IFS

Thanks to Dave H. for pointing me at this IFS document:

The public finances: 1997 to 2010

Now there are two unperceptive ways to come at this document, depending on your political stance. You can claim it proves that Labour spent all the money and the Tories will sort it out. But that forgets that RPI was 18% in the first year of the Thatcher administration – the tired claim then would be to blame Big Jim. Or alternatively, you can say that the recovery is fragile, and severe cuts now endanger it. That ignores the fact that £156bn is not a feasible amount of borrowing every year for five years nor can it be justified, as I previously argued.

Neither of these approaches are useful of course, and this document is more balanced than that. My views are post-political. I have one objective and one only: balance the books. Beyond that, I don’t care who is in Downing Street. Governments of both stripes will fail to tackle the structural deficit while doing other annoying and pointless things. Labour will fail to tackle it while recruiting an unproductive army into the public sector in a version of the payroll vote writ large. The Conservatives will fail to tackle it while being antagonistic in Europe – our largest trading partners. Or maybe this time it’s different…?

People assume I am right wing because I keep wanting to cut social security. But my primary motivation for that is just that we need to cut the deficit and it is the largest slice of the pie, by some distance. So you need a smarter response than just to suggest cutting traditional right wing shibboleth items like defence instead. Because I don’t care. I think probably it would be good to help people in Afghanistan and Iraq, and maybe we do have a security threat emanating from those place, but we probably have to take that risk because we haven’t got enough money for two new aircraft carriers and a Trident replacement.

The second reason for cutting social security is derives from the question: ‘what is it good for?’ I know what I get from the NHS and the Education spend. Both are public sector monoliths which probably waste 1/3 of the money put into them, and we should fix that. But that doesn’t mean that you don’t get a benefit from every pound you put in. In education, you could double the spend and still get results. The law of diminishing returns would only bite seriously when you got to to gold plating levels. But we are a million miles away from that. You could give every child in the country 13 years of one-to-one tuition with a specialist graduate teacher paid £60k plus a £10k bonus per A-grade and you would see immense benefits from that. Likewise with the NHS – put money in, and people will live longer and better. What do I get from social security apart from bribing people who can’t be bothered to feed themselves not to chuck a brick through my window? Why isn’t it a protection racket?

So what does the document say?


“Both parties inherited large structural deficits from their predecessors: 4.8% of national income in 1978–79 and 2.8% of national income in 1996–97.”

“By year 11 of their terms in office, both governments were recording exactly the same structural deficits: 2.6% of national income in both 1989–90 and 2007–08.”

Here’s the problem:

Now the standard left response here is to say that the way this gets completely out of hand after year 11 of the Labour administration is because the bankers are responsible for a global financial crisis. In which case I desire you to point me to the section of the pie charts in
cuts which show bank bailout spending, and also why it isn’t true that the first sign of the crisis was a crash in subprime mortgages in the US. Some bankers may be to blame for that, but not I-banks, and it has more to do with excess saving by the Chinese than anything else. But there is plenty of material in the document for you to use against me if you disagree. I think it’s wrong though, primarily because the situation had got out of hand before the crisis and all of that money will come back and may even make a profit.

“On the eve of the financial crisis, the UK had one of the largest structural budget deficits among either the G7 or the OECD countries and a higher level of public sector debt than most other OECD countries, though lower than most other G7 countries. Most OECD governments did more to reduce their structural deficit during the period from 1997 to 2007 than Labour did. This fiscal position formed the backdrop to the financial crisis.”

That wraps it up for me. So what’s the answer? Slay an equal number of sacred cows on both sides. Cut defence, though it’s only £38bn so it won’t help much. Cut the NHS – even though that will do damage, it is better than cutting education in terms of being economically adverse. Do not cut £1bn out of science spending – it is futile and about the most disadvantageous choice available – the leverage multiple on that will be higher than elsewhere. Leave education spending alone. Which again, only leaves social security as the major source of cuts.

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About timlshort
I am the author of "Simulation Theory" and "The Psychology Of Successful Trading," both published by Routledge. tinyurl.com/oosta11

53 Responses to IFS

  1. lukeroelofs says:

    “Why isn’t [social security] a protection racket?”

    Why isn’t state enforcement of property rights a much larger, more aggressive, protection racket with a roughly opposite distribution of who benefits?

    • timlshort says:

      Luke –

      By ‘protection racket’ I mean the situation in New York where if you are a restaurant owner, you have apparently various free choices as to who provides your laundry services. Some of them are twice the price of the others, but they come with an implicit guarantee that the restaurant will not be firebombed. Restaurants are particularly vulnerable to that sort of threat because they cannot hide and they suffer badly from adverse publicity. And I see the analogy because in the past I have been told that one reason I should support social security is because otherwise people not reliant on it would be lynched in the street by the large numbers of those in receipt of benefits. So I see that as equivalent to state-sponsored support of blackmail with threats of violence. That isn’t to say it isn’t the easiest way of dealing with the situation of course…

      So then your analogy would be to claim that the (or perhaps any) distribution of assets is unjust. There are large questions here, but I suppose I would focus on transfers. Your claim that the well-off benefit from retention of their assets in proportion to what they hold is presumably true, but unless you want to make the further claim that those people gain further transfers, I don’t think that is enough for your position. I would be against any transfers like that, but not against retention of property rights. By ‘more aggressive’ I suppose you mean that ultimately some of the police have guns. More realistically, you mean that some people will be sent to prison for not paying their taxes or for benefit fraud. So I would distinguish that from the analogy with social security. In the former case, if I pay my taxes and avoid benefit fraud, I am left alone. In the latter case, I have to pay up to avoid unpleasant consequences.

      • lukeroelofs says:

        “then your analogy would be to claim that the (or perhaps any) distribution of assets is unjust.”

        No, it’s that it’s imposed on people against their will by the threat of violence, which is exactly your complaint about social security. We’re not talking about whether what people get is fair, just about what is equivalent to ‘blackmail with threats of violence’, which is your beef.

        “in the past I have been told that one reason I should support social security is because otherwise people not reliant on it would be lynched in the street by the large numbers of those in receipt of benefits”
        This is a claim of the sort ‘if P then Q’ where Q only follows given numerous other significant antecedents. In particular, I don’t think it would be remotely plausible if the scenario we’re envisioning is “no social security, but also lax enforcement of property rights”, because then people without legal income can more easily meet their needs by taking what they want directly, and have no incentive to do anything with the persons of others. That is, this threat of violence only arises *given* the pre-existing threat of state violence.

        “In the former case, if I pay my taxes and avoid benefit fraud, I am left alone. In the latter case, I have to pay up to avoid unpleasant consequences.”

        Oh I *see*. In the one case, if you pay up, you’re left alone. In the other case, you have to pay up or you won’t be left alone. Completely different.

        Also, to be ‘left alone’ by the state doesn’t just require paying tax, it also means exerting constant care that you only consume or use things that they regard you as entitled to.

      • timlshort says:

        Fair enough. If you are saying I should for consistency also be against tax, then I am fine with that…

        I think there is a status quo point here though isn’t there? The implicit threat of state violence – or at least the threat of curtailment of liberty – is indeed used to enforce property rights. So if someone tries to take something from me that I currently have and they are caught doing it, then they may go to prison. There’s an ambiguity in the phrase ‘distribution of assets’ – it could be a pattern or a process. I think what I want to follow is the Nozick line where providing the current distribution (pattern) has been arrived at by a series of just transfers, then the government may use force to deter involuntary transfers from that patterned state. This arises from my right in a state of nature to use force to protect my assets and safety but absence of any right to assets belonging to anyone else. (I know we are going to get Hobbes involved here.) So there is a just status quo defended by the state whereas social security is a use of violence to move away from that status quo in an unjustified way.

