Libertarians : Communists or complete bastards?

I was talking to a friend at work yesterday who mentioned that he’d met an extreme libertarian while visiting America. