Mitt Romney isn’t alone in dismissing the poor: Tories use the same rhetoric


9:30 am - September 18th 2012

by Sunny Hundal    


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The Mitt Romney campaign suffered a huge setback last night after Mother Jones magazine published videos of Romney talking disparagingly of 47% of Americans who he claimed never paid income taxes.

Mother Jones’ David Corn wrote: “When he doesn’t know a camera’s rolling, the GOP candidate shows his disdain for half of America.”

Romney’s hastily organised press conference to explain his remarks didn’t go so well either.

The New York Times has published a scathing piece by the conservative commentator David Brooks on Romney’s comments.

But one point strikes me: Mitt Romney’s comments aren’t so far removed from current mainstream conservative ideology.

Attacks on the poor – calling them lazy and state-dependent have become standard fare even in the UK.

Only last month a group of Tory MPs published a pamphlet saying the UK “rewards laziness”, and that, “too many people in Britain prefer a lie-in to hard work”.

Mitt Romney is wrong, and the pamphlet by Tory MPs was full of factual errors and slipshod research.

The Cabinet minister Iain Duncan Smith too has taken to branding the poor as “lazy” for the failure of his own plans.

There is near-identical rhetoric and victim blaming on both sides of the Atlantic. Chris Dillow thinks this is happening because the Tories’ class base is splintering.

I think its something different: conservatives are running out of reasons to explain why their policies have stopped working, and why an increasing number of people dislike them.

In fact, the column by David Brooks, which I mentioned above, has a good critique of this approach:

In 1987, during Ronald Reagan’s second term, 62 percent of Republicans believed that the government has a responsibility to help those who can’t help themselves. Now, according to the Pew Research Center, only 40 percent of Republicans believe that.

The Republican Party, and apparently Mitt Romney, too, has shifted over toward a much more hyperindividualistic and atomistic social view — from the Reaganesque language of common citizenship to the libertarian language of makers and takers. There’s no way the country will trust the Republican Party to reform the welfare state if that party doesn’t have a basic commitment to provide a safety net for those who suffer for no fault of their own.

The final thing the comment suggests is that Romney knows nothing about ambition and motivation. The formula he sketches is this: People who are forced to make it on their own have drive. People who receive benefits have dependency. But, of course, no middle-class parent acts as if this is true. Middle-class parents don’t deprive their children of benefits so they can learn to struggle on their own.

The United States may be more to the right, but both Bill Clinton and Barack Obama have recently offered a full-throated defence of the welfare state and role of government that I think the Labour party should look to adopt.

More broadly, Labour cannot shy away from hitting back when the right attack people as “lazy” – the recent debate in the US shows there is a way to hit back about Conservative mentality, without being scared that voters will run away.

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About the author
Sunny Hundal is editor of LC. Also: on Twitter, at Pickled Politics and Guardian CIF.
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Story Filed Under: Blog ,Conservative Party ,Labour party ,Our democracy ,Westminster

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Reader comments


Well of course. The tories are owned by the same people who fund Romney. The 1% brigade. They see this depression as an opportunity to restructure society to their liking. A return to pre welfare days of the 19th century. And what part of the state remains will be there to shovel tax payers money into the pockets of the rich. Hence why health and education privatisation is on the agenda.

It should be noted that the 47% figure is from the conservative response to the ‘we are the 99%’ message of Occupy – we are the 53%. Quite why they decided to settle for just barely a majority I don’t know, but apparently it’s the percentage of people in America that pay Federal income taxes. The implication is that those who don’t are freeloaders even though most people who don’t pay federal income tax do pay payroll tax and a variety of state and local taxes.

3. Dick the Prick

It’s canny dog whistle politics too. I dunno – fair play to the lad. At least he’s honest.

4. Chaise Guevara

INCOMING PEDANT

Minor point: are the Tories really “copying” Romney? Don’t they just follow similar ideologies? Especially seeing that your Tory example happened before your Romney example.

Either way, you want to fix the title as it doesn’t make sense. You want “copy the rhetoric” or “use the same rhetoric”. Otherwise you’re suggesting that there’s some third, originator rhetoric that the Tories and Romney are both cribbing from…

The accusation that the Tories villainise the vulnerable is, of course, absolutely true.

“Romney talking disparagingly of 47% of Americans who he claimed never paid income taxes.”

It’s a well known statistic. Although it’s “do not currently” pay federal income tax rather than never have done.

What amuses me is that when I start shouting about how the poor should be taken out of income tax then the response I often get is that no, people should be paying a bit, at least, of income tax so that they’re all part of the system.

In fact, wasn’t that part of the argument against raising the personal tax allowance in this country?

What Romney said is really outrageous. He’s more or less dismissed half of the american public as worthless. Why? Because they are poor. He should never be President. He really isn’t good enough. The tories hold simular views. In fact David Cameron isn’t right wing enough for some of them.

Trouble is people are falling for the tories propaganda. They want the welfare state reformed. Not realizing it won’t be there anymore when they need it. Unless i missed something, Labour aren’t exactly defending it!

7. ex-Labour voter

An important item that I noticed when I followed your links.

Court Strikes Down Wisconsin Union-Busting Law

Interesting to see this on a day that the news is discussing government plans to cut benefits to those who need them.

As I’ve said before, this country has an odd obsession with paying for our collective needs by sucking more and more wealth from our poorest people, so we don’t have to suck proportionally relatively little from the wealthy.

@5. Tim Worstall

Absolutely right Tim. It is very amusing that that it is in fact the libertarian thinkers who want to take the poor out of income tax all together. The vast majority of the left want to see them pay at least 20%. Labour were in power for nearly 3 full terms, yet they failed to take any action on raising the threshold.

The threshold should be raised yet further in my opinion to 12k p/a. Thus providing people with 1k a month tax free. The benefits of such a system would be far in excess of any state backed expenditure “for the poor”. Give the money back to the people. Let them decide how they want to spend it, they after all know what is best for them, not the state.

@Tim Worstall – I don’t recall that particular argument against the raising of the personal tax allowance, I DO recall G.O.’s argument, with the provided sums, that if the aim is to help out the poorest, (which is implied by the statement “lifting the poor out of tax”) then tax credits are a far more efficient method of achieving that aim. If the aim is to give middle to higher earners a large tax break in comparison to the ‘help’ given to the poor, then raising the personal tax allowance is the way forward.

Speaking of tax credits, the 47% is so high because of Clinton’s tax credits scheme, which was significantly expanded under Bush. Prior to their introduction it was around 20%ish. We are the 80% would have made for a much better right wing rallying call…

Thank god labour never used the words scroungers work shy and lazy.

If Labour in the UK was to move toward saving the NHS welfare state, I think Blair would have a fit, Progress would be screaming traitors, it would be interesting then again Miliband would not do that.

“Speaking of tax credits, the 47% is so high because of Clinton’s tax credits scheme, which was significantly expanded under Bush.”

Actually the EITC started in 1975, I think Nixon first proposed it. And it was Milton Friedman who invented it (it’s a variation on his negative income tax idea).

Those darned neoliberals, eh? Always trampling on the poor…..

Robert

Tony Blair’s government doubled NHS spending and massively increased it as a % of GDP.

In fact, for his first term especially, he spoke about hardly anything else than saving the NHS.

3 No he is not being honest. These comments were never meant to be heard by the public. They were made at a dinner for his corporate donors. The 1% ers.

What of course is priceless is a man attacking people who pay not taxes, who won’t release he tax returns because he wants to hide how little tax he pays. Oh and by the way, the biggest non tax payers are mostly the Southern red states like Texas. They take more in federal spending than they contribute in taxes. Typical fake libertarians.

@TW – Apparently it was the child tax credits scheme that bumped up the figures, (or is thought too given the spike from the mid/late nineties onward) although the various tax breaks under Regan and others also helped many canny Americans to dodge the federal tax bill too.

@ Tim Worstall

“What amuses me is that when I start shouting about how the poor should be taken out of income tax then the response I often get is that no, people should be paying a bit, at least, of income tax so that they’re all part of the system.

In fact, wasn’t that part of the argument against raising the personal tax allowance in this country?”

I’m not understanding the source of your amusement. The phenomenon of 47%-bashing among right-wingers does indeed demonstrate that once you take low-income people out of income tax, it becomes easy to characterise them as lazy scroungers relying on benefits and services funded by ‘hard-working taxpayers’ and contributing nothing to society themselves.

I’ll tell you what amuses me though: the fact that the very right-wingers who supposedly want to see the tax burden reduced for hard-working low earners will then happily queue up, once that burden *has* been reduced, to denigrate those very same people as sponging bastards making no contribution to society. (I understand that many of the tax allowances responsible for reducing some people’s federal income tax liability to nil were instituted by Republican governments.)

It’s all terribly clever, of course, because it’s a way of convincing ‘the 53%’ that they are all net contributors to a system that benefits not them, but ‘the 47%’. Of course, many of them aren’t net contributors at all, and most of them will rely to a lesser or greater extent on the sort of state-funded/subsidised benefits and services right-wingers want to see cut, but obscuring these facts and drawing an ‘us and them’ line between the middle and the bottom rather than between the rich and the rest is one way to persuade turkeys to vote for Christmas.

17. Chaise Guevara

@ 9 Freeman

“Absolutely right Tim. It is very amusing that that it is in fact the libertarian thinkers who want to take the poor out of income tax all together.”

It gets less funny when you realise that the libertarians would give little or nothing to the poor, in terms of either money or free services. Except for a few pennies thrown magnanimously over the balcony, of course.

If you’re going to talk about taxation, you need to be able to consider both sides. Tax money isn’t deleted, it’s spent. Reduce tax and you reduce that spending. It’s only by ignoring this that you can make the laughable claim that libertarians are better on poverty than lefties.

“The threshold should be raised yet further in my opinion to 12k p/a. Thus providing people with 1k a month tax free. The benefits of such a system would be far in excess of any state backed expenditure “for the poor”.”

Well, that depends on what you consider a benefit, doesn’t it? It’d be great for rich people who want to do whatever they like. Less so for people who actually need support.

“Give the money back to the people. Let them decide how they want to spend it, they after all know what is best for them, not the state.”

I’m sure the poor will thank you when they’re spending all that money they don’t have, while dying of preventable diseases because you aren’t in a charitable mood that week.

18. man on clapham omnibus

‘Only last month a group of Tory MPs published a pamphlet saying the UK “rewards laziness”, and that, “too many people in Britain prefer a lie-in to hard work”.’

I think most people would like to lie rather than hard work wouldn’t they?

Since I haven’t seen this pamphlet maybe they are talking about the Royal Family! Can you post it by any chance?

16. Very well said. Take the poor out of tax and then blame them as moochers. Classic right wing bait and switch.

We all know what this really about. Cutting taxes for the rich. It always is.

@17. Chaise Guevara

“It gets less funny when you realise that the libertarians would give little or nothing to the poor, in terms of either money or free services.”

This misses the point. Firstly, there was merit in the saying “there is no such thing as a free lunch”. There is no such thing as free services because the money to pay for them has to come from somewhere. In this instance it comes from the tax payer. The problem with this is that it diverts capital away from efficient personal expenditure to inefficient government expenditure. The poor do not benefit from these services nearly to the extent that they should. Consider America. The provision of “free” school through the Fed’s schooling programs has lead to America having one of the worst educated populations of any developed country. Yet it was the state schools that did this. It is a disgrace that America has such a high young black unemployment rate, but what do you expect with such poor schooling.

That does not mean that I am in favour of ‘no’ services. There are of course instances where a catch net may be required for cases that simply fall between the cracks, but we should not have half the population in these catch nets. We should have 5% of them there. So why is a large proportion of this country in those nets (ie, the state benefits system in all its versions). Simply because people have too much of their money taken away in taxes. 40% of the wage of lower income people is taken away in various taxes. This is not a question of providing the services in the first place, it is a question of choice. Means test public education and healthcare to drastically shrink the size of the public services, and then stop taxing everyone so much and let them make their own decisions as to how they spend their money. Stop state subsidising education pushing the prices up.

“Tax money isn’t deleted, it’s spent. Reduce tax and you reduce that spending.”

No you don’t. That the point. It merely becomes a question of who spends it. It moves the spending away from the government (who has shown us that they spend money inefficiently) and gives it to the individual to spend. The who idea is to reduce the spending. That is exactly what I want to happen. Direct those funds to the private individual to decide for themselves how they spend the money.

“laughable claim that libertarians are better on poverty than lefties.”

And yet it has been the lefties who have created the most poverty around the world. Was the USSR rich? what about North Korea? China? even consider Sweden in the 60’s and 70’s. It was only after a liberalisation of their economy and the privatisation of huge chunks of industry in the early 1990’s that Sweden has developed, and income gaps have closed.

“It’d be great for rich people who want to do whatever they like. Less so for people who actually need support.”

I don’t get your meaning. The support comes in the form of more disposable income to do with as they wish.

“I’m sure the poor will thank you when they’re spending all that money they don’t have”

The vast majority of the poor work…you do realise that. How is letting them keep more of their salary a bad thing. In relation to health specifically though. Switzerland has one of the highest standards in the world, yet it is 95% private. Everyone has to have health insurance, paid for by the money the Swiss have from not being taxed so much. The benefit? they are able to decide where they are treated, effectively sinking inefficient or poor hospitals.

‘Only last month a group of Tory MPs published a pamphlet saying the UK “rewards laziness”, and that, “too many people in Britain prefer a lie-in to hard work”.’

Well they would know. Sitting for 30 years in rock solid safe tory seats. £65000 per year salary. £100,000 expense account with much of it paid to their wives, and a gold plated pension at the end of it. And they can top it all up with a handful of speeches, and the odd newspaper column as well.

22. Man on Clapham Omnibus

@21 Sally

Don’t you prefer to lie-in rather than hard work?

Mitt has been caught out saying something pretty honest, but it will not really affect his campaign significantly, one way or another. Obama’s, (and the Brit Labour Party’s) problem is not identifying this ‘47%’ or the Nation’s poor, but connecting with them significantly enough to get the vote out. Mitt Romeny could call these people paedophiles and it wouldn’t matter a jot; the poorer you are, the less connected to the political process you are and the easier it become to dismiss your political agenda (ask Vince Cable).

The really infuriating thing for me is the rather explicit debunking of the ‘cut the income tax, help the poor’ bullshit that gets trotted out by the Right and swallowed up wholesale by the Left. Yet here we are, Mitt Ronemy, a Right winger who we are allowed to hate has pretty much explicitly used a lack of income sufficient to pay tax as a marker for ‘lazy’ people.

Romeny might as well had said once we reduce income tax to the point that those on lowest income don’t pay tax, we can use this to further stigmatise the poor, as well as save ourselves a few quid. The Right are rubbing their true motives in our face and yet, many of us still cannot see it.

We need to focus on regressive taxation to relieve the tax burden, not tinker about with the single progressive taxation system we have left in this Country.

24. Chaise Guevara

@ Freeman

“Consider America.”

Loads and loads and LOADS of countries have free schools. Why have you cherrypicked the US?

“Means test public education and healthcare to drastically shrink the size of the public services, and then stop taxing everyone so much and let them make their own decisions as to how they spend their money.”

But you can’t spend money you don’t have. So under your system, the poor-but-not-poorest have to send their kids to shit schools, and choose between giving them a college education or buying lifesaving treatment when they get ill.

“No you don’t. That the point. It merely becomes a question of who spends it. It moves the spending away from the government (who has shown us that they spend money inefficiently)”

Not necessarily. The NHS gets drugs cheaper than private companies in equivalent countries, precisely because its sheer size makes it a powerful negotiator. Plus there’s economy of scale. Centralisation can increase efficiency.

“And yet it has been the lefties who have created the most poverty around the world. Was the USSR rich? what about North Korea? China?”

Snore… Oh, sorry! Some dishonest person was trying to conflate left-liberalism and Stalinism. I must have nodded off.

