Wednesday, October 19, 2011

The problem with the EU is that it is the same as the UK

Endorsing and responding to this and this.

Do not throw at me the policies and structures of the EU. I want the EU to have better, more liberal policies and better, more democratic structures. This is the same as what I want for the UK.

The reason the EU doesn't have these things is because it is dominated by socialist and conservative politics; the same as the UK.

And yet I will not cry and take my ball home, and demand secession from the UK and the EU. Our interests lie in engaging with the politics of both and working to make them better.

Yet just as my support for the localism agenda in the UK does not make me a secessionist, it should be possible to have a sober debate about EU competencies without it becoming a proxy for the hare-brained withdrawal agenda.

Our best interests are served by a strong and democratic EU, acting on trade, the environment, cross-border crime, security and in the international community. The entrenchment of democracy in Eastern Europe is unlikely to have happened without the EU. And much of it might easily have fallen back into Russia's sphere of influence. A quadrillion pounds of defence spending could not have achieved this kind of progress for democracy and the rule of law, which is in all our interests.

This should not be taken to imply support for any particular socialist or conservative policy adopted by the EU at the behest of the conservative and socialist national governments that control it. Given this political dominance it is a small miracle that the policies of the EU (or UK) are as good as they are.

No. The demands for localism and democratic reform are not predicated on the belief that liberals will suddenly win all the arguments and all the elections under a more democratic system. Rather that politicians of whatever party will be more accountable to the people and will therefore make better decisions.

Eurosceptics of left and right, in common with the SNP have a very quaint belief that the political challenges they face can be attributed to some evil outside force, and if only "they" could be got rid of then "we" can put things right. The use of "they" and "we" is pure emotional button-pushing, and quite arbitrary. Yet the challenges in Scotland are not that different to those in the rest of the UK, nor those in the UK very different to the rest of the continent. Scapegoating the other is cheap and dangerous politics.

So what I am advocating here is not a compromise between the Europhiles and Eurosceptics. I am uncompromisingly in favour of the EU, and of a particular liberal democratic vision of it, and against the policies of socialists and conservatives that stand in the way of that vision; against those policies when they are implemented at the EU level just as much as when they are implemented elsewhere. This means campaigning against the EU "government of the day" in the same way that we would campaign against a similarly wrong UK or local government.

Sunday, October 09, 2011

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.

Thursday, September 29, 2011

Ed Milliband's little big idea

While it is easy to lampoon Ed Milliband and the speech he gave to his party conference, he had one big idea that is worth looking at: that of bringing moral values into government's dealings with business, to reward the good and punish the bad.

On the face of it, what could possibly be wrong with that? It is better to have more training, more R&D, better cared for workers, a social conscience, environmental sustainability. Let's reward the companies that go the extra mile to deliver these things, and punish those that merely follow the rules. Companies that merely tick all the boxes and play the rules to their advantage are not giving back to society in the way they should.

Ed was subsequently challenged to give some examples of what he is talking about and failed abysmally. Southern Cross was mentioned as a company that wasn't giving back, but of course that was in the process of it failing as a business. Let's punish failure with higher taxes? The problem is that it isn't obvious who the good guys and the bad guys are. If you can't even say which companies you think ought to be punished for existing, how are you ever going to write laws to fairly judge the predators from the producers?

The challenge here is to turn good intentions into good policy. Ed's project has been tried before with almost no success under the banner of stakeholderism. Stakeholderism held that workers, suppliers, consumers, the wider community and the environment all had a stake in a business, not just the shareholders, so businesses should be run with all these stakes in mind. But put workers, suppliers and consumers on the board and you get big conflicts of interest. So little policy was ever developed to implement this vision beyond saying "you really ought to think about this stuff". I have written about stakeholderism before, and it all still applies to Milliband's new compact.

While it is possible and necessary to regulate for such things as environmental standards and workers rights, it is logically impossible for a regulation to meaningfully say that you must go the extra mile, beyond ticking all the boxes, because every regulation is precisely one of the boxes to tick. So you can't legislate for virtue.

And while tax breaks for R&D, support for apprenticeships and so forth are reasonable attempts to improve incentives, they don't reward virtue, they are attempts to steer self interest towards more public spirited goals. If Ed's vision means another avalanche of schemes and tax loopholes aimed at rewarding virtue, it will be met head on by an avalanche of tax accountants for whom virtue is not the pressing concern. This is no new vision, this is very much Gordon Brown's signature move of trying to micromanage behaviour through the tax system, giving us one of the most complex tax codes in the world and record levels of tax avoidance.