        Para 2 – you are certainly right in saying that P is not sufficient for Q. But perhaps we are paying social security merely in order to reduce the risk of Q. I think that ‘this threat of violence only arises *given* the pre-existing threat of state violence’ is a stretch though. You are right to say that no social security together with no property rights would not lead to violence (other than people defending their property themselves) but of course that would just be because there would be no property. Overall that would be much less efficient than a market system because people have no incentives to improve assets they do not own.

        But it does seem on the weight of your comments that we would both prefer less state than more.

  2. Dave says:

    “My views are post-political”

    I call bullshit. Beyond this I’ll reply properly tomorrow.

    • timlshort says:

      Dave you are such a flirt.

      By this I mean that I did what I said I would do before the election. I noted that the agencies said they would withdraw the Aaa rating on the previous administration’s deficit reduction path because it wasn’t adequate. As you probably noticed, Fitch have said that this remains their position. This is what you would expect because so far ahead of the emergency budget we have had the £6.2bn of cuts but the deficit is still £156bn.

      So by the next election if we have a full set of parties offering various policies, with I hope by then a better deficit position, no downgrade and a sustainable forward path, then I would make a more political choice based on ‘soft’ factors. So by post-political I just mean I ignored everything else in favour of a focus on the deficit. You may well claim that this is in itself a political position – but I will wait to see your full reply.

  3. James Monk says:

    Your views are not post-political. The prioritisation of money over other things is very political, since it benefits only a small group of people. For example, the belief that interest rates should be set by an unelected quango rather than elected representatives belies a political ideology. Money is not a real thing, so we don’t *have* to do what the numbers tell us. If society is persuaded they have no choice, that’s a kind of totalitarianism. Thatcher said it: “There is no alternative.”

    Presumably you advocate all that, which means you are very far from post-political, you just think yours is the one true religion.

    • timlshort says:

      James –

      See my response to Dave. I think I can claim that having interest rates set by the BoE is a smart idea pragmatically because it simply works. We have had a much better inflation record with that system thatn the previous one, for the very simple reason that Chancellors were always tempted to engineer pre-election booms, which is not in fact in the interests of the country. But this disagreement between stems from the root cause that you want more democracy and I want less on the grounds that I think the MPC is smarter than the man in the street.

      By ‘religion’, I understand something like ‘believing claims not founded on evidence’. I would counter that there is plenty of evidence that sovereign default or its local equivalent, personal bankruptcy has very severe consequences. Since you have said that you intend to be the only person in the country who will buy a house by saving up, you don’t need debt and so you might be the exception for whom insolvency is a career choice.

  4. lilyasquith says:

    Is this a philosophy blog now? Please can you give me an example of a real thing.

    • timlshort says:

      Lily –

      Well I did intend that but so far I admit there has not been that much philosophy. And yes you are right – since transcendental idealism is correct, there are no real things ‘out there’…but your question is for James anyway I guess.

  5. lukeroelofs says:

    “So there is a just status quo defended by the state whereas social security is a use of violence to move away from that status quo in an unjustified way.”

    This is a perfectly valid, appropriate, and adequate response, except for its complete lack of connection to the real world.

    • timlshort says:

      Which part is ‘not connected’? Do you want to deny that the status quo is just (not perfectly obviously but generally) or that social security is an expropriation or both?

      • lukeroelofs says:

        I want to deny that the status quo is generally just. I see no reason to think this except that it is so stable that people have come to consider it just because it seems normal. I also want to deny that the processes that led to it are free of systematic fraud, violence, assault, and violation of whatever sort of ‘pre-social property rights’ we suppose to exist.

        Social security is a transfer of property, sure,but I’m not sure it’s a ‘moving away from the status quo’. Your plan to cut it sounds more like a ‘moving away from the status quo’. Identifying the ‘status quo’ ina dynamic system is prone to fuzziness.

      • timlshort says:

        Who is committing this ‘systematic fraud’? The politicians? The establishment? What form does it take? When does this violence happen or when did it happen? Do you mean things like colonial activities or just the fact that the police carry truncheons?

        I think that social security almost by definition is a moving away from the status quo. Sure, you can claim that the existing pattern of asset distribution is unjust but it *is* the existing pattern. Redistributive taxation and social security act, in the view of the defenders of those two activities, to a more just pattern than the existing one. Unless you are also regarding social security and taxation as so normal that it must be just – because we are all used to them.

  6. lukeroelofs says:

    Well, the various wars that established political control of the country, colonial activities certainly, and what you describe as “the fact that the police carry truncheons”, which could also for much of the country’s history be described as “the fact that the soldiers who obey the unelected government will kill the hell out of you if you break the law.”

    Certainly the intensity and frequency of overt violence has decreased, but analogously the following is not a defense: “I haven’t given my spouse more than the odd slap for years, certainly nothing like the severe beatings of our early marriage, because since then they’ve been willing to do what I tell them so I don’t have to.”

    “Sure, you can claim that the existing pattern of asset distribution is unjust but it *is* the existing pattern.”

    But at a given moment, such a fact as my ownership of certain financial assets consists largely in my entitlement to an ongoing flow of income. Are we to say that all ownership of capital is a ‘moving away from’ how things are? That would make the notion largely meaningless, so instead we say that this entitlement to an ongoing flow *is* a static, current, thing, my ‘ownership’.

    But if we can do that, why not then also say that each individual ‘owns’ a set of welfare-entitlements, or ‘stakes’, or ‘accoutements of citizenship’, or whatever reifying label is preferred, which are static and ‘existing’, but which entitle them to an ongoing flow of ‘money’ from the state under various circumstances? Or why not say that all UK citizens collectively ‘possess’ the laws, and the significance of these laws is, among other things, benefit flows, just as the significance of capital is, among other things, interest flows?

    • timlshort says:

      Luke –

      OK so we are really going back quite a way into history now. I suppose you mean something roughly bounded by maybe Magna Carta and going forward to perhaps the Great Reform Act of 1832. I appreciate that this is a large and amorphous area of history but if your claim is that historically it took a long time to establish individual freedom and there was a great deal of injustice and state violence during that process, you must be right. Your analogy is with domestic abuse though only works if you think there is some kind of continuity between current levels of state violence and, say, the repression of the peasant’s revolt. I just don’t recognise that level of violence as a frequent driver of what happens in our society today. We can note maybe mounted police in the miner’s strike or the poll tax riots, or more recently the ‘kettling’ in demonstrations – but it seems to me that for most people most of the time these days, there is no more than an implicit threat of violence.

      Incidentally, I see an insidious effect of society which is perhaps related to your problem, and which is in accord with the Heideggerian line you were taking on Spinoza in your post. I think that something like ‘thought repression’ that Heidegger describes so well in his terminology of ‘fallenness’ and the conformity imposed by das Man is so ubiquitous we don’t see it or realise how damaging it is that we all think the same way and do the same things.

      I don’t believe there are inherent human rights, which is why someone couldn’t have a claim on any resources not belonging to them merely by virtue of being human. And if I am wrong about that, then there is the problem I mentioned in The Global Poor, which is that Singer and Pogge argue that any division of resources based on geography is going to be arbitrary and unjust. Pogge also claims that colonialism funded the industrial revolution, which I think is wrong, but if he is right, then we really would have to ‘give the money back’.