“even consider Sweden in the 60?s and 70?s. It was only after a liberalisation of their economy and the privatisation of huge chunks of industry in the early 1990?s that Sweden has developed, and income gaps have closed.”

The fact that Right Wing Idea #143 had a certain amount of success does not mean that Right Wing Idea #519 is a shoo-in.

“I don’t get your meaning. The support comes in the form of more disposable income to do with as they wish.”

If you give all of a poor person’s disposable income back to them, they still don’t have much to spend, on account of being poor. They then have to spend it on things that should be state-funded, like schools and medicine. So they have LESS money – in debt, most likely. I honestly don’t see what’s so hard to follow here.

“The vast majority of the poor work…you do realise that. ”

Of course. What’s this got to do with my post?

“How is letting them keep more of their salary a bad thing.”

See, you’re doing it again. Ignoring half the issue, because your pet idea only sounds good if you can pretend that there are no implications. The problem is NOT poor people keeping more of their salary. It is the rest of us keeping more of our salaries instead of supporting the poor via tax.

“In relation to health specifically though. Switzerland has one of the highest standards in the world, yet it is 95% private. Everyone has to have health insurance, paid for by the money the Swiss have from not being taxed so much. The benefit? they are able to decide where they are treated, effectively sinking inefficient or poor hospitals.”

Not familiar with Switzerland. What happens if you can’t afford insurance?

25. Man on Clapham Omnibus

@20

‘The problem with this is that it diverts capital away from efficient personal expenditure to inefficient government expenditure’ That is entirely supposition on your part. You are suggesting that necessarily an individual knows whats best for them and will articulate that efficiently within the market. That supposes a lot none of which is probably true.
Things like health get out of hand pretty quickly if money is directly involved. An example of this is the inordinate number of unnecessary operations performed. Moreover a service that is regulated simply by consumer demand doesn’t necessarily mean it will rationally serve the best interests of those involved. The issue of universality for example.
Same thing with care homes.

‘The poor do not benefit from these services nearly to the extent that they should. Consider America. The provision of “free” school through the Fed’s schooling programs has lead to America having one of the worst educated populations of any developed country. Yet it was the state schools that did this. It is a disgrace that America has such a high young black unemployment rate, but what do you expect with such poor schooling.’

It is a bit naive to suggest that if every black kid was given the money instead of the service they’d somehow gained a better education. Seems to me you don’t understand the impact of class on culture,expectations or real world outcomes. There is a wealth of research on the relationship between poverty and under achievement.

Your problem seems to be you think everyone has a choice.
Trouble is you get more choices the richer you are which kinda does damage to your ‘everyone can make it’ outlook

Freeman @ 20

The provision of “free” school through the Fed’s schooling programs has lead to America having one of the worst educated populations of any developed country.

Has it? Where do you get such ‘evidence’ for such a halwitted statement? That is a complete non sequitur. You have no fucking idea what has lead to America having one of the worst educated populations of any developed country. I am willing to bet that American school kids are not being taught that five times three is sixteen, by state funded teachers, for example. Though I do bet that many Americans are taught that evolution has been thoroughly disproved. The people responsible for the trashing of evolution are not State employed education professionals, but political interference from a cadre of religious nut jobs.

Yet it was the state schools that did this.

And at no point did it occur to you and the rest of the backward fuckwitts that there might be more to it than that? It never occurred to you that there are thousands of environmental factors that influence education standards? Like hunger, sleep deprivation or the home environment, for example? Gang violence, drugs? What if you are brought up in a culture that does not respect education?

You cannot blame the educational system for the whole of society’s woes. Nor can you measure and educational system in a vacuum.

If a child does not know how to multiply fractions, how do you know that is because the teacher has not taught the child that, rather than the fact the child has not been able (for whatever reason )to follow and understand the lessons?

Of course, had you bothered to examine the education of America, you will have noticed that it created the biggest single middle class we have seen. The single biggest driver of American powerhouse economic growth.

@ Freeman

“Loads and loads and LOADS of countries have free schools. Why have you cherrypicked the US?”

Because edication spending in the US is one of the biggest in the world. Proving really that giving it more money doesn’t equal better education.

“Not necessarily. The NHS gets drugs cheaper than private companies in equivalent countries, precisely because its sheer size makes it a powerful negotiator. Plus there’s economy of scale. Centralisation can increase efficiency.”

You take net cost of drugs as the gross cost of drugs. The provision, supply and administration also have to be added to the cost. There are also economies of scale where there are private health care providers who are able to shop around, not dictated to as to where they will buy their drugs. Centralisation can increase efficiency (although almost never does), but you also have to look at whether if there is an increase whether an even greater increase could be achieved in the hands of the private individual or organisation. History has shown us governments cannot allocate resources efficiently. Even Keynes said that governments cannot hope to be more efficient than the market, they can only aspire to be ‘as’ efficient.

“Snore… Oh, sorry! Some dishonest person was trying to conflate left-liberalism and Stalinism. I must have nodded off.”

Before you discredit the concept read Road to Serfdom. The left cannot function on liberalism, the very concept of centralisation destroys liberalism.

“The fact that Right Wing Idea #143 had a certain amount of success does not mean that Right Wing Idea #519 is a shoo-in.”

Yet the telecomes, shipping, transport, a lot of health care (even Stockholms biggest hospital), education (with school vouchers), abolition of subsidies in agriculture, reduction in tariffs, abolition of minimum wage, and a dismanteling of state monopolies…have all worked. That is not liberalist idea #143, that is entire chapters of liberalist ideas, which have made Sweden better.

