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September 26, 2006
Timmy Elsewhere
Aha, here is that piece in The Times.
LAST YEAR there were five people in Britain who thought that their taxes were too low. No, this isn’t the number of people who have called for higher taxes. Rather, it is those who were so convinced of the righteousness of state spending that they voluntarily sent extra money to the Treasury.
Unfortunately, we are a little behind America in these things, for we don’t have a central register of all those extra sums sent to be spent by the Government. We don’t know how many fivers have been posted to this or that Ministry, or whether the Office of the Deputy PM has been sent additional sums in gratitude for its services to comedy, because we don’t have an equivalent to the “Gifts to the United States” account, which has been running since 1843. Last year, it received $2,671,628.40; which compares well with the £461,204.95 donated by those five patriotic Britons.
Economists have a handy term called “revealed preferences”. In colloquial English it means “look at what people do, not what they say, and certainly never take notice of what they say others should do”.
Now, you can’t help but notice that there is a disparity between those who say that taxes should be higher and those who act as if they should be. Clearly, an individual who really believes that the Government is more effective at spending his money would voluntarily offer up more than the legal minimum of taxation. That we have fewer people acting in this manner than are to be found writing columns and making speeches calling for higher taxation shows a certain gap, does it not, between public utterances and private actions? Why, we could make such donations a litmus test for those believers in higher taxation and state spending who want to compel all of us to pay more. Only those who show their commitment by sending a cheque to the Treasury should be treated seriously.
Cheques, by the way, should be made out to “The Accountant, HM Treasury”, and sent to 1 Horse Guards Road, London SW1A 2HQ. A 2nd-class stamp is sufficient and you are encouraged to add a covering note so that your donation is spent in the way you like.
When the tax’n’spend brigade show us their thank-you notes, we should listen: until then we should ignore them and insist that our money remains, fructifying, in our pockets.
September 26, 2006 in The Blogger Himself | Permalink
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I fear Tim is missing a point here:Clearly, an individual who really believes that the Government is more effective at spending his money would voluntarily offer up more than the legal minimum of taxation. That we have fewer people acting [Read More]
Tracked on Sep 26, 2006 9:56:33 AM
Comments
They're socialists FFS! Of course they're not going to spend their own money on getting what they want, they want to spend someone else's. These are the same idiots who supported the Soviet Union provided it was somebody else getting shot or jailed and not them.
Posted by: Tim Newman | Sep 26, 2006 5:10:46 AM
Good lord, you Timmys are up early! Tim W, you might want to check the formatting on the first two paras of that pasted article (ends of sentences running under the right sidebar.
Whilst I cannot actually believe that anybody voluntarily gave the Treasury yet more money, I suppose that one should admire their integrity even if one must simultaneously berate their stupidity.
DK
Posted by: Devil's Kitchen | Sep 26, 2006 5:36:34 AM
Yes us Tims are up with the lark - I presume an old reprobate Devil like yourself is on his way home at this hour...
Posted by: The Englishman | Sep 26, 2006 6:02:48 AM
Nah, this Timmy's on GMT+11 these days, so it was early afternoon by the time I read this. Weird time zone this. When you set your computer to it, the places used to identify the zone are Magadan, Solomon Islands, New Caledonia. Took me a while to work out which one I was in, as none of those places are within a thousand miles of here.
Posted by: Tim Newman | Sep 26, 2006 6:27:45 AM
But Tim English is correct: I have been pottering about, as is my wont of an evening, and have not slept, no.
Timmy N: yes, I thought that would be the case.
And Skype told me that Timmy W was active...
DK
Posted by: Devil's Kitchen | Sep 26, 2006 6:37:58 AM
Tim, this far and away too subtle for Polly.
STB
Posted by: ScotsToryB | Sep 26, 2006 6:55:59 AM
Is Polly one of the 5?
Tim adds: Since 3 of them were dead that leaves 2 and no, I don't think that Polly will be one of those 2 out of 48 million adults.
Posted by: HJHJ | Sep 26, 2006 7:49:02 AM
Interesting analysis. Do you know how many people out of the 5 asked for the money to be spent on higher defence spending?
Posted by: Matthew | Sep 26, 2006 9:11:17 AM
Also, i) surely the most obvious conclusion is that this money is designed to pay off the national debt?, and b) unless I've missed a decimal point, isn't our money a larger proportion of GDP than in America?
Tim adds: Yes, ours is a higher proportion of GDP. I don't know what people asked for it to be spent upon. Treasury wouldn't tell me. (It took nearly a month to get this much out of them.)
Posted by: Matthew | Sep 26, 2006 9:16:10 AM
Surely this could be regarded as an example of a prisoner's dilemma.
Even if the government can be shown to spend the money more wisely than you could it doesn't make sense for you to voluntarily give your money to the government. If you keep it you get the benefit of the government spending other people's donated money anyway and if you give your money to the government and no-one else does then you will get very little in return.
Posted by: James | Sep 26, 2006 9:49:07 AM
I think the government should contact these people and refer to a therapist. They're plainly suffering from Stockholm Syndrome.
Posted by: Tim Almond | Sep 26, 2006 10:42:50 AM
Aw it will be some granny or granddad who got muddled up and didn't understand the question properly!
The type of auld biddy who gives away all his/her savings to some dodgy builders for doing nothing to their roof...
Posted by: angry economist | Sep 26, 2006 11:33:24 AM
So, a retread of your August 23rd TCS piece, even down to use of the word "fructify" (you must be proud of that one).
"So, according to the doctrine of revealed preferences," you wrote then, "we now know by exactly how much taxes should rise."
It was -- ha ha! -- the amount voluntarily donated to the treasury. Well done Tim.
Except of course it's complete nonsense, as James's mention of the Prisoner's Dilemma suggests. As a person who pretends to an understanding of economics, you will be familiar with game theory. Indeed, you have on occasion wittered on that subject. So why do you feel it's acceptable to leave it out of your taxation "analysis"? Obviously the majority's actions will be conditioned by what they believe others will do. If they don't believe others will contribute they are unlikely to do so themselves, whatever their view of public provision. That's why tax is coercive. The direct reductio ad absurdum of your position is clear: all tax should be voluntary.
Given how obvious this is, and given that you peddled the same imbecilic argument a month ago, and therefore had ample opportunity to be enlightened, it is hard to understand why you persist with it. Hard, that is, if we assume that you are interested in presenting accurate, logical analysis. If instead we view you as a purveyor of partisan garbage designed to elicit approving harrumphs over breakfast then it all makes sense.
Tim adds: 'If instead we view you as a purveyor of partisan garbage designed to elicit approving harrumphs over breakfast then it all makes sense.'
That probably is what The Times were paying me for in this instance, yes.
Posted by: Stuart | Sep 26, 2006 11:45:32 AM
Stuart - Why don't you send a cheque then I might actually bother reading the rest of your comment. I got to "Except of course it's complete nonsense..."
No pal, the UK tax system is complete nonsense, anything that opposes it is completely sane.
Posted by: Northern Monkey | Sep 26, 2006 12:20:32 PM
Well, we have an admission from Tim that he was "probably" paid by the Times to produce partisan garbage. I salute his honesty.
And then there's the remark from "Northern Monkey" to the effect that he won't debate tax who disagrees with the Worstall line and who hasn't voluntarily sent a cheque to the government. He is presumably some sort of anarchist, as he is in favour of anything that opposes the UK tax system, including ideas that lead inevitably to the abolition of all tax. But then perhaps he doesn't know that, as he didn't read the rest... because I disagree and haven't sent that cheque. It must be nice to lead such a sheltered existence.
Tim adds: I was agreeing rather more with this bit 'designed to elicit approving harrumphs over breakfast ' which is exactly what The Thunderer column is supposed to do. But each to his own.
Posted by: Stuart | Sep 26, 2006 12:42:34 PM
*with anyone
Posted by: Stuart | Sep 26, 2006 12:43:41 PM
"Last year, it received $2,671,628.40; which compares well with the £461,204.95 donated by those five patriotic Britons."
It doesn't. The US figure is about £!.4 million, 3 times the UK figure - but the US has 6 times our population & a per capita GNP about 1/3rd more.
Posted by: Neil Craig | Sep 26, 2006 1:55:42 PM
Worstall writes drivel in the Times and gets paid for it. Well done that man.
Posted by: james C | Sep 26, 2006 4:03:33 PM
Well Tim, I controversially opted to work from the meaning of the words you quoted, rather than psychic inference. I note, in any case, that you have supplied no refutation.