And let's not forget that creating jobs and providing goods and services are a positive contribution to society. We might like more training and R&D, but there are few businesses that could exist without ever doing any of either. Is Labour just too uncomfortable with the fact that business generally makes a big positive contribution to society even without being tinkered with by government?

So Ed, I hope you enjoyed telling your conference that you will stand up for what is right and oppose what is wrong. It is a fine and noble ambition, albeit somewhat unoriginal. But if you can give it any substance at all, that will be an achievement. Failing that, a mountain of regulation motivated by good intentions is the best and worst we can expect.

Tuesday, September 27, 2011

That Ed Milliband speech in full (2)

In a big scoop for the Extra Bold Blog, I have again obtained an early draft of Ed Milliband's speech.

For copyright reasons, I won't release this until after the actual speech has been delivered.

[check against delivery]

Friends, comrades, it is great to still be here. A generation ago a Labour leader condemned Labour in Liverpool. Today, Liverpool has been put right, by someone.

Ask me the three most important things I've done this year, and I'll tell you. They're all about my family. Which is nice.

But let me talk about my nose for a while. You'd be surprised how many unfunny jokes it can inspire.

Conference, let's get down to business. This is a dangerous time. This is not the time for the same old answers to the challenge of growth. People need to know where I stand. We lost trust on the economy, and I am determined to restore that trust.

We will only spend what we can afford, we will live within our means, but not yet. The next Labour government won't be able to reverse any of the cuts we purport to oppose today.

We will set new fiscal rules [like the "Golden Rule"? - Ed]. But I have a disagreement with this government. They believe the government should live within its means, but they are wrong. [Didn't you just say the opposite? - Ed]

Of course the world economy is suffering, but our government is making it worse by following our legacy of debt and austerity, albeit slightly more effectively.

I say to David Cameron, put politics aside and look at the facts. I am going to tell it straight. That's a lesson I have learned over this year. [Insert actual straight talking here later.]

Milly Dowler, Milly Dowler, Milly Dowler. What kind of country have we become where political parties such as this one would suck up to Rupert Murdoch? That's why, once opinion had turned against him, I was willing to change. I'm not Tony Blair (he wouldn't have done this) - a great man, I am my own man, that's what it means to lead. Nobody ever changed things by being nice.

My message to the public is simple... Technical Fault.

... the Labour Party lost trust on the economy. [Haven't we already had this bit.]

... people looting shops, burning cars. But thousands came to help with the clean up. That is what we mean by the big society, I mean Blue Labour, I mean Purple Bookery, I mean refounding next new Labour.

Citizens and public servants alike are truly British, I think. We are great people in a great country, ready for the Olympics. So with such great people, how did we end up here. It is because of the way we have run the country for decades.

There are hard lessons here for our party. Some of what happened in the 80s were right, but too much of it was based on the wrong values. Wrong values that we did not do enough to change.

You believe you deserve more, but bankers are getting more instead.

You believe in the long term, but the fast buck, short termism, borrowing and debt bubbles have been the rule.

You believe in responsibility, but big vested interests like the unions have for too long been able to get away with anything.

Who do we blame for all of this, apart from the last Labour government? Why the fat cats in industry of course. Oh except for the good fat cats, we like them, they create jobs and value. But often the bad fat cats earn more than the good ones. I'm sorry our wages policy didn't crack that one.

Opportunity, opportunity, opportunity. Children, children, children. Sad puppy expression.

Values, values, values. You know what your values are. Celebrity culture, gangs, life on benefits, chavs.

People who have paid into the system all their lives find the safety net full of holes. We need a new bargain. Let's confront head on the new challenge of values, wealth creation, you know what your values are, values, values, China, India and Brazil, the kind of economy we have now, we can't pay our way in the world, confront head on.

Not credit default swaps but creative industries etc.

Now not all business is the same. Who knew? All parties must be pro-business today, but we can distinguish between wealth creators and asset strippers like the Phoenix Consortium; I learned this from a hollywood movie from the 80s.

We must learn the lesson that growth is built on sand if it is built on debt, I mean predators, not producers. This is the pro-business choice because really there is not much asset stripping going on these days, but it makes a good soundbite.

This is why our new industrial policy will stick government fingers deep into the hearts of businesses seeking contracts.

But lets get more competition in energy supply, despite all that.

The wealth of our nation is built by the hands not only of the elite few, but also the proletarian masses.

Just think of our young people going into higher education facing a graduate tax in all but name style repayment. We would cut the amount that a few top earning graduates would have to pay by cutting the headline notional fee to £6000.