“If you give all of a poor person’s disposable income back to them, they still don’t have much to spend, on account of being poor.”

You assume that the rate of income stays the same in a liberalised economy. Do you see people dying of preventable diseases in Hong Kong? are they starving on the street of Switzerland? or dumb as cow dung in Singapore?

“It is the rest of us keeping more of our salaries instead of supporting the poor via tax.

We are not supporting the poor though. We are giving them crap edications that don’t prepare them for jobs, we are creating a hand out state where they earn more not to work, we provide them with, at best a dodgy healthcare system where it can take 3 weeks just to see a GP, our government manipulates the markets by spending billions on sectors that arn’t working and by crushing sectors that do with tax and regulation, all of which kills off jobs which the poor could be doing had they existed.

“Not familiar with Switzerland. What happens if you can’t afford insurance”

That is the point I was making. They can afford insurance because the state doesn’t take so much money off them, and the 5% of people who can’t pay receive it for free. I am not advocating anarchy. What I am saying is that the size of the state can (and has to be) a lot smaller than it is. We cannot simply borrow money to run the government, and then borrow more on the hope that it will help us grow to pay off the original debt, and grow some more to pay of the debt we got into to pay off the debt. I do not advocate the abolishion of the government, only that it is not possible to run a government that spends 50% of GDP.

@27 Er, isn’t health spending in the USA also one of the biggest in the world too? Fails quite a lot of people too.

@26. Jim

Wow quite a tangent there Jim. Was struggling to see where the evolution issues came into it.

America has had some rapid development, but that hasn’t come from the poorer, and poorly educated classes has it? It is telling that in a country that spends so much on education, has such a huge divergence of skills between the lower state funded schools, and the Ivy League educational establishments. There is no reason for America to have a low education standard (excluding the small number of top schools and uni’s), yet they do. The state has failed to adequately equipe children with what they need.

And believe me when I say I am not only blaming the education system. That is only one small piece of the equation. There are a multitude of other areas that have failed, but the discussion I was having was in relation to education and in America. There are of course similar issues in this country across a similar number of areas.

Freeman ‘ 27

So, where were these schools and hospitals that the poor has ready access to, before the State provided them? Why did we invent the National Health Service if everyone in the Country had good medical provision in the first place? Who introduced the concept of ‘Universal healthcare’, if it already existed and had done so for centuries? Why did Labour win a post war landslide promising to provide an NHS and education system that was already obsolete?

Are you seriously suggesting that it never occurred to anyone in the Country that what Beverage proposed was already in place? Are you seriously suggesting that the concept of people going without an education or unable to provide healthcare for their children was completely alien?

So why, when the Beverage report came out, did it occur to anyone in the cabinet to say ‘er why do you talk about universal health care, when that is exactly what we have right now’.

Look, I understand that you are not a true Libertarian unless you can sustain a level of dumb ignorance that would make a real person blush, but do you guys really deliberately go out to blind yourselves to the real world to this extent.

31. Chaise Guevara

@ Freeman

“Because edication spending in the US is one of the biggest in the world. Proving really that giving it more money doesn’t equal better education.”

No, it doesn’t. It’s possible to throw good money after bad policy. I’m not that familiar with the US system. I would venture the possibility that the problem doesn’t stop at education. A lot of American cities have sinkhole estates, and people who have been failed by the system may view the system as a waste of time. And then pass that attitude to their children. Plus there’s the whole bloody “acting white” crab bucket they have over there.

“You take net cost of drugs as the gross cost of drugs. The provision, supply and administration also have to be added to the cost.”

Yes, but this is another place where you benefit from economies of scale thanks to centralisation.

“There are also economies of scale where there are private health care providers who are able to shop around, not dictated to as to where they will buy their drugs. ”

The NHS can shop around. With more bargaining power.

“History has shown us governments cannot allocate resources efficiently.”

Nor can individuals. It’s not a case of efficient vs inefficient, it’s a sliding scale. Individuals can pick based on their needs better, but they can’t get the economies of scale.

“Even Keynes said that governments cannot hope to be more efficient than the market, they can only aspire to be ‘as’ efficient.”

But where do those efficiencies go? Into managers’ pockets. Don’t get me wrong, it’s a great model for nonessential goods. But it’s simply not appropriate for essential goods.

“Before you discredit the concept read Road to Serfdom. The left cannot function on liberalism, the very concept of centralisation destroys liberalism.”

They’re two completely different things. I’m really not bothered that some tinfoil-hatted author wrote a book claiming one is a slippery slope to the other. If you can’t tell the difference between a liberal nation that uses redistribution to support the vulnerable, and a fascist society that uses the rhetoric of communism while oppressing the people for the benefit of the rulers’ egos, you’re probably beyond my help.

“Yet the telecomes, shipping, transport, a lot of health care (even Stockholms biggest hospital), education (with school vouchers), abolition of subsidies in agriculture, reduction in tariffs, abolition of minimum wage, and a dismanteling of state monopolies…have all worked.”

Um, abolition of minimum wage only “works” if your success criteria is “make the rich richer”. Mine ain’t. School vouchers are state-funded and thus more in my camp than yours. Dismantling state “monopolies” sometimes works, but it’s also given us an expensive, crap train service.

