Why the Laffer Curve shouldn't matter

The Laffer curve is often cited as a reason not to raise taxes.  I think this is a disingenuous argument that rather misses the point.  Let me explain...

For those of you who don't know, the Laffer curve is a theory that says that there is a level of tax that maximises revenue.  If you raise the tax rate too high, people will be more inclined to avoid the tax, whether by using off-shore arrangements in the case of VAT, by becoming self employed and paying dividends in the case of NI and income tax, or even simply by working less (as each hour worked is worth less to the individual as the government's take rises - there comes a point when it's not worth the bother). 

Further to the above, it has been suggested that the new 50% rate of tax will not increase tax revenue as it is too high - people will work less, employ accountants to avoid the tax or leave the country to avoid paying it (and the people being taxed are those most able to do these things).

I think that this misses the point.  The whole idea behind taxes is that there are some things that we can't buy efficiently as individuals.  Taxes are levied so that government can provide us with the things that only government can provide, while inconveniencing us as little as possible (in an ideal world).

If this maxim were followed, the total size of government would be much much smaller, and thus much less tax would be required to fund it.  The Laffer curve is irrelevant because the purpose of taxation is not to raise as much money as possible, but to provide essentials only, and so we should never get anywhere near the point where we suffer from diminishing returns.

Consider the damage done to our economy by the government taking fully 50% of the fruits of our productive labour and pissing them up the wall...

That LPUK report

So, I've just read the report that was published regarding the whole furor over the post on Anna Raccoon's blog about Andrew P Withers.  It's in a few places on the web, but the version I read was here:
http://pjcjournal.files.wordpress.com/2011/05/ncc-report-final.pdf

My thoughts:

It does come across as a bit of a hand-wave.  Take point 7 for example, which is I think the thing that most people are worried about.  There's no consideration of whether the accounts have been suitably managed, and the fact that it's taken over four months since a new treasurer was appointed and the books still haven't been handed over is "far from ideal and must not be allowed to happen again."  This is something that crops up a few times in the report - things aren't ideal, mustn't happen again, but there's nothing to worry about.

The thing that really got me about point 7 was the complete indifference to the contents of the financial records.  Apparently there are two options, either "The NCC may take the view that as the Electoral Commission has given the accounts submitted to them a clean bill of health (A1 in Andrew's words), there is no more to be said and we should consider the matter closed" or they could have someone carry out audits of the accounts over a number of years (which would be costly).  The thing is, the Electoral Commission will sign off the accounts as long as they look ok, but they have no real idea what they're looking at.  If someone puts down that they took thousands of pounds of expenses that sound legitimate (which is what worries people), the Electoral Commission will likely take them at their word - they're not going to request receipts or go over the accounts with a fine-toothed comb.

At the very least, whoever did the report should have looked at the accounts.  Money in should be donations, membership subs and loans, and money out should be payments on loans and genuine expenses (and the expenses should ideally be documented with receipts on file).  Furthermore, we're always campaigning for more transparency on expenses from MPs, at the very least we should do the same with the party - is there any valid reason not to publish the money in and out?

The rest of the points in the report don't seem to actually say a lot.  For example, point 8 says something was done wrong and "should be regretted".  Point 9 says that the matter should be investigated thoroughly, "... and, if true, not allowed to be repeated. It is the antithesis of libertarianism." Similar phrases can be found throughout.

Point 10 rather misses the point.  Yes, the party should ideally have it's own address, but if the person who runs the website is the same person that deals with the post, then we'll still have the same problem.  Ideally, the whole of the NCC should have their email addresses on the site as a minimum so that people can raise concerns.  I know that people are busy, but we can't afford for one person or a small group to have a stranglehold on the communication channels.

The party is in dire need of some help.  Right now it's falling apart, and without transparency, honesty and good communication I think it's days are over.

I was a member - My membership lapsed last year.  I was planning to renew once I had a bit more money (I got married a little after becoming a member and money has been rather tight ever since) but now I don't know if I'm going to bother.

I really want there to be a Libertarian Party - problem is that the more I hear from some of the people involved in this fiasco, the less sure I am that this ever was a Libertarian party...

How much is a human life worth?

A lot of people seem to hate any discussion of costs.  You'll often hear "if it saves just one life, it will have been worth it" but this really isn't practical.  If it was, we'd all be wearing full body armour the whole time, and never driving faster than 10 mph.

I freely admit that I admire capitalism.  I think that markets provide a fantastic way of getting the most bang for your buck, and I'd like to consider how market-based thinking can be used to save more lives.