      • lukeroelofs says:

        “going forward to perhaps the Great Reform Act of 1832”
        UK governments weren’t elected by majority suffrage until the 20th century – not that suffrage has that great a significance, but I’m supposing it’s at least significant if we’re to consider a state’s distribution of wealth ‘just’. Presumably there are *some* constraints, if we’re not to just observe what actually exists and presume it just.

        “it seems to me that for most people most of the time these days, there is no more than an implicit threat of violence.”
        But it works, doesn’t it? You set up implicit threats and as long as they are obeyed you can leave it at the level of implicit threats. How would this picture look any different if the general policy of governments had been “use overt and bloody force if necessary, and if the need can be avoided some other way use that other way, as long as the essentials of the status quo are preserved”? I don’t think that would look remotely different to what has in fact happened.

        You originally said “what I want to follow is the Nozick line where providing the current distribution has been arrived at by a series of just transfers…” You appealed to history – I’m saying that it’s force, implicit or explicit, all the way down, except when it’s turtles.

      • timlshort says:

        Well that all looks pretty convincing so I am just going to concede it all.

        It looks like the remaining difference between us is that I would in addition deny that democracy legitimises the state because in fact nothing can.

        But let’s change the focus and work out. When I wrote about a just distribution, I wasn’t actually speaking of a historical pattern per se i.e. actual history. I don’t mind if you set inheritance tax to 100% for example. And that might even have beneficial effects because it would drive a lot of spending. But consider the pattern of assets I currently control and how those assets came to me. I would claim that essentially I was an employee of various firms who hired me voluntarily and paid me what they thought was necessary to retain me. Eventually I got fired. All of that seems fair to me.

        If I was a beneficiary of unjust transfers, it will have been from areas which I think will be more consistent with my position than yours. When I did my first degree, for example, it was customary to sign on for unemployment benefit in the long holidays, and I did that. You will regard that presumably as a fair transfer since I was entitled under the regulations obtaining at that time to make the claim. Likewise of course, the government paid for me to go to Imperial and funded that institution. I received that funding as a result of competing in an open competition and making the grades they required.

        So I think you should say now which of those transfers if any you regard as unjust.

        I have also very occasionally used the NHS even though I don’t particularly see why I should be entitled to free health-care. But of course I want something back for the tax. It may be right for me to accept an unjust transfer in my favour under circumstances where everyone else is likewise benefiting from the unjust transfers, partly at my expense. Though as I have said here frequently, I am much less unenthusiastic about the NHS than social security.

      • James Monk says:

        The thought repression you mention here sounds very much like what I was saying about “There is no alternative.” Where you see an insidious effect – presumably in the assumption that there is no alternative to benefits payments – I also see a problem in the accepted norm of our financial system, which as Luke says entitles some people to a stream of income without doing any work simply because they “own” some capital. Most people think we had no alternative but to bail out the banks, for example.

        My landlord takes about 14 times as much of my salary each month as the council takes in tax. At least the council empties my dustbin. The landlord does nothing, but people generally accept paying the landlord as “normal” and complain more about paying the (smaller) tax. So by this point in history you don’t even need an implied threat of violence – you just need your premise to have become so widely accepted that all alternatives are forgotten. That doesn’t make the premise right.

        Clearly, the mass media is going to favour the interests of those who own it, so over time the perceived norm will align with those interests without using even so much as the threat of a blunt stick. The threat of physical violence is primitive in comparison.

      • timlshort says:

        Well, you are certainly right to take a Sartrean line and insist that there is always an alternative – it may be unpalatable or unconventional, but it is still there and may be right.

        I think people are entitled to a return on capital they own basically through having earned the money. It represents their previous labour crystallised and they should be able to choose where to invest it, at their own risk. If you think that no-one should inherit great wealth and get paid for sitting around, I agree with you, and return to the 100% inheritance tax suggestion I made in response to Luke. The efficient allocation of capital, for which there are sound economic reasons to think can only be arrived at by the market, also benefits all of us.

        There was an alternative to bailing out the retail banks but it would probably have been much worse in terms of outcome.

        We need to know how the landlord came to own your building. He may have built it himself expressly for the purpose of renting it out. More plausibly, it was more efficient for him to work at a field in which he had a competitive advantage, crystallise that labour in the form of capital which he then invested in bricks and mortar while hiring a specialist builder. All of that is fine isn’t? If on the other hand your landlord is the Duke of Westminster, then fine, you and me are on the same page.

        I guess the difference between rent and tax is you have choices as to whether you pay rent. Realistically the alternatives are unpleasant, but you could at least decide to live further out of London to save money, or move to Thailand where a room costs about £8 a day in a hotel, or share a flat with others to save money. There are things you can do. You can’t do much about tax. When I did a bond trade in New York last year, the government decided it was entitled to a decent slug of the profits (then 18% and likely going back to 40% in a bizarre Tory change to Labour rules) just because I live in London. They gave me nothing for that beyond the questionable value of the services they were previously providing, and they wouldn’t have helped me out if I had lost on the trade.

        The media point is fair, but there is the BBC and also I don’t think any of you, I or Luke is interested in thought repression.

      • James Monk says:

        I think the entitlement to a return on capital ought to depend on how you expect to make that return. If you use your capital to design and build a new type of thorium reactor, say, then you are taking a risk (it might not work, people might make electricity cheaper elsewhere…) and it is fair enough. If you simply buy an existing asset and extract rent on it then I don’t think you really did much. So we should come up with a taxation regime that encourages the first and penalises the second, which is actually quite hard, but I have no reason to believe impossible. This point is actually the key inconsistency in the current system, I think. We agree it is probably fair that people are allowed to earn as much of a living as they are able to and desire (ignoring for a minute what is a fair definition of “earn”), but if they use the resulting capital to reduce the life chances of others, including those yet to be born, it’s not really fair. If, on the other hand, you spend it all on champagne, fast cars and fast women there isn’t so much of a problem.

        In the case of my landlord I suspect he acquired some money from a family member (since the monthly payment is to a different first name) and took out a large loan. Thus, to my mind he is simply the bag man for the banking industry. Seen like that it is clear why I think banks are a bigger burden than tax – if you swapped the numbers around I might think differently.

        I think the word monopoly has to be involved here. It’s not really feasible for everyone in London to move to Thailand, so we’ve got to pay whatever is the local rent, which I am claiming is monopolised by large financial interests. Part of the justification for taxation is to work against these sorts of monopolies.

        On the media, I guess that is another example where a monopoly of thought is bad, and you are right that something like the BBC is the way to counter it. Independent media outlets like the BBC are quite rare globally, however. On thought repression I assume you mean we personally are not interested in repressing the thoughts of others. I would be more worried about having our own thinking restricted – how would we know? And even if we may not be interested in thought repression, it does not mean others are not and have not to their own advantage. Do you not think it a bit disturbing the way one particular brand of financial capitalism seems to dominate the space of acceptable economic ideas?

      • timlshort says:

        No, the entitlement cannot depend on method, because then we would lose the primary benefit of a free market in capital. The landlord is taking a number of risks including your failure to pay, uninsured loss, decline in house prices, voids and a long additional list. But apart from that, if he weren’t allowed to make a return on his capital by renting you the house, you wouldn’t have anywhere to live.

        You can rent a room in Hull for £55 a week, which is actually less than the Thailand number. Or do you think there is a basic human right to live in London, one of the most expensive piece of real estate in the world, at my expense?

