Tuesday, 8 January 2013

The Rich, the Poor, the Stupid: Part 1 - A few words about the socialists

Now that Gérard Depardieu is Russian, I got reminded about a lunchtime chat with a socialist colleague of mine which took place soon after Francois Hollande got elected, with the pledge to tax the rich at 75%. But before I start I guess I should make it at least a bit clearer to whom I refer by the socialists. There are genuinely different varieties of socialism and different definitions for each of them - for example, I don't think that in the civilized world we should leave poor people to die on the streets and this opinion might render me a socialist under certain definitions. I will cover this in more detail in part 2, but for now let's assume that a socialist is someone who'd rather trust the government than private sector; someone that considers entrepreneurs as evil, greedy people and that approves any amount of tax on them, because this will make society more equal.

I'm struggling to understand how could there be people that are neither poor nor stupid but are still socialists under that definition. I mean, if you are poor (and not stupid!) then envy and bare necessity could easily blur your reasoning prowess to the point that you'll believe that everyone should be pretty much equal in wealth, at least in orders of magnitude. Then on the other hand, if you are stupid albeit not poor you might believe that a such a world could exist. However, it doesn't take much more than common sense and a full stomach to realise that if everyone enjoys comparable benefits regardless of effort and skill then no one would be bothered to work hard on anything, and it will suck massively for everybody - except for the corrupt few that will inevitably propel themselves at the expense of the others. In capitalism, at least it's usually the capable few that get propelled, to the benefit of all others, who's jobs they provide by investing in new ventures.

But back to the chat with my colleague - that was probably the easiest lunchtime argument ever. This guy (reasonably smart and pretty well paid) said 'Francois Hollande suggested that they should tax the rich at 75%. It's a bit radical but I support that!'. Of course even before he had finished the sentence I was ready to rebut with 'everybody's going to emigrate' - and he was prepared. Then - he said - the whole world should do it in a coordinated fashion, so they have nowhere to hide.

Very many socialists are dreaming about such a world indeed. However, two counter-arguments were quick to spring into my mind, presented here, as over my lunchtime discussion, in order of increasing compellingness:

Even if such a world-wide arrangement were possible, it would be very shaky and risky. We can run the same logic for the military - the world is spending shitloads on standing armies, we should abolish them all at once and everyone will be better off. True, indeed, but then again there will be this psychopath that will covertly raise an army and take over the whole world like a piece of cake, literally. In the same way, some country will - in one way or another - allow their rich to pay less tax, quickly attracting all of them (and even the most radical of socialists won't like all the rich people to leave, along with their wealth, before it's been redistributed). This can happen overtly - by breaking the pact and lowering tax - and covertly, by turning a blind eye on tax evasion, which leads me to my second argument: with such draconian taxes, corruption will be widespread as people will be making more money as corrupt government officials rather than businessmen. Nowadays, even with 10 to 40 per cent taxes in the civilized world, we still have a huge grey and black sectors - at 75% these will grow huge, as the temptation to have 4 times your legitimate earnings is not easy to resist. So, it is quite reasonable to expect that corruption will devour this system in no time, in the same way as it did with the soviet block's attempt at universal equality, but faster.

Anyway, back to the original point, although I find it confusing it's obviously a fact of life that there are a lot of pretty intelligent socialists around, some much more so than me. In this two-part essay I have tried to capture the position of the people I have had plenty of heated discussions with - in which, much to my delight, we have found a lot of common ground in terms of what the world ought to be like - but there is also a lot of disagreement on some crucial details. I have tried to capture their viewpoint adequately but naturally I haven't spared criticism where I felt it is due.
Apart from the people I have had personal discussions with, Bertrand Russel has been a great inspiration. This guy was a socialist before it was cool - actually during his time it was uncooler than ever to be a socialist in the west. I think his position evolved throughout his life and support for socialism was much firmer in his early works in the 20s but I have yet to read most of his more recent works in order to confirm this - and he was quite prolific.