“You assume that the rate of income stays the same in a liberalised economy. Do you see people dying of preventable diseases in Hong Kong? are they starving on the street of Switzerland? or dumb as cow dung in Singapore?”

Don’t know. But state support can guarantee that people get what they need in terms of healthcare, education etc. Libertarianism makes no such guarantees. There’s simply nothing built into the system to ensure that people are ok.

“We are not supporting the poor though. We are giving them crap edications that don’t prepare them for jobs”

We are giving them fairly good educations. You’d leave them with no education at all.

“we are creating a hand out state where they earn more not to work”

Source.

“we provide them with, at best a dodgy healthcare system where it can take 3 weeks just to see a GP”

“Can”? How often? And why?

“our government manipulates the markets by spending billions on sectors that arn’t working and by crushing sectors that do with tax and regulation, all of which kills off jobs which the poor could be doing had they existed.”

At £2 an hour cos you got rid of the minimum wage. Then expected to pay for their family’s education and healthcare with that money. Hooray.

“That is the point I was making. They can afford insurance because the state doesn’t take so much money off them, and the 5% of people who can’t pay receive it for free.”

Well, that’s ok. Pretty inefficient, though. They’re spending money to line CEOs’ pockets when the state could just cut out the middleman.

Just to check: there’s nobody in Switzerland who doesn’t have insurance, yes?

“I am not advocating anarchy. What I am saying is that the size of the state can (and has to be) a lot smaller than it is. We cannot simply borrow money to run the government, and then borrow more on the hope that it will help us grow to pay off the original debt, and grow some more to pay of the debt we got into to pay off the debt.”

Fine. But the way to resolve this is not to beggar our citizens, and throw people on the scrapheap because they can’t afford a good education or necessary healthcare. You can increase taxes, stop spending money on unnecessary things like cold-war nuclear deterrents, get rid of illiberal drugs laws that keep untold billions out of the tax purse.

” I do not advocate the abolishion of the government, only that it is not possible to run a government that spends 50% of GDP.”

Is it not? How much does ours spend now?

“So, where were these schools and hospitals that the poor has ready access to, before the State provided them?”

The first hospital built by the NHS opened in 1963.

Between 1948 and 1963 the NHS offered treatment in exactly the same hospitals that had existed prior to 1948.

The “creation” of the NHS was the nationalisation of those hospitals that already existed you see?

Heck, there’s been a hospital at Barts since the 12 th century or something.

This is probably why nearly half of Americans regard themselves as victims:

In 2010, the typical American household earned an inflation-adjusted income of $49,445, scarcely different from that in 1989 and a fall of 2.3% since 2009. Current incomes are at roughly the level of the late 1970s for those near the bottom of the income spectrum.
http://www.economist.com/blogs/dailychart/2011/09/us-household-income

Grrr.

“Yes, but this is another place where you benefit from economies of scale thanks to centralisation.”

There are also diseconomies of scale. The optimal scale for any organisation is when the benefits of the economies of scale are just about equal to the costs of the diseconomies of scale.

This is a generalised Grr BTW. It’s something all too few consider in all sorts of arguments.

35. Chaise Guevara

@ 34 Tim W

“There are also diseconomies of scale. The optimal scale for any organisation is when the benefits of the economies of scale are just about equal to the costs of the diseconomies of scale.”

What sort of thing are we talking about? Middle-management?

Tim @ 32

Yes, but the provision for healthcare was extended. A hospital can be physically there, but that is little consequence if you have no access to it. There were also universities too, but for most people, they may well have been on Mars if they had no access to them.

I wonder how many of those pre NHS hospitals were renovated, adapted, extended or even saved because of the NHS.

Of course the NHS is not just hospital buildings, dental clinics, GP surgeries is it? It is nurses, doctors and surgeons and and a whole host of other people and the equipment they use, hospital beds to xray machines and everything in between. The NHS paid for their training too and the existence of the NHS offered more people pathways to those professions as well.

It is easy for the likes of freeman et al, because they assume that just because a State of affairs existed before they were born, it would have existed anyway.

I am sure that Barts did have a hospital eight hundred years ago, but when did it recieve most of the modern equipment it uses today?

Willing to bet

@31

“I’m really not bothered that some tinfoil-hatted author wrote a book claiming one is a slippery slope to the other.”

I am afraid this is hysterically dumb, and shows that clearly the reading of a book is beyond your grasp. I actually thought it was a decent discussion going on, but for someone who spends his day commenting on an online forum to refer to possibly the greatest economist of the 20th century and Nobel prize winner as a “tinfoil-hatted author” proves only two things. Firstly, that you really do have no idea, and secondly, that the discussion stops here as I was unaware I was having a conversation with an extraordinarily ignorant person.

Oh I don’t know, I find calling Hayek a “tinfoil-hatted author” rather apt. But then I’m a spart.

The policy makers aren’t looking to Hayek for solutions for current challenges in dealing with recessed economies with actual or potential problems in borrowing more to fund a fiscal stimulus to create jobs. The sad insight comes from the popularity the Nazis gained in Germany in the mid 1930s from mounting a public works programe to create jobs:

“The Nazi Party leaders were savvy enough to realise that pure racial anti-semitism would not set the party apart from the pack of racist, anti-semitic, and ultranationalist groups that abounded in post-1918 Germany. Instead, I would suggest, the Nazi success can be attributed largely to the economic proposals found in the party’s programs, which in an uncanny fashion integrated elements of 18th and 19th century nationalist-etatist philosophy with Keynesian economics. Nationalist etatism is an ideology that rejects economic liberalism and promotes the right of the state to intervene in all spheres of life including the economy.” [W Brustein: The Logic of Evil – The Social Origins of the Nazi Party 1925-33 (Yale UP, 1996), p.51]

Unemployment in Germany went ” . . from 6 million in October 1933 to 4.1 million a year later, 2.8 million in February 1935, 2.5 million in February 1936, and 1.2 million in February 1937.”
[CP Kindleberger: The World in Depression 1929-1939 (Allen Lane, 1973) p.240]

Austrian school economics had and has nothing to offer.