        You could tweak the taxation system to achieve your end, but I wouldn’t recommend it. Ending taxation altogether having noted that it is on a par with forced labour would make more sense.

        If I adjust your sentence to “if they incur the resulting debt thus reducing the life chances of others, including those yet to be born, then it isn’t fair” then I can agree with it. You in conc=sistency ought to as well. But in the meantime, give me an example of someone using capital to reduce the life chances of the unborn.

        I have every intention of complying with your spending suggestions since I am a good citizen.

        The local rent cannot be monopolised by large financial interests because it is mostly composed of private individuals but also since we are not a communist nation, the market is open to anyone to join it. That means if there is a single £ above the minimum profitable rate being made anywhere, then it will pay someone else to come in. This is why the market works for all of us all the time, invisibly.

        The Economist is privately owned through a sort of hands-off trust arrangement and is in my mind the best journalism in the world. The FT is pretty good too. I don’t rate Sky though.

        It disturbs me not at all that financial capitalism is dominant because contrary to your assertion, it is constantly being challenged. There were also large-scale failed experiments in alternatives in the last century in many parts of the world. It is incumbent on you to explain why it is wrong that China is using the market to lift a million people out of poverty every month.

      • James Monk says:

        You claim the landlord is taking a number of risks, but is he really? Tenants are usually vetted to ensure they have sufficient income and employment, so there is little risk there. I paid a deposit that would cover a substantial amount of damage, and no doubt a portion of the rent covers his buildings insurance anyway. A general fall in property prices may lose him money, but the government seems intent on propping the price up with the value of my future earnings and current savings. In any case, even if that last risk exists it is a bit like arguing that if the landlord put all his money on the 3.15 at Newmarket then I have a duty to cover that risk. This is all irrelevant, anyway, as I shall explain, but I wanted to question the assumption that there is a risk, and if there is it is of a fundamentally different nature to risking capital on a new invention or business.

        In suggesting that the market solves all, you make no attempt to separate the bricks and mortar from the underlying land. You are right that, to some extent at least, the building itself is subject to market forces: if I don’t like the quoted price I can build one myself with my own labour, or negotiate to hire my own contractors. In any case, the price to construct a flat such as I live in is not too high, somewhere in the ball-park of £50k, possibly less I believe. Presumably that price includes whatever profit the builder is happy with. What you are really paying for, then, is the land. I cannot manufacture land with my own labour, nor can I contract someone else to build some. Increasing the price of land will never increase its supply. I will therefore argue that there can never be a true market in land – it is always a monopoly. Your assertion that the flat would not exist had the landlord not taken a risk is false because what we are really talking about is the land, which certainly would exist. Please bear in mind that the underlying land where I live is owned by the church, and I ask you how they came to be in possession of so much property?

        When I talk about large financial interests monopolising land rent, this is what I mean: over a multi-decade timescale the banks will loan money at interest for different people to repeatedly buy the same piece of land. This is functionally the same as a landlord charging rent – only the timescales are different. This is made even more clear by the existence of 99 year leaseholds, such as the one that the church extends to my landlord. The financial sector thus extracts a rent from the rest of the economy by having a monopoly on the ability to issue credit to “buy” land, which is essential for all economic activity (even someone wanting to start their own new bank). The financial sector has a symbiotic relationship with the government: the government guarantees the property rights that allow this rent extraction and in return receives tax. Additionally, if government did not extract capital from the general population then the land would stay in the hands of those rich enough to buy it instead of being resold to a new owner at interest. Those few who accrued all the land/capital would eventually control the economy and would *be* the government, so it is necessary for the government to raise taxes in order to be the government. By arguing against taxes you are arguing for the removal of government, which would be replaced by another de-facto government.

        So if we are going to worry about the government extracting an un-earned income from us then I am going to require that you also solve this related problem of land rental, and from most people’s point of view it’s a much bigger problem. In the extraction of other finite commodities (oil form the N. Sea, say), the state charges companies a fee to operate, or in some cases nationalises or semi-nationalises (Statoil) the industry. There is an implicit recognition that the commodity was not manufactured and therefore belongs to the general population. Why is land any different?

        it is not incumbent upon me to say anything at all about China because I did not mention it and it has nothing to do with my current argument. Further, I question your premise that China has “used the market,” when the Chinese government employs a large amount of state control in many aspects of life, including economic planning.

      • timlshort says:

        Yes. Tenants are by definition in lower socio-economic groups, they will usually have less stable employment patterns and will earn less. In any case, in the market economy, if anyone thinks landlords are being excessively rewarded for minimal risk, then it will be open to them to come in and offer the service at a lower rent. In a planned economy, there will be no rewards to anyone from providing a service, so everyone will receive the service appropriate to the lowest quality i.e. highest risk tenants. The government should not intervene in markets for houses or anything else, but the latest proposals to fold back the FSA functions into the Bank include a duty to monitor house price bubbles and act against them if necessary.

        You don’t have any relation to the landlord’s decisions in relation to betting on a horse but you are one of the causes of his risk in terms of being his tenant. And again, in a market economy, if you don’t like it, you can go elsewhere.

        I obviously don’t think that the market solves everything. I just think it is Ricardo optimal. Land is very cheap in other parts of the UK and you have no basic human right to live in one of the world’s most expensive cities. In fact, the market is telling you that you should not. You are paid a public sector salary which varies less than a private sector one would – these are much higher in London because for example if you are a stock exchange trader, you must be here. You could do your job in Edinburgh just as well. Who has the monopoly in land? The Queen? And why do you even stay in the UK?

        I would immediately disestablish the church and seize all the assets but that is kind of unrelated to this discussion.

        Why do you need land to run a bank?

        Why would only a few people acquire all the land? Is it because some people are smarter than others?

        You are not excused from the requirement to say something about China because you did not mention it. It is going to be very hard for you to deny that the famines and cultural repression belonged to the planned part of the economic history of that country and the part which has involved much poverty reduction has been driven by market reforms. There is a wealth of evidence for that.

    • James Monk says:

      I don’t have time to fully reply to all these points right now, but you are going to have to prove that I am a risk to the landlord. I googled for the statistics for cases where there was a dispute between the landlord and tenant over the return of deposit. This gives an indication of how often the landlord loses money. The first source I found is a scheme appointed by the government to hold tenants’ deposits, so presumably they would know:

      http://www.mydeposits.co.uk/news/pressreleases/20090401-tenantstakeitall.htm

      They indicate that 0.35% of deposits go to arbitration, and in 90% of cases the tenant gets at least some of the deposit back, which indicates that the landlord’s loss is less than the deposit. That means in approximately only 0.03% of contracts the landlord loses more than the deposit he holds as security. You then have to weight the fact that I am a lower risk than average because the landlord checked with past landlords and employers, i.e. I have a proven record of not creating a loss, so the risk is really less than 0.03%.

      0.03% is not a very big risk – in most cases it is consistent with 0. It certainly does not justify the large amount of rent. He is simply extracting an income without working.

      • timlshort says:

        You must be wrong that the landlord has discovered a risk-free source of profit because if he had, we would all pile in. This would reduce those profits to the same levels as available from other risk-free sources – such as Gilts, in normal times when the government doesn’t try to borrow 12% of GDP a year in peacetime. Those times may even be coming back. So your argument cannot succeed, and in principle I don’t even need to knock it down.