Consider this completely made up example - you have a hundred people who are ill.  50 of them have illness A and 50 have illness B.  Illness A reduces your average lifespan to 5 years and costs £100,000 to treat, whereas illness B reduces average lifespan to 10 years and costs £50,000 to treat.  Suppose that the average lifespan for one of these people who had no illness would be 40 more years, what is the cost of a life?

Treating Illness A gives you an extra 35 years, for a cost of £100,000 - or £2,857.14 per year.  Treating Illness B gives you an extra 30 years, for a cost of £50,000 - or £1,666.67 per year.

Thus, Illness B should surely get funding before Illness A.

The reason being that the money we spend on healthcare is limited.  It comes from somewhere (the taxpayer's pocket) and there isn't an infinite supply.  In an ideal world (one with infinite energy and resources perhaps) we'd treat everyone that's ill, but in our world we have limited money, and spending money treating Illness A costs 70% more than treating Illness B for the same result.

What I'd like to see is a proper evaluation carried out on the various things that we do, looking at (among other things) quality of life, cost/benefit ratio, success rates, recurrence rates, etc.  Then we can build a picture of what it really costs to treat the various problems that people have, and we can figure out how to spend our healthcare money most efficiently.

Pros: More lives saved for less money spent
Cons: Might lead to bad press

One big problem I can see.  If the system is taken to extremes and every case looked at on it's merit, treatment for the elderly would be seen as considerably more expensive than treatment for anyone else (largely because you don't get that many extra years from successful treatment).  This could be offset either by not breaking it down at an individual level (which is sort of against the whole point of this) or by the government funding part of the treatment (well, if you had Illness B we'd pay for it and that costs £50k to treat, so we'll put £50k towards the cost of your treatment if you can pay the rest).  This would likely encourage private topup insurance.

The people have spoken - now they'll have to live with it

So, the results are in, and the people have said No to AV.  As predicted, a number of people are viewing this as Yes to FPTP.

'David Cameron ... said the referendum had delivered a "resounding answer that settles the question" over electoral change and people now wanted the government to get on with governing in the national interest.

'The director of the No campaign, Matthew Elliott, said he had been "astonished" at the scale of the No victory: "I personally believe that this result will settle the debate over changing our electoral system for the next generation."'

Oh well - I guess I might get a chance to get proper PR one more time before I die...

Why I'm Voting Yes

I suspect most people will have already cast their vote before reading this, but figured it was worth putting out there anyway, if only to show how I think.

I'm voting Yes to AV.

Democracy - which we like to believe that we have here in the UK - relies upon the will of the people.  The people often don't really know what they want, and only get to express their will every 4 years, but what the hell - we'll accept this idea that the will of the people determines who governs us. 

But we don't look at the will of the country overall - that sounds far too much like PR, and would mean that the BNP and UKIP would get seats.  No - we look at it on a constituency basis.  In each constituency, the people are asked who they want to rule, and they collectively decide.

Now, we're accepting here that the people have a collective will, and that it can be measured.  Then what we want to do is measure it as accurately as possible, in order to represent them as accurately as possible.

Consider an election with only two people running.  We'll call them A and B.  Now, suppose that A gets more votes that B.  We know that the people would rather have A running things than B.  Under FPTP and AV, the result is the same as there are only two candidates.

Now, consider what happens if a third candidate is introduced (and we'll call them C, just to keep it simple). As this is a thought exercise, let's suppose also that C is not very well liked and will get less votes than either A or B, but will get some votes. If C has policies that are closer to As than Bs, then more of the A voters will change from A to C.  In this way, it's possible for B to win under FPTP, thanks to the extra candidate - despite the fact that we know the voters prefer A to B.  Under AV, C would be eliminated and the votes redistributed to the people's second choice, leaving us with the A vs B situation again. 

Another way of thinking about it would be to consider a seat under our current system.  In the last election, the constituency that I'm in (Croydon Central) returned a conservative.  The Conservative had 19,657 votes, and the next best was Labour with 16,688.  For the sake of brevity, I'm disregarding everyone else except those who voted for these two (not least because we have no way of knowing where the second choice votes would have gone). Imagine if noone changed their opinion of which party to vote for, and the election were run again, but the conservatives (for some reason - miscommunication perhaps?) ran two candidates.  They'd get about 10,000 votes each, but the Labour candidate would still have 16,688, and Labour would win with twice the majority that the Conservatives currently have, despite the people still preferring the Conservatives overall.  With AV, the 10,000 votes each would most likely have the other conservative candidate as the second choice, so as soon as whichever one gets least votes is removed, the other wins, and the collective will of the people is once more triumphant.

That's why I'm voting Yes.