Thursday, 23 October 2008

'Special edition' liberalism??

. Charlotte Gore is in full swing again; bemoaning the fact that there is no party which will defend 'classic liberalism'. One wonders if she thinks that David Lloyd George was a 'classical liberal' or she thinks he was a horrible 'red'. James Graham wrote an excellent piece in The Guardian flagging-up the so-called 'Peoples Budget' of 1909 and saying it should be a model for Nick Clegg in 2009.

The budget of 1909 is interesting because it was this budget that essentially established the principle that taxation can and should be used to fund social welfare. It was also redistributive in that those on higher incomes paid more; it was increased by one shilling on incomes above £2,000 and those earning over £5,000 would pay an additional super tax at six (old) pence in the pound on any income over £3,000. Lloyd George also tried to tax land; although this was eventually abandoned in 1920.

In other words what we see here is it was clearly 'classical liberalism' which first looked to place restrictions on the free market; recognising the need for restrictions to be placed on it and that the state needed to intervene where necessary. It is complete nonsense to say that 'shackling' capitalism is the invention of 'modern socialists'. This poses an interesting question; namely who is closer to 'classical liberalism', self-styled 'libertarians' or 'evil red-eyed' socialists/social democrats'?

What we can certainly see is that the Liberal Democrats are not guilty of inventing 'special edition' liberalism. Liberalism has contained within it long before the advent of the Lib Dems the notions of social justice and social welfare.

11 comments:

asquith said...

When I consider Asquith's achievements, I can imagine the vulgar libertarians denouncing every last one & saying they were the first step on the road to serfdom.

Yet, they made this country a better place & laid the foundations for the civilised society we have today.

This is why I gave myself this name & why I am against that tendency.

Of course, there's also the fact that Asquithian liberalism is a form of classical liberalism, & is very different to social democracy & socialism. But that's for another time.

Suffice to say that I agree with James Graham's sentiments.

Andrew said...

But surely what is is missing in your post, or rather glossed over in a single sentence, is Land Tax. The idea was to start taxing land to redistribute wealth, not to start on the long road to taxing labour more and more. This fundamentally doesn't make sense.

So the people's budget was fatally undermined, and has been for the last 100 years, yet, strangely, it is only the people that would call themselves 'libertarians' who really wish to see it completed in it's original intention, the 'left' seem obsessed with taxing labour more and more. How's that working out for you?

Asquith, do you really think that if your namesake was here today he would be happy with what he saw? And do you think he would say the answer was to tax work more? Personally I think he would call us all idiots (or 'damn fools' was probably the vernacular of the time) and wonder why we haven't finished his work.

James Graham said...

Andrew - I'm not sure that's fair. There have been numerous attempts to revive LVT in the party over the years, mainly by ALTER. Yet where are these libertarians when we need people to help make the case?

Oh, I hear the occasional murmurs of agreement from the libertarian right when it comes to LVT, but nothing substantive.

Darrell G said...

I'm not talking about taxing work but taxing capital - there is a fundemental difference. I am cautiously supportive of our plans to reduce the tax take from lower and middle income families.

asquith said...

Andrew, I am well aware that the Liberals of that period did not envisage what was done since 1945 & would have regarded it as a mistake.

I am trying to take up some position between the libertarians & the social democrats, operating on a case by case basis, with a tendency rather than an ideology.

As said, I am in agreement with James Graham!

Darrell G said...

Asquith,

Whether it would have been regarded in such a way is a moot point. I can see how you could argue either;

a) it was the logical collary of what was started or

b) it went much further than ever would have been done

The point is that there is plenty of common ground between social democracy and classical liberalism - enough for the Labour Party to be an early partner of the Liberal Party and as such the notion that the concept of an 'alliance' or 'special edition' liberalism started with the Lib Dems as Charlotte insists it does is nonsense.

Andrew said...