41. Chaise Guevara

@ 27 Freeman

“I am afraid this is hysterically dumb, and shows that clearly the reading of a book is beyond your grasp.”

I was about to get all offended by this, but then I realised it was coming from the guy who can’t tell the difference between the UK and the USSR. So treasure the fool’s reproach and all that.

“I actually thought it was a decent discussion going on, but for someone who spends his day commenting on an online forum to refer to possibly the greatest economist of the 20th century and Nobel prize winner as a “tinfoil-hatted author” proves only two things. Firstly, that you really do have no idea, and secondly, that the discussion stops here as I was unaware I was having a conversation with an extraordinarily ignorant person.”

I read his post and could only come up with an answer to one sentence! Better throw some personal abuse and run away!

In Germany, by the time of the November 1932 elections, the electorate was looking for authoritarian solutions to their unemployment predicament – the Communists attracted the second largest total vote after the Nazis. The lesson to draw is that it’s far better to apply keynesian remedies to boost an economy out of recession and retain democracy before an electorate starts looking for desperate solutions.

At the time of the New Deal in America, Roosevelt said that what he was doing was to save capitalism in America, in which he passionately believed. Btw Roosevelt didn’t understand keynesian economics. His administration developed its own policies to deal with the situation it inherited from its Republican predecessors.

43. Richard Carey

@ Freeman,

well done for a valiant effort.

44. just visiting

Chaise

>> “There are also diseconomies of scale. The optimal scale for any organisation is when the benefits of the economies of scale are just about equal to the costs of the diseconomies of scale.”

> What sort of thing are we talking about? Middle-management?

Chaise, sounds like you’ve not worked in a large company in a role to see how it works across the board.

In simple terms, it’s an attribute of human nature – that large organisations are dysfunctional. Whether private or public; both.

There’s a large volume of work on this subject, from the ‘Peter Principle'; the fact that a team will tend to do what maximises things for them and not what maximises things for the company overall (does anybody ever argue that their own role has become irrelevant and should be dropped!), through to tha fact that it is very hard to introduce change in large organisations because typically you progess by not making mistakes: and if any new initiative fails the originator gets a black mark, whereas the manager that sees a failure and can say ‘we only did what had been done before’ is not blamed. So people tend to carry on doing things that they themselves know are sub-optimal.

TW@5

It’s a well known statistic. Although it’s “do not currently” pay federal income tax rather than never have done.

You’re conveniently forgetting that in the US, payroll taxes and sales taxes are at the state level. Paying no *federal* tax is a major distinction – those people are nevertheless paying taxes to the state in which they live!

US, payroll taxes and sales taxes are at the state level. Paying no *federal* tax is a major distinction

Err, no.

Sales taxes are at the state (and county, even municipal) level, yes. Many excise taxes are so but not all (there’s a Federal gasoline tax). But payroll is Federal. The clue’s in the name: FICA. Federal……

Some states also have state level payroll taxes. But the big ones are Federal.

Anyway, that bit of pedantry aside, the claim isn’t about “taxes” it’s about “income taxes” anyway.

47. Chaise Guevara

@ 43 Richard

“well done for a valiant effort.”

Calling people “extraordinarily ignorant” because they haven’t read your favourite book, dodging points made to you, throwing a strop, and then taking your ball and going home, is probably not what I would call “valiant”. But each to his own I guess.

48. Chaise Guevara

@ 44 JV

Interesting, thank you. I can certainly see why the people in a smaller organisation would have more motivation to do things for the good of the overall company, because the impact of their actions on the firm would be larger. No good positioning yourself to become the boss’s favourite if the company goes under in the meantime.

What literature, if any, is there on the relative vulnerability of small and large organisations to sunk-costs fallacy (continuing with a bad idea because you’ve already spent a lot of resources on it) and similar? I can’t help wondering if the data are skewed by the fact that a small organisation that follows poor policy will probably soon stop existing, whereas large organisations can handle a few moderate failures. In other words, the worst performers of small firms might be removed from the sample base.

“What sort of thing are we talking about? Middle-management?”

That’s part of it, certainly. Another word for very much the same thing is bureaucracy. You’ve got a large organisation, there must be rules about how things are done. Get an organisation too large and those rules become stultifying. Leaving the organisation unable to deal with change: and that external business environment is always changing.

There are very few, in fact other than WalMart I can’t really think of one, private sector organisations that are more than 300 or 400,000 people. It’s just extraordinarily difficult to manage, or to make adapt, an organisation above that size.

It was interesting listening to Sean Hannity spinning this on his radio show last night. He said it was great that Romney highlighted how many people the American tax-payer was carrying, and that Americans really needed to decide what kind of country they wanted to be. Like Europe with it’s cradle to grave welfare dependency, or like the country America was meant to be, with people creating their own futures, free from that welfare culture.
He said Romney should play up this issue, not be embarrassed by what he said.

