Wednesday, January 23, 2008


There is an interesting and not entirely pointless article by Jonathan Freedland over on CiF. The gist of it seems to be that the bankers, traders, banks, and moneymen who complained of state-intervention when times were good are now demanding support from the state in the form of stimulus packages.

This seems grossly unfair. From the article:

"If the market economy is looking peaky, then its accompanying free market ideology should be on life support. Behold the hypocrisy. The free marketeers have spent the past two decades preaching against the evils of state intervention, the dead hand of government, the need to roll back the frontiers, and so on. Yet what happens when these buccaneers of unfettered capitalism run into trouble? They go running to the nanny state they so deplore, sob into her lap and beg for help. The results of their own greed - "exuberance", they call it - and incompetence have caused more than 100 substantial banking crises over the past 30 years, yet time and again it is the reviled state which answers the call for help. Four times in this period, the authorities have had to rescue crucial parts of the US financial setup. If the banks make money, they get to keep it. The moment they look like losing it, we have to cough up. In Wolf's brilliant summary: "No industry has a comparable talent for privatising gains and socialising losses.""

This debate looks to fundamental questions of the place of the state and the market in the distribution of scarcity.

If a woman chooses to take up rock-climbing as a hobby then the state has no place to tell her she can't do it. However if she falls and breaks her leg whilst rock-climbing the state has no right to withhold state-funded paramedic care.

My concern is that it is all very well to complain of enormous disparities in income between the bottom and the top, but what do people intend to do about it? The answer is usually to raise the top-rate of income tax. But then what incentive do people have for aspiring to wealth in the first place?

To put it another way - would you, as a citizen of a state, rather take 40% of £100 000 in tax or 20% of £20 000? Rich people, for all that they piss off people with less money, are a positive thing in a society.

PS: the second comment in on that article someone called "tommydog" made a good point.

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