James, that is a perfectly good point - I have done there exactly what I have been most peeved at others doing - characterising a position/people as libertarian when it/they aren't. What I was trying to get at was that, if you don't subscribe to the idea that if we just increased tax for the rich then we'd all be alright then you are classed as illiberal, or some libertarian loon. Whereas the truly liberal way forward, that would release individuals the most and redistribute wealth the best, seems to be a land tax. Until that happens we aren't going to get anywhere near the root cause of the problem. We are just rearranging penguins on the iceberg.

But as I said, you are completely correct in pulling me up on it. I will now go and commit the liberal version of Seppuku (which I think would involve some sort of plastic safety knife so I didn't hurt myself).

Darrell,

But surely eventually if you tax my capital more and more I am not going to bother having any? This is one of my (many) problems with any 'socialist' idea. When does it stop? And what is to stop me buggering off somewhere else that doesn't tax my investments so much? Surely I would then invest there rather than in Britain and the british would be worse off?

Asquith, Fairly do's!

Darrell G said...

Andrew,

Well of course if you want to go out on a limb then the 'socialist idea' is that society should not be geared towards the accumulation of capital in the first place but if you want to go less out on the same limb and argue that even under our current social system taxation should be redistributive then the answer is that it stops when you pay in an equitable way to what you earn. Currently, the inverse is true in that the taxation burden falls more heavily on those who earn less.

What would stop you is that the loopholes that allowed you to trade in Britain but avoid tax would be closed. You could but I think there is a strong case for the harminisation of taxation policy, especially across trading zones like the European Union as a first step but the argument would also be that Britain was such a substantial market that you couldnt avoid it or you could trade it for a market where your scope for profit would be less so the additional tax would be offset by a potential loss of profit.

Andy said...

Well, Charlotte would be unusual in considering Lloyd George a "classical liberal".

http://en.wikipedia.org/wiki/New_liberalism#The_birth_of_social_liberalism

This is what gets to me about the libertarian strain of thought within the party: it seems to want to just erase many years of liberal thought because it produces answers they don't like.

Charlotte Gore said...

Slight problem Andy.. I've never said any such thing.

Darrell,

As for 'tax capital, not work'.. you could never raise your 600 billion just from capital gains tax alone.

Unless you're talking about LVT.. or are you talking about taxing businesses in general? Business rates, corporation tax and so on?

I just wonder who you think really pays these taxes, and whether or not you realise that these costs are passed on to us?

You get your pay, in which 33% has been taken in tax and NI, then you pay 17.5% vat on goods, and then there's the invisible corporation taxes and business rates which are included in the mark-up, with every business in the supply chain also having to add extra to pay their tax bill (and employer's National insurance contributions) and so on and so forth.

£600 billion is a lot of money to raise. If 30 million people in the UK earned the average wage of £25,000 that would be £750 billion in cash before tax. But, I think, as you know, a lot of people do not earn that much.

As it happens only £300bn ish is taken by direct income taxes - the rest is invisible to us... but we still pay it. Even if people on minimum wage were moved out of income tax, they'd just end up paying it through their spending instead.

If you think you're paying too much tax then the only way to pay less is to reduce spending. You cannot dump the tax burden on someone else.

Darrell G said...

Charlotte,

I would argue that a wide measure of tax reforms would be needed; LVT is quite attractive from what I have seen of it...I am perfectly happy to see the tax burden shifted to big corporations as opposed to small business as part of redistributive taxation.

I am however, against doing this by cutting their national insurance contributions. I havent the faintest idea why you think im taxed at 33%; i'm not thank god. Try a combined total of 19% and you might be closer.
Of course you are right about VAT except that some goods and services are offered at a lower rate of 5 or 0%.

I rather suspect there are more people on £25,000+ than you would have us believe to be honest. Well you are a little optimistic on the 300bn but the rest is not invisible, the only significant hole worth pointing to in this years budget was the 84bn expected to be raised by mysterious 'other' means. Blame corporations for passing on their 50 odd bn slice of the tax cake if they do not the state.

Of course these calculations have been rather messed up by the 10p tax debacle and now the bail-out but the notion that there is a 300 bn gap in the budget is not true.

You whole argument is predicted on assuming that we all pay for all taxation which err we dont...