Lunchtime chit-chat aside, let's dwell on the nature of wealth and poverty for a while. It was about a century ago when the world was divided between rich and poor, with pretty much no mobility between the classes. As the barrier between them was almost impermeable, the rich didn't value their much more comfortable lives as they were taking it all for granted; the poor didn't envy the rich that much as they were considered a different type of human beings altogether, their lifestyle beyond reach, and the fellow poor man that was just a bit better off was a more realistic target of envy.

Things have changed in the meantime, however, and now we have a lot of upward mobility - within a lifetime one can get into the upper echelons by hard work, by foul play or by building good connections. The ones that are incapable or unwilling to do any of these are exposed to the lifestyle of the rich through films, through the media and even through personal contact - and are subsequently capable of developing bitter resentment towards them, which they often do. It feels so unfair - these people, just like us, so close to us, and yet inhabiting a world of their own, just out of reach. Some have indeed worked their arses off to get there, sacrificing emotional well-being, health and family - but others have been born rich and have never had to experience the toil of hard work. If that isn't unfair - what is? How can we not envy them? That's one of the questions I've set out to answer in these lines.

First of all, let's dwell on the word 'poor' for a bit. It's a common view that poor is the opposite of rich, hence whoever isn't rich is poor. I would disagree - winter is cold, summer is hot but we have a rich gradient inbetween. Miriam-Webster dictionary seems to be on my side:

a : lacking material possessions
b : of, relating to, or characterized by poverty

We'll see in more detail what exactly is poverty but I definitely think that only a tiny minority in the west can be considered poor - and pretty much none of the iPod-owning chaps that repost leftist slogans are (see above - lacking material possessions!). For me poor is someone who can't cater for their basic physiological needs - not the 99%-ers that eat varied food every day and enjoy a shelter.

There are two kinds of people my friend - those with loaded bank accounts, and those who dig

Luckily, we have a term for this group - it's middle class. These are people who eat every day, to start with, also own homes or can afford rent - and can even afford to pay for entertainment! I think there should be something like language crime for people who call themselves poor and yet attend paid concerts, cinema or do some other paid activity that doesn't satisfy physiological needs. To be honest, today even the lower middle class lead a much more comfortable lifestyle than that our ancestors in pre-capitalist times enjoyed - hell, even people on welfare are well fed and don't need to work out on the field from dawn to dusk, which pretty much everyone except the rich did before the industrial revolution. We now have heated homes in winter; comfortable, even fashionable clothes; all the food we want (oh, but it's not organic!*); we have public transport, our own vehicles; we take it for granted that we'll go to the seaside, in the mountains, even abroad - at least once per year. So what the fuck, I ask, is our problem? The rich can do more, with less effort - that's the problem! Envy! I guess if more people realize how good our lives are compared to our ancestors', and how much we take for granted there will be a lot less people willing to change the world.
Don't get me wrong, changing the world is a good thing - but not when it's done for the wrong reasons!

But before proceeding to change the world, let's look at the those poor people again and see what exactly poverty is. In the UK, being into poverty is defined as being under 60% of the median income - it doesn't have anything to do with an actual evaluation of their standard of leaving. Apart from obviously not making a lot of sense, this scheme has other, subtler peculiarities. For example, when the banks have a good year (there were times when they used to have such regularly) and score 5% more, this automatically pushes 5% more people "into poverty", without they being any worse off that year. The government then needs to lavish them with welfare, to get them "out of poverty" as to not ruin their statistics, which will be used against them on the next election. And that's not all - now we are in a recession and see what happens - poverty is fixing itself! In a recession businesses get hit first and the people "into poverty", while being slightly worse off than before actually get lifted out, and the government takes credit!
This might be the most ridiculous side effect of this arbitrary poverty definition (which is by the way not used in the UK only but in plenty of other places) but it's not the most dangerous one. Having this imaginary poverty line (that moves up and down with the economy, like the waves in the ocean) gives the government an incentive to push people out of poverty who were on the verge of the line anyway - they need just a bit of welfare and they are officially out of poverty! Now the ones that live in poverty in the literal, dictionary meaning - well, no matter how much benefits you pour on them they are not going to improve your stats, so why bother?