Schools, schools, schools, children, children, children.

Have you noticed how uncomfortable David Cameron is when talking about responsibility at the top of our society. When you have had to pay, it is always our fault, our toxic legacy of debt and austerity. Yet at the same time the government is taxing top earners more than Labour did. [Sure you want to say this? - Ed] How dare we say they're all in it together!

If you think putting things right means reforming welfare then you're wrong, but at the same time you're right, work must pay. I'm prepared to make the tough decisions to make the welfare reforms to make work pay a reality, seeing as it will already have been done by 2015. But that won't stop us scoring points along the way.

Decency, fairness, helping those who do the right thing. These are values we are learning from the coalition. And with these values we will make welfare work again.

Millions of public servants deliver a fantastic public service every day and every week. But public services can become unaccountable, and need reform. Patients, victims, standing in the queue, computer says no. We need to sign up to the government's reform agenda, in the hope people think we thought of it. We need to stand up to the vested interests, except the unions, who own me.

Why does Britain care so much for the NHS? Because it's really good. And free, mostly, at the point of use. And when I look at everything the government is doing, I try really hard to find a way in which that will change. That reform agenda I spoke of a moment ago; if the government does it, we will scaremonger as if our lives depended on it.

I'm not finished. Yet. If you want someone who will rip up the old rules, new rules, old rules, new hat, old hat. You know Britain needs to change, kids, mum and dad, a fight for a new bargain, your values, pay our way in the world, values, break open closed circles, a new bargain, a long pause, a new bargain, kids, mum and dad.

I promise to promise the promise of each so we promise the promise of Britain. Thankyou.

Thursday, March 31, 2011

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.

Featured on Liberal Democrat Voice
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.

Friday, February 04, 2011

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.

Tuesday, February 01, 2011

Coalition FAQ

Why are you in coalition with the Conservatives rather than Labour?

Throughout the election campaign, we said that in the event of a hung parliament that we would talk first to the party with more votes and seats, and we spelt out our four policy priorities on fair taxes, schools, the economy and political reform. It was also clear that the country would need a stable government willing to take the tough decisions to tackle the deficit. The Conservatives won more votes and seats than Labour, they were more willing than Labour to support our policy priorities, and they were more willing than Labour to take the necessary decisions to tackle the deficit. And because Labour and the Liberal Democrats combined did not have enough seats for a majority in parliament, a coalition with Labour would not have been stable.

Do the two parties now agree on everything?

No. The coalition is a constructive relationship between two parties with differing values and priorities but willing to work together in the national interest. It would be extremely difficult to make this work if ministers were publicly arguing with their own government. We saw how damaging the conflict between Tony Blair and Gordon Brown was, and we are determined not to let our disagreements lead to rancour. However, we recognise that there have been problems of message and tone, and it has now been agreed that, in future, Lib Dem ministers will be freer to express distinctively Lib Dem views.

What influence are the Liberal Democrats having in government?

We are delivering on our four key policy priorities: reforming the tax system so that low earners pay less than they did under Labour; supporting the most disadvantaged children in schools through the ‘Pupil Premium’; investing in the green economy and reforming bank regulation; and fixing our broken political system with the right to recall MPs, fairer votes, and elections to the House of Lords.

We are engaged in all areas of government policy, with much of our manifesto being implemented, and the more extreme elements of the Conservative manifesto blocked. For example:
  • This government is rebalancing the tax system so that low earners pay less and high earners pay more. Rather than lower Income Tax for low and middle earners, under a Conservative government we would have seen Inheritance Tax cuts for the richest.
  • The coalition takes a moderate position on the European Union. It's likely that a Conservative government would have headed for a major confrontation with the EU, damaging the national interest.
  • A Conservative government would have shown less commitment to civil liberties, and no interest in constitutional reform. This government has strong programmes for rolling back Labour’s encroachment on our freedoms and making our democratic institutions fit for purpose.

Is there a coalition between Liberal Democrats and Conservatives in Sheffield?

No. There are no Conservative councillors in Sheffield, and the Liberal Democrat councillors follow Liberal Democrat policy. They have a good working relationship with the coalition but are not part of it, and are not influenced by Conservatives. In Sheffield there is a simple choice between Labour and the Liberal Democrats.

Will the coalition parties merge?

No. Nor will there be any pact between the two parties at the next General Election. The two parties have not changed their values and priorities: we have simply found a way to work together. But there is no guarantee we will need or wish to work together, or be able to find so much common ground, after the next election. We would be just as willing to work constructively with Labour in the future if the circumstances were right.