That would imply that it is indeed true, James C, that the Times paid Tim for authoring drivel -- as did TCS. This must mean, via the incontrovertible "doctrine of revealed preferences", that The Times aims to publish drivel, whatever they might claim about journalistic standards. By the same token we know that Tony Blair doesn't believe in invading Iraq, because he didn't personally fight his way in. To conclude otherwise would be to take into account the actions of other people, a concept apparently alien to Tim Worstall, economics guru.
Posted by: Stuart | Sep 26, 2006 5:48:41 PM
> I controversially opted to work from the meaning of the words you quoted, rather than psychic inference.
I'm not psychic, and I understood him. I must have used clues such as context, knowledge of human conversational norms, that sort of thing. Or I was just lucky.
Your criticism, Stuart, doesn't make a whole lot of sense when one considers consequences. If you believe that taxes should be increased so that the Government can spend more of the public's money, then you can, as Tim points out, give them more money. This will have the benefit (from your point of view) of providing the Government with more of the public's money to spend. However, once you take into account other people's behaviour and realise that, just because you give voluntarily, doesn't mean anyone else will, then... well, what? Where's the drawback? Why on Earth would the prisoner's dilemma provide you with any disincentive?
The disincentive, in fact, only kicks in if all tax is voluntary. Since Tim was talking about whether compulsory tax rates should be increased, not whether they should exist at all, I fail to see the relevance.
As for your claim that this logic leads inevitably to the total abolition of taxation -- how? It hasn't led to the total bankruptcy of every charity in the country, so we can reasonably assume that lots of people do voluntarily give away money to be spent on others.
James,
> If you keep it you get the benefit of the government spending other people's donated money anyway and if you give your money to the government and no-one else does then you will get very little in return.
This is actually kind of Tim's point, though, isn't it, just approached from a different direction? What you're saying is that the reason not to give voluntary tax is that you, the giver, get little in return. If that's the disincentive, then we should perhaps be suspicious of people who claim that they want taxes raised for entirely selfless reasons.
Posted by: Squander Two | Sep 26, 2006 9:24:54 PM
"[C]onversational norms" do not dictate that one discard arbitrary sections of an opinion that a person claims to endorse. So rather than exquisite contextual sensitivity, a more likely explanation for your attitude is that you are more of a fan of his Tim's output than I am. Certainly such a charitable interpretative outlook has not been a hallmark of Tim's own work in the past, and to demand it now on his behalf is therefore rather partial. But this is a side-issue.
Perhaps the point is not as obvious as I thought, given that you also fail to grasp it. Let me state it in more detail then. If one believes that the government should provide services out of general taxation then it is a non sequitur for one’s consequent action to be donation of money to the government. Why? Because donation to the government is not general taxation; it is charity.
However, you phrase it differently, saying the putative donor is keen for the government to “spend more of the public’s money”. You do this so that you can allow in charitable donation as a means of meeting this demand. This allows you to argue against a more general proposition than was actually proposed by most advocates of tax rises. Your entire argument is thus founded on an unjustified and empirically invalid premise.
The relevance of game theory is obvious if you begin with the correct premise. If I believe the general good is served by collecting money from everybody to provide public services then I am not necessarily going to hand over money personally unless I believe others will too. My behaviour is conditioned by the likely behaviour of others, exactly as in the Prisoner’s Dilemma.
Posted by: StuartA | Sep 26, 2006 11:16:38 PM
Perhaps the point is not as obvious as I thought, given that you also fail to grasp it.
Posted by: Squander Two | Sep 27, 2006 10:31:27 AM
And that means what, S2? That you have no substantive response?
Posted by: Stuart | Sep 27, 2006 11:20:12 AM
At the risk of repeating myself (or stating my point in more detail, as you inexplicably refer to it)... that is a substantive response, and is made no less so by your predictable failure to understand what its substance is. Predictable because, had you understood the significance of someone's repeating the sentence back to you, you'd never have been arrogant enough to write it in the first place.
T'ra.
Posted by: Squander Two | Sep 27, 2006 1:51:23 PM
Squander Two I don't believe that my argument is making the same point as Tim's.
Tim seems to be arguing that the fact that few people voluntarily pay extra taxes indicates that those arguing for an increase in taxation do not really believe that this should happen.
I am arguing that there are strong disincentives to paying taxation (or additional taxation) voluntarily that have got nothing to do with whether you think that taxation should rise or not and that therefore Tim's argument is flawed.
Posted by: James | Sep 27, 2006 3:36:32 PM