* - Still, we are much healthier and we live much longer than our great-great-great-grand parents who ate exclusively what they gardens produced. Turns out it's not all that healthy when you need to get up at 5 and work yourself to exhaustion on your garden as it yielded only so much without artificial fertilizers.


  1. Well, I don't think defining poverty at below 60% of average income is a bad policy. For example, it accounts for progress. If people advance enough to go to space and spread to thousands of worlds and spread and grow civilization there, then poverty could be defined as those unlucky enough to stay on mother Earth, and that seems fair definition.

  2. Lyubo, I generally agree that the condition of the most destitute should be linked to the well being of civilization as a whole - if we advance enough as a species to have the resources to explore space and whatnot we should definitely do more to ease suffering on earth.

    However, I don't think there should be such an arbitrary line - I think it would make a lot more sense to definite a set of basic necessities that we'll commit on covering for the poorest, to be revised every generation or so - or every month, after we reach the technological singularity :-)

    Also, I think that 60% of a developed country's average is too high. It's a bit hard to explain why as it needs tapping into other topics but I'll try. It has mostly to do with patriotism and nationalism - passions that I despise. For example, in the UK right-leaning people are opposed to sending aid to countries like India, which has nuclear programs and space exploration programs, when they have a budget deficit at home. However, India also has a couple of hundreds of millions of poor people - poor as in starving. For me personally what matters more is the suffering people around the world have to endure, not just in my country.
    That's why I think it's ridiculous to spend welfare money so that hoodlums in London can buy plasma TVs while millions around the world are starving.
    And even if you look at just one country in isolation, it still doesn't make sense to support financially people with incomes of £1,000 a month while in the very same country there are people that are far more desperate

  3. Comments in a random order, as usual.

    Gerard is Russian, yes, but actualy it war a real artist suicide. Gerard is a French Symbol. He is Asterix, and heavilly "Décontracté du gland". Next, the famous 75% tax was blocked by the Conseil Constitutionnel - Sarkozy, I feel you happy about it. But, the main debate about the 75% is not the money - in fact this represents only 3B euros per year (yes, this tax was an "extra effort for 3 years only") and curiousely, the biggest fortunes of France ware agree with it. There is a common effort to be done, and make this with EU credits us a dead end. The France will never go below the 3%, she is not so stupid.

    Anyway, the debate is noot about "taxing the riches ones", but taxing the Stock (Cac 40) transactions and the big capital. Capital is not money. In the worls 80% of the stock transactions are speculative, and 63% of the CAC40. Daily. What is wrong about taxing this? This was proposed first by Chirac - a UMP, not socialist president, but he only acheved a taxing of the airplane tickets. On EU, not only France. Next, there is a big EU problem about with the "Paradis Fiscaux". One of the biggest companys in the EU as Carrefour, Auchan, Leclerc etc etc are domicilied at the Belgian border, and do not pay taxes at all. Generating povrety. Simply as it. The probles here is not the corruption, but the "non paying taxes at all" And our Gerard, hi simply put the old EU project (yes, still a UMP invention) for the equal taxes all arround EU. This will be discussed March. Bien joue, Gerard! And, finaly, lock the bank taxes to the Brute Economy Grouth. Yearly. And not as such well known bananian republics as BG. Wich generates pauvrity, the riches and the smatrest enjoys, no regrets at all, and, hope that you can see this real pauvrity and unemplyement.
    Socialist means not comunist. It came from society, not money from the poors and lasyest. It means simply Dignity. Not slavery. In the evolution of the economy those days - no free places, no production, the services are more than 80% in the French economy (55% 20 years before). So, there will be a restructurations, in order to avoid the closer social fracture.