentralised Danish health system. However, it turns out that the Danish system has only just been reformed - January 2007 - and is now somewhat less decentralised than it was, although still one of the most decentralised systems around.

I must say that for me this leaves something of a question mark over the proposal. Shouldn't we give a new system some years to bed in before we praise it or emulate it? And why did the Danes centralise, even if only a little? But this is just a question mark.

The idea is to turn PCT duties over to county/city/unitary councils or elected health boards covering the same boundaries. Small authorities might choose to set up joint health boards. This seems sound enough.

I am a little puzzled still, because in the section on funding, Richard talks about a new tax - the NHS contribution - almost identical to, and partially replacing Income Tax, which would, along with NICs comprise NHS funding. Suddenly there is no mention of the locally raised share of NHS funding. This along with my loathing of hypothecation and of extra complexity in the tax system, made this a very disappointing conclusion to a good chapter.

And while localism is a big idea and a good idea, I don't think it is as big or as good as the expectation we have of it. Many people will be unimpressed with a policy that doesn't on the face of it change anything. What do we expect the different bunch of politicians to do differently? Are there no more ideas? Richard's pamphlet with Nick Clegg on education (pdf) was full of ideas.

This is a good retort to the Orange Book simply by opposing social insurance. And yet could not a local health board choose social insurance? It is pretty half-baked localism if it can't.

Poverty stinks

After a heads up from Quaequam I've posted the following comment to Duncan Brack's essay on meeting the challenge.

Was it ever a secret that poverty is related to poor health outcomes? Of course it is related. And a large part of that relationship will be causation of poor health by poverty, although there will also be elements of causation the other way, and third factors causing both poor health and poverty.

The question Duncan misses is to what extent it is absolute rather than relative poverty that is a cause of poor health outcomes. The biggest factors impairing health, are poor diet, lack of exercise, smoking and drinking - are these consequences of poverty? - yes, to an extent.

But Duncan’s argument is not that povery stinks and we should get rid of it. It is that inequality stinks. Being on the bottom rung of the ladder is a cause of stress. The thing is that every ladder has a bottom rung, unless it is lying flat on the ground.

Now I would agree that both absolute and relative poverty do matter and should be tackled. They are not, of course, the only things that matter, so the question is how much. Duncan argues for more equality. How much more? Japan and Sweden are held up as examples. Are they equal enough, or do all the same arguments still apply to them?

It may be right to demand more of something that is good, such as equality, but if you ignore the downsides, and you don’t say how much more equality you want, then what you have is a very weak argument. Not to mention a politically terrifying unlimited aspiration for redistribution.

I absolutely agree that people in absolute poverty have very little freedom, and so supporters of freedom like the Lib Dems should fight against that poverty. What is not so clear is how much relative poverty restricts freedom.

Duncan defends the 50p top rate policy - the proceeds of which were almost entirely recycled to the middle classes, doing nothing about poverty or inequality.

It is dangerous to try to wish away the fact that prosperity brings better outcomes and better opportunities. Prosperity is not the problem, it is the solution. The largely symbolic 50p policy suggests that it is the problem.