        However…even if you are right that the landlord often gets to hold on to deposits, this is a problem you have with the legal system that could be solved by improving the Small Claims mechanism. And in any case, you only address the risk that the deposit does not cover the losses to the landlord from damage and non-payment of rent. That may well be a tiny element the overall risk incurred in terms of house price decline – I would guess that is far and away the largest risk item – and then the opportunity cost of doing this job. Again, if you can do it in no time with no effort and no money while avoiding all risk and making a profit – go ahead.

      • James Monk says:

        So to summarise, your argument is apparently going to be that a landlord is justified in taking an income because he took a risk, and you say the proof that he took a risk is because he is making a profit, a.k.a income. I have never done a philosophy course, but I believe that line of argument doesn’t cut much mustard in the circles that you like to hang around in.

        Lame.

      • timlshort says:

        Nice try, but the criticism you are attempting to make out is called ‘begging the question’. In order to be guilty of it, I would need to have argued in a way that looks like ‘A therefore A’. The following different thing is what has happened.

        1). The landlord is justified in taking an income because he took a risk.
        2). We know he took a risk because he is making an income.

        That’s fine. You need it to be:

        1a). The landlord is justified in taking an income because he took a risk.
        2a). The landlord took a risk because he is justified in taking an income.

      • James Monk says:

        Under 1) and 2) is it ever possible for a profit to be unjustified? I think not because you are saying a) the justification is risk b) the proof of risk is the existence of profit and therefore c) all profit is always justified. The only justification you have for the existence of the profit is the existence of the profit. i.e. A is justified because A exists. Therefore under your assumptions all instances of A are by definition justified.

      • timlshort says:

        An unjustified profit would have to be something like blackmail. You are taking some risk, but not in the way markets would recognise. If you have otherwise moved faster than anyone else or created a monopoly by fair means (i.e. you invented something and own the patent and not you have unfairly competed away all other market participants) then you probably are making a justified profit even if it looks excessive to some. So there are some circumstances where 1). and 2). would not hold. However, those cases are not relevantly analogous to the landlord case.

        In the landlord case where the returns are justified, both 1) and 2) are true. For a profit in the landlord case to be unjustified, then 1) would have to be false. 2). could still be true. An example of 1). not being the case would be where the market rent for the flat was £50 a week, but he made you pay £100 because otherwise he would reveal some damaging information about you. The reward has generally to reflect or be correlated with the risk to be justified, unless there are other differing factors.

        So you are right to say that no profit can be unjustified if both 1) and 2) are true. But that’s fine. This is because 1) includes the definition of a justified profit (perhaps with the insertion of ‘reasonable’ before ‘income’ and ‘appropriate’ before ‘risk’. And then the definition of an unjustified profit would be the falsification of 1) which is equivalent to ‘The landlord took an unjustified income because it exceeded the amount appropriate for the risk taken.’ And then of course 2) comes into play. His income would be competed back to the fair return for risk because others would come in to offer the same service. They would be able to rent a similar flat for £50 to you. You would still have the £50 a week blackmail to contend with – because there is no market in that.

  7. gabs says:

    Re the NHS and education, you say that both ‘are public sector monoliths which probably waste 1/3 of the money put into them’. Why do you think that? Do you think the NHS, say, is especially inefficient when compared to private sector health care, or something?

    • timlshort says:

      Gabriel – yes. Partly because it is so immense, which will make it imposssible to run efficiently. 1.5m people work in it; it is the sort of size of the Chinese Army. But also there is a lack of competition which would drive efficiencies because it always does, and people do not experience a personal benefit from good performance. The latest information seems to indicate that Scotland is one of the problems.

      http://news.bbc.co.uk/1/hi/health/8468897.stm

      Now interestingly, Blair had this right and the Tories have got it wrong. Blair let contracts on the basis of ‘what do you want to get paid to do 500 cataract operations in Norwich?’ and a South African company put in the lowest bid. Obviously you have to regulate them for safety and relapse rates, and that sort of thing. But they got twice as much done as the NHS did. This is the right sort of approach. What the Tories now seem to be suggesting is that hospitals should suffer financially for poor re-admission rates. This understands half of the problem in that we want people’s performance to matter to them, but forgets that while the hospitals are in the public sector: it’s still our money! So we would really just be punishing ourselves.

      You will have noted from other comments that my major problem is with social security, because however inefficient the NHS is, I know what it does and why it is valuable.

      • gabs says:

        Tim – I know it’s not your main focus, but it just seems to me there’s often an unquestioned assumption that goes around that the NHS (or indeed state provision of education) is not efficient, but this is really not obvious (I don’t have a view on this btw; I’m not committed to thinking the NHS is relatively cost efficient or inefficient.)

        If we’re talking about Independent Sector Treatment Centres, I think I’m right in saying the balance of evidence suggests they are less cost-efficient than the NHS (being about 10% more expensive), and that many of them were run down for this reason. There are some reasons that they can appear cheaper though:

        (i) Private companies can cherry pick easy procedures, with known outcomes and low risks.
        (ii) Private companies can cherry pick patients, again low risks groups.
        (iii) Private companies don’t have to provide expensive staff & equipment to ensure against risks (e.g. resuscitation facilities, also a reason why private hospitals are often close to NHS ones).

        There have also been some worries about quality of provision in some cases (I’m particularly thinking about a scandal a couple of years ago concerning negligent hip (or knee?) surgery by one such contractor, but I can’t find the info on it now).

        One thing a state run system does do is keep top-end pay much lower, and payroll is I think the biggest part of NHS spending. Of course, state run systems typically keep pay higher at the low-end too, so if you’re not concerned by issues of pay inequality, only pay issue question will be whether the increase in high skilled worker’s pay would be balanced by corresponding cuts in low skilled people’s (and increases is worker efficient, and so on).

        If you think contracting out will cost less, you also have to have faith that the government will be able to effectively negotiate/contract with companies that can afford much more expensive lawyers, make deals amongst each other, and so on… I’m a bit sceptical about this.

        I think it’s the case that across Europe, state run systems are a cheaper, but also slightly lower in quality, than comparative private ones.

      • timlshort says:

        All fair points which I will need to look at in detail…

  8. lukeroelofs says:

    “It looks like the remaining difference between us is that I would in addition deny that democracy legitimises the state because in fact nothing can.”
    I hope that’s not the major difference, because I would agree with you there. I think our disagreement is that I see government and the capitalist economy as allies, mutually supporting and on a par, whereas you see the capitalist economy as a just natural state of affairs that is in its essence indifferent to whether there’s a state or not.

    “I would claim that essentially I was an employee of various firms who hired me voluntarily and paid me what they thought was necessary to retain me. Eventually I got fired. All of that seems fair to me…You will regard that [benefits] presumably as a fair transfer since I was entitled under the regulations obtaining at that time to make the claim…So I think you should say now which of those transfers if any you regard as unjust.”

    1) You were paid by a firm only because they had money to pay you, so the justice of that depends on how just it is that they had that money in the first place;
    2) You were paid because someone thought it advantageous to pay you given the existing conditions and the opportunities available at that time, given what others were getting paid, what others would pay you, etc, so if there’s major injustice in those conditions that at least calls into question the justice of the payment;
    3) You were paid in a currency that’s usable for both capital and consumption because that is the currency of our society – if it’s unjust that we have such a currency, then such payment is to that extent unjust, even if unavoidably so;
    4) You were paid in a currency that exists indefinitely over time, rather than having any natural decay to it, so the same issues apply as in 3.;
    5) You were paid in resources that potentially could have saved lives if used in particular ways, and so if one feels that need constitutes a legitimate moral claim on a par with other factors (e.g. effort) then the giving of that money to you and not to more desperate causes is to that extent unjust.