I’m sure that view is full of holes, but it probably worked for his listening audience.

51. Chaise Guevara

@ 49 Tim Worstall

Bureaucracy probably swings both ways. I imagine it’s more efficient to have a specialised person or small team managing HR and payroll stuff for a large organisaton, than one person managing it for the five people who work at a small firm, when it isn’t their main job.

But I’m sure you’re right about rules becoming inflexible and stultifying. I used to work at a call centre for a bank, and I’d describe the way the system worked as “necessary stupidity”. It was impossible for us to deal with unusual requests that someone in a normal office could have resolved easily, like writing a non-form letter to confirm that such-and-such was true. On the other hand, we couldn’t fuck up people’s accounts or misrepresent the bank’s line on PR (at least not in writing).

Of course, this is a huge organisation that needs a lot of safeguards, so it’s probably at the apex of the problem. In other big firms, I suspect that this sort of thing is at least partly down to poor management.

52. Chaise Guevara

One other thing, Tim: some inefficiencies are worse than others. If the NHS can get drugs cheaper, that’s a straight benefit to the country. If the size of the organisation means that it has to have more than the optimum number of staff, that’s bad for the UK in terms of tax burden, but good in terms of jobs.

“I imagine it’s more efficient to have a specialised person or small team managing HR and payroll stuff for a large organisaton,”

Indeed. I have a little rule of thumb (not that I have any proof at all, it’s just a rhetorical device) that once you’ve got to have an Uber-HR department to take care of the recruiting and payroll for the HR department then you’re over that bureaucracy horizon.

I also agree that the subject is complex, that there’s no one rule fits all. My real point is simply that there really are diseconomies of scale and people just don’t pay enough attention to the very idea in the same way that they do to economies of scale.

Which is a pity: for it’s exploring this sort of stuff that got Paul Krugman his Nobel. Under what circumstances will globalisation lead to global monopoly. His answer is complex but one major factor stopping it in most/many industries is precisely those diseconomies of scale.

Globalisation can lead to global monopoly but only in small organisations. There’s an old story which I’m going to get wrong in detail but right in broad brush. One factory in Japan made all the glue to stick computer memory chips into their casings. For the world (close enough at least). A fire at that factory knocked out production and was the major cause of soaring RAM prices in the mid 1990s.

We have/had competing RAM makers, because that’s a large organisation with hundreds of thousands of people. Diseconomies of scale strike. But it is possible to be a monopoly supplier to those as an organisation of some thousands or tens of thousands.

Heck, thinking back I’ve been the global monopolist in one element for a year or two. Tiny market (a couple of tonnes a year) and the efficiency of having one expert doing the wholesaling overcame the inefficiencies of monopoly. But then that sort of idea can be taken too far. I can see in the trade statistics that one year I was the monopoly supplier of thorium to the US market. There was exactly one transaction in that metal that year……value $30,000

@5 and 12

Pure sophistry but that’s what you self-described ‘libertarians’ are all about.

Economies of scale:

What matters is minimum efficient scale in relation to market size. In the cases of making civil airliners and jet engines, minimum efficient scale looms large in relation to the respective sizes of the global markets so there are only two producers of civil airliners – Boeing and Airbus. There are a few more than that making jet engines but not many.

There are probably about a couple of dozen companies making cars worldwide, including smaller, specialist manufacturers like Lotus. Toyota, the largest, ranks as the ninth largest global company.

Try this for the country breakdown of the largest companies in the Fortune 500 list:
http://en.wikipedia.org/wiki/Fortune_Global_500#Breakdown_by_country

In the mid 1990s, Britain used to rank at No 3 after America and Japan. Now Britain ranks after America, China, Japan, France and Germany.

This quote from the NYT last year, is probably another reason why 47% of Americans regard themselves as victims:

“Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.”
http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html?_r=1

TW@46:

Payroll taxes apply at the state *and* federal level. You can be exempt from the federal payroll tax, but still paying the state payroll tax.

58. Man on Clapham Omnibus

I cant see the issue with what Romney is essentially saying.
The capitalist system naturally divides people into rich and poor. Why should the rich like the poor or indeed wish to pay higher taxes to support them. They certainly do not have common ideologies; one is of financial success and one is of failure. That goes for rich nation states as well who have pretty much robbed the third world ever since boats could cross the oceans. It certainly is the current policy of Germany over Greece.
This process of demonising the poor is central to capitalism.
Since Labour is a capitalist party no amount of rhetoric is gonna change this. Unless of course its all just to do with poll ratings!

@Tim W #49:

There are very few, in fact other than WalMart I can’t really think of one, private sector organisations that are more than 300 or 400,000 people.

There are a fair number; from IBM at just over 400k, to Micky D’s at c1.7m (including franchisees), via Volkswagen (c500k) and Foxconn (c1m) and others…

@Tim W #32:

And to drive a point home:

Heck, there’s been a hospital at Barts since the 12 th century or something.

There’s been a hotel at 150 Piccadilly for centuries as well; but you’ll remember the comparison between the most recent hotel on that site and English justice.

News update:

“Republican presidential candidate Mitt Romney has released his much-anticipated 2011 tax return, which shows he paid a rate of 14.1%.”
http://www.bbc.co.uk/news/world-us-canada-19682947

Compare Warren Buffett’s tax rate as reported in that quote @56 from NYT last year.


Reactions: Twitter, blogs
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