    So there’s a large range of ways that although it may ‘all seem fair’ on the surface, it is potentially open to numerous challenges on terms of justice. I’d say the same, by the way, about all the state-mandated transfers you were involved in.

    So overall, I would say that injustice is more a systemic thing than a matter of individual transfers (although there are certainly individual-transfer conditions that can be inherently unjust, such as fraudulent ones).

    • timlshort says:

      Yes, I do think there is a difference in legitimacy between the state and the market. I think the latter arises naturally from ineradicable elements of human behaviour. If I have one free hour tomorrow, and you want me to read a chapter, you might offer me a pint to use my free hour. But James might want me to look at a graph, and offer me two pints. Then, ceteris paribus, I will do the latter. That seems extremely normal, and also beneficial in that he has valued the scarce resource more highly than you – it is always open to you to offer me three pints of course – but short of that, it means that you perceive the benefit of me reading your chapter as lower than he sees the benefit for him of doing what he wants. This is the efficient allocation of capital/resources/effort on a market basis and is why the whole thing works. And international markets in everything are built up on not much more than that. If you think a bond is worth more to you than me – bearing in mind all the secrets information you may have about your plans and particular views you may have on geopolitics etc – then you will be prepared to pay me more than I need to sell it at and a trade is possible and beneficial to both sides.

      The parallel with the state is dual. You and I have both arrived at the illegitimacy of the state as currently constituted from different perspectives. Mind would be Nozick’s in Anarchy, State and Utopia which I imagine would be anathema to you. But on both sides, I would want the state to get out of the market, especially in the form of taxing me to pay social security, and also to get out of the state as it were, i.e. scaling itself back to a minimum and having nothing to do with questions like who marries who and whether some men are homosexual.

      1). Yes. I don’t know what you have in mind here. I don’t believe that the bank I used to work for had any dealings with Jewish gold in Nazi times, but I imagine that is the sort of thing you mean. As far as I know, all the money paid to me was legitimately generated by normal market activities. But on one view, I paid myself because I would typically make 5% or 10% of what I brought in and I know for a fact that all my transactions were legal. If for no other reason than I would typically have 50 lawyers reporting to me on each of them. [I know I have equated ‘legal’ with ‘legitimate’ there and you may want to question that.]

      2). The market means that such injustices do not exist. If someone is being paid less than they could get elsewhere, they should move. You may have noted in my Kerviel post that I questioned the oddity of his salary being very low.

      3). Yes, but I would want you to unpack that claim.

      4). I agree, and perhaps the 100% inheritance tax idea will work here.

      5). This is exactly right and the point I am making in The Global Poor.

      Not sure I want to follow you on justice as a system rather than being made up of individual transfers because I think the latter approach is the only one which can build a complex pattern justly – we cant get there from principles. Viz, Rawls thinks we should have fair equality of opportunity, but we can’t get there because of e.g. the enormous cost of preparing someone in the lowest decile of the IQ graph for a shot at Oxford entry. I presume that this is not economically unfeasible given infinite resources for this one individual – decades of one-to-one tuition by world-leading specialists etc…and we can’t really do that sort of thing…

      • lukeroelofs says:

        “And international markets in everything are built up on not much more than that.”
        I beg to differ. An enormous amount of extra political power and effort and engineering has gone into the international capitalist economy than the (perfectly natural phenomenon) of human bargaining.

        Analogously: it’s natural for people to form long-term emotional bonds, and commit to those bonds, but any particular set of marriage laws is a political artifact.
        It’s natural for people to defer to perceived expertise, but any particular technocratic bureaucracy is a political artifact.
        It’s natural for people to pursue knowledge and associate with people they think they can learn from, but any particular educational system is a political artifact.
        Just so, it’s natural for people to bargain in whatever manner is convenient and with whatever they find themselves able to offer, but any particular system of property rights and any particular distribution thereof is a political artifact.

        Moreover, these various political artifacts often introduce more systematic and extreme disparities of power, and thus become tyrannical in spite of the naturalness of the phenomenon that they organise.

        1) “I don’t believe that the bank I used to work for had any dealings with Jewish gold in Nazi times”
        Well, that’s an overt example, and I think I can make a strong case using only such overt examples. For instance, anyone whose business activities involve mobile phones has probably benefitted from international mineral companies funding murder and warlordism in the Congo. I’d be very surprised if any individual or company could say that its present wealth owed absolutely nothing to any war, massacre, dictatorship or colonialism.

        But even without overt and obvious examples, the point is that if ‘normal market activities’ are, say, unjust 20% of the time for more philosophical reasons (e.g. the next 4 points), the interdependence of the capitalist economy means that everyone else’s assets will partially depend on that 20%.

        2) So firstly, market failure to varying degrees is enormously widespread. Secondly, your antecedent is “if someone is being paid less than they could get elsewhere”, which ignores the possibility that people are unable to get paid as much as they deserve anywhere in the present economy.

        3) Unpack it how? Suppose I think that the relevant principles of justice are a: it is unjust to increase power differentials artificially unless required to by some other principle of justice, b: it is just that people should receive rewards for their effort in proportion to their effort expended and the benefit that this effort gives to others. Suppose I also believe c: it is possible to reward people in such a proportional way without artificially increasing power differentials, e.g. by using currencies that decay over time or which can only be used for consumption and not for investment. Then it will be unjust to use a currency like our money, because it enables large inequalities of power to arise.

        4) My worry about 100% inheritance tax is that it can be avoided fairly easily by giving all your assets to your adult children when you hit, say, 60, and then living in a house that they own. I.e. if I can still freely give away money, I can reconstruct the same basic pattern of inheritance, except in cases of sudden death or ill-preparedness.

        5) Either way, your proposals in the case of the global poor or inheritance tax are beside the point – we’re not talking about your hypothetical ideal market but about real capitalism that exists. Our original point of disagreement, remember, was whether, in the real world, the state’s enforcement of capitalist property constituted a protection racket.

      • timlshort says:

        If you spend any time in international financial markets, what you observe is politics and law trying to get in your way; it is the opposite of the idea that there is an enormous political systems which supports markets. Since we are agreed that the state is illegitimate, we will both presumably be happy with a rolling back of the state in general and in its pretensions to market involvement in particular.

        I don’t see why these political artifacts you mention need to exist or why they would ‘often introduce more systematic and extreme disparities of power’. That would mean they would, for example, bar entry to financial markets of people not born rich and also give extra profits to those who make a profit, as opposed to tax them in order to move more closely towards your favoured pattern of distribution.

        I do not agree that any distribution of property is a political artifact but it is precisely that I want to get rid of – we should just have the pattern resulting from voluntary transfers.

        1). This is akin to a doctrine of original sin. I am sure that there is no one in the world who has not involuntarily benefited from an unjust act. In fact, that is probably provable at the 10^-18% level you think is relevant by the following simple example. All social security payments are unjust transfers. I imagine there is at least one person in the world who on one occasion has sat in bed watching Jeremy Kyle rather than commit a crime because they can sign on. This means that the crime statistics are lower by one incident than they would be without the unjust transfer. Therefore, everyone in the world lives in a slightly lower crime world and feels slightly better. If that is enough to prove your case, then anything will. In the real world, if no one currently involved with a company has ever done anything illegitimate, that’s good enough.

        You would be right if the number of unjust transfers in normal market activities is 20%, but unless you could social security within market activities, it isn’t. It isn’t any measurable amount. That amount would dramatically increase in a planned economy however.

        2). Market failure is widespread – where and how? But anyway, I don’t argue for the end of public funding of certain activities such as health and education; I merely claim that public sector provision is inefficient and should be terminated.

        3). a and b fine, and that’s what we have. c no because the transfers are just. Not being able to use cash for investment means no houses for James to rent, no buildings, no roads, no hospitals…Decaying currencies are what we have in a world of non-zero inflation. Since inflation is caused by excessive benefit spending right now, you have exactly what you want.

        4). OK. But there isn’t a better option.

        5). Not if the pattern is just – which is where we are also disagreeing.

  9. lukeroelofs says:

    “If you spend any time in international financial markets, what you observe is politics and law trying to get in your way”
    If you spend any time in ______, what you observe is ________ trying to get in your way. Obstacles, and things which spark political conflicts among powerful groups, tend to be conspicuous: enabling conditions, and things which there is political consensus about, tend to appear invisible.

    “we should just have the pattern resulting from voluntary transfers.”
    But that means all I can offer you is my personal services and whatever I presently have physical possession of. I can’t offer you numbers in a bank account, or pieces of paper that others will give you food for, or the huge stock of magnesium ore that I have in a warehouse in Kuwait – because I don’t ‘have’ any of those. At the moment, people will manipulate those things if I ask them to, and if they don’t others will incentivise them to do so, etc. but that’s a political artifact.

    Without political artifice, international financiers can offer the sum value of ‘a human standing inside a building shouting and waving their hands while watching a screen’, and nobody wants that very much.

    1) “In the real world, if no one currently involved with a company has ever done anything illegitimate, that’s good enough.”
    I believe that responsibility, like every other natural phenomenon, comes in degrees. The degree of proximity of an injustice to me, the degree to which it enables something I do, how long ago it was, how much knowledge or influence I had over it, all affect the degree of my responsibility. This means that nobody is likely to be entirely ‘clean-handed’, and as you say this is trivial. But my point is just the conditional: *if* injustice is widespread, then it will ‘contaminate’ each aspect of the system – which is why I say that injustice is a system feature. This is often called ‘privilege’.

    2) Externalities, asymmetric information, public goods, and the general fact that market prices don’t reflect the utility of an outcome, but its utility weighted by the wealth of the people it benefits. Etc.

    “I merely claim that public sector provision is inefficient and should be terminated.”
    Thankfully we’re not discussing that.

    3) “c no because the transfers are just” no because they’re not, according to a
    “Not being able to use cash for investment means no houses for James to rent, no buildings, no roads, no hospitals”
    Please. I spoke of individuals not being compensated with control of the means of production, not of there being no means of product. Anti-capitalists don’t want all the capital in the world destroyed (except possibly primitivists)
    “Decaying currencies are what we have in a world of non-zero inflation”
    What I was suggesting was a currency that decays fast enough to make unplanned personal hoarding/saving impossible. We clearly don’t have that.

    4) You think there is no better option; I disagree. But that’s another story.

    • timlshort says:

      This is a Heideggerean point I suppose and good as far as it goes. There doesn’t seem to be much political consensus around right now that says that politics (read ‘the people’) should get out of rthe way of bankers and markets. In fact, something quite different seems to be going on.

      OK so I need impartial and rapid enforcement of contract law (incidentally, lack of this seems to be the key problem in developing nations and if I could do something about that with the aid budget, I would be a lot happier about spending it) and I need a common accepted medium of exchange. You can term these political artifacts but I do not see why they could not arise in Nozick’s ultraminimal state, itself a product of the combination into a locally dominant protective agency.

      1). I am happy to agree that responsibility is not binary, but I still fail to see how you have made out that the system is corrupt *enough* for your analysis to hold. I think you were claiming that 20% of transactions were tainted. If we consider 20% of the £1,500bn of FX trades that clear through London every day – do you seriously think that type of number has got something to do with blood diamonds, or slavery or something? And should we not have some kind of cutoff such that we write off any illegitimacy associated only with people now dead? Or do you really want us all to burn because Adam took a bite from the apple?

      2). We need to fix that viz. for climate change but we can do so and if we do, we will have an immense force at our disposal.

      3). Individuals are indeed compensated by ownership of the means of production if the invest their earnings in shares; an opportunity you wish to take away from them.

      • lukeroelofs says:

        “do you really want us all to burn because Adam took a bite from the apple?”
        We started talking about justice because you said the status quo is sufficiently just that violently enforcing it, beyond being a good a idea (a consequential judgement), is moreover not a protection racket (a deontological judgement).

        I never said that everyone who participates in injustice should ‘burn’, or indeed be punished in any particular way. I’m just disputing your invocation of justice. I’m not even arguing that the protection racket to maintain property rights is morally wrong (though I think that), since you might support it on consequential grounds. I’m just saying it’s the same type of action as a protection racket.

        “do you seriously think that type of number has got something to do with blood diamonds, or slavery or something? ”
        Yes, I do. But you haven’t defined “got something to do with”.

        “We need to fix [market failures] viz. for climate change but we can do so”
        Irrelevant. You said ‘there could never be a case where the market doesn’t give people what they deserve (in some sense of deserve)’, I said ‘there are many market failures’. That’s unaffected by what we’ll do in the future.

        “There doesn’t seem to be much political consensus around right now that says that politics (read ‘the people’) should get out of rthe way of bankers and markets.”
        But where has anyone publically said ‘we should stop enforcing banker’s property rights so strictly’? Nobody says that, because that basic intervention isn’t recognised as political.

        “I need impartial and rapid enforcement of contract law…and I need a common accepted medium of exchange. You can term these political artifacts but I do not see why they could not arise in Nozick’s ultraminimal state”

        1) ‘Rapid enforcement’ of rights and ‘common acceptance’ of currency are clearly things created by political action, including violence (indeed, you yourself admit they *are* violence, unless ‘enforcement’ means something very different from it does in every present legal system).

        2) Who cares if they could have arisen in some hypothetical Pinkertopia? They did in fact arise politically in this real world.

        3) Nozick’s ultraminimal state is clearly a political artifact – it’s created by people collectively making and disputing claims of whose rights have been violated and what sorts of violence a given group should inflict on another group or individual.

      • timlshort says:

        You accept that responsibility/culpability is a concept that comes in degrees, so let’s see where you want to draw the line.

        Imagine a possible world not actually too far distant where all financial transactions of any kind for everyone go through a superOyster card. A computer knows about all transfers between everyone – maybe just in London. Panels of independent economists assess and charge for negative externalities such that my cab fare is boosted by elements to account for a). increased risk to pedestrians, b). climate change effects, c). congestion and anything else. And those additional amounts are used to offset the various problems or consequences in some way.

        I go to the coffee shop and buy a latte. I am served by Mary, who also owns the coffee shop. The £2 I give her by waving my card goes directly to her card.

        Case A). This morning, Mary was incontrovertibly responsible for inflicting mild non-injurious harm on her cat in that she did not feed it because she was late to open the shop.

        Case B). Mary incontrovertibly committed a murder five minutes ago.

        Now the superOyster computer can have a number of powers including i). disbar Mary from all financial transactions until her case is considered by the authorities, ii). same until she hands herself in, iii) disbar me unless I contact the legitimate authorities with her location or d). any mechanism you like that is agreed, impartial and legitimate.

        I think you are going to say that applying these powers of the computer is fine in case B) and excessive in case A). Or do you want to track back through an unlimited number of transactions to find some that took place before both Mary and I were born that were illegitimate to mean I shouldn’t get any coffee from her because she shouldn’t be allowed to brew it or at all because I shouldn’t be allowed to drink it because of our joint responsibility for the gunboat diplomacy of Lord Palmerston?

  10. lukeroelofs says:

    In your hypothetical example, all I’m committed to saying is that (to some extent) you have only a utilitarian claim to drink your coffee, rather than an additional claim of justice. If it can be truthfully said ‘you wouldn’t have that coffee, were it not for Mary’s unconscionable neglect of cats, or wouldn’t have it, were it not for her murder’, then that undermines any sense that the distribution of coffee here is an agreed upon, presumptively fair sort of distribution. That doesn’t in itself give a positive reason to stop you drinking the coffee, because considerations of utility are still relevant and it will probably be better to let you drink it.

    • timlshort says:

      So the transfer of the £2 from me to her is just in both cases?

      • lukeroelofs says:

        I’m not sure. I don’t think it’s beyond potential criticism, but that would depend on details like what you know about or what effects it has. But it’s not unjust in the strong sense that it should definitely be prevented for its own sake.

      • timlshort says:

        OK. What type of thing would make it unjust and put it in the 20% category of transactions you say are tainted in some way?

  11. lukeroelofs says:

    20% was a random figure. I don’t know how to count transactions for one thing – for another, how many are ‘tainted’ is proportional to the degree of taint we’re talking about.

    I don’t even know if we’re using the same sense of ‘just’. You seem to want to talk of the ‘Unjust’ as Bad stuff that stands out from the everyday and should be treated harshly (what violates justice). I want to speak of the ‘unjust’ as the opposite of the ‘Just’, which is what you claimed the present distribution of property is (what is not required or specified by justice).

    As I see it, the argumentative role of ‘Just’ is that it gives carte blanche to enforce what is Just by whatever means are necessary, even means that would otherwise be (considered in themselves) immoral. That’s what you initially claimed, and that’s a strong claim, for a very special sort of quality. It suggests that there may be only one Just distribution, or only a few. Now you’re trying to talk about a lower-case sort of ‘just’ where everything is to be considered just unless there are special circumstances.

    If your question is ‘what would something have to be to be unJust’, i.e. to lack the special quality that redeems violent enforcement, then I will answer happily ‘anything that is the way it is, in large part, because of who killed who’. Conversely, if the question is about things being ‘Unjust’, i.e. positively standing out as violations of justice, then I’m not sure I have a ready answer.

    • timlshort says:

      Well, there are two obvious ways to count transactions, by number and by volume. I will be happy for you to proceed in either way to make out that 20% or even 2% of transactions are unjust on either basis. Or even to suggest how it could possibly be true.

      I agree that we have different definitions of ‘just’ but I do not see how that will help you with the above problem.

      I think my initial position was to argue for the status quo and for the minimal amount of intervention to change that. A sufficient condition to go against that would be to show an unjust transaction had taken place, for example a social security payment, and to reverse the effects of that. I don’t think I have said ‘by all means necessary’ – I am not sure I would hang social security recipients. I would just cease paying them because I can’t see why we should unless there is a basic right to subsistence at public expense, and if that is true, we need to exchange the foreign aid budget with the social security spend. Also I have not agreed with ‘violence’ as far as you wish to go with it, unless we modify ‘violence’ to include ‘involuntary incarceration after failure to comply with rules’. But probably we shouldn’t discuss that because we are both opposed to the state locking people up.

      There are a very very large number of just distributions; they will change all the time, but they are nevertheless a small subset of an even larger number of possible distributions.

      Fine – let’s focus on ‘anything that is the way it is, in large part, because of who killed who’. Now we can agree, can we not, that I can then have a completely untainted transaction with Mary over the coffee if she did not feed the cat but maybe that is not the case if she just murdered someone? And if you agree to that, you need to show that 20% of transactions are with murderers. Or 2%.

      • lukeroelofs says:

        If Africa had done to Europe what Europe did to Africa, I’d probably have been born into a condition more like that of the average African than like my present one, and then I’d have had very different assets.

        If different factions had won the US or UK civil wars, I’d probably have been born into a different class background, and again ended up with quite different assets.

        If WWI had ended differently, a different set of companies would probably have ended up with control over Middle Eastern Oil supplies. If any number of Middle Eastern wars had gone differently, my family would have paid a different price for oil all their lives – similarly, if things had gone differently in Rwanda and the Congo, different prices for electronics. If the wars and revolutions in China had played out differently, we might have paid different prices for manufactured goods. Coups and civil wars in Latin America affect the prices of coffee and copper and whatnot. If the prices of all those things were different, a lot of other things would be different.

        Now, maybe it’s not like this for you. Maybe you’re so smart and resourceful that even had you been born in a Nigerian shanty town, you’d have attained the exact same level of wealth as you presently have. Maybe everyone who hasn’t is less smart and resourceful than you are. But I don’t feel like that’s the case for me – I feel like I’m just incredibly lucky that I was born in an affluent household in a country which had recently dominated the world, and not in one that had been dominated.

      • timlshort says:

        Everything in your first three paragraphs is true, but of course we need to define how different ‘different’ is. Your claim is that the initial distribution of assets is crucial and cannot be overcome. This I submit is a Rawlsian picture of wealth creation which involves it just being a distribution of assets which are created by the government and doled out by the government. On that picture, naturally it is correct that everyone should get the same. That is how it is the public sector. In the private sector, you are paid according to your productivity – i.e. you gain (a share of) the wealth you create. Other participants such as those who pay for the machines you use if you work in a factory or the computers if in an office are also rewarded.

        In your last paragraph, you hit on exactly my problem with giving social security payments to people born here or – I was going to say anywhere in the G20 but the position of woman and non-nationals in Saudi Arabia dissuaded me – anywhere in the developed world. These people have essentially won the lottery because everywhere else in the remaining 180 countries in the world conditions are much less favourable. Nevertheless, given free education and other extraordinary benefits, these people are incapable of supporting themselves other than at my expense. It would be ludicrous to claim that people born in Nigeria have the same life chances. I suspect that I would have maybe managed to get a job in a retail bank and avoided starvation, but there is no prospect that I would have got to my current position from that starting point. And every chance I would have been dead before five without any opportunity to exploit my abilities.

        All of this is agreed, but is insufficient for your point. In addition, you need to show that colonial exploitation is the major reason for the disparities. This is our fundamental point of disagreement. You think that historical factors are dominant in the questions as to whether Africa is being treated fairly *today* and in addition in the closely related question as to whether an individual transfer *today* is just while I only accept that there is a small and negligible factor around history. I can claim that it doesn’t matter any more very much without claiming that colonial exploitation was right, though even the claim that it was wrong needs modifying for the benefits that did accrue to colonies – which again I do not claim were sufficient to justify colonisation – but should be taken into account.

        In the UK, class is not the dominant factor in wealth.

      • timlshort says:

        In addition, just noticed you making the Saudi point in your blog today by coincidence…

  12. lukeroelofs says:

    “Your claim is that the initial distribution of assets is crucial and cannot be overcome.”
    No, I assume that where you start out is a large factor in where you end up, including a large factor in how able you are to do what would change where you end up.

    “In the UK, class is not the dominant factor in wealth.”
    As above, it is a very significant influence. Social mobility is substantially lower than 100%.

    • timlshort says:

      It depends what you mean. I agree that if you are born in sub-Saharan Africa, there is little you can do with those life chances in many, even if you have significant abilities.

      In the UK, class is a very minor factor in what you can achieve. Intelligence and application will overcome what barriers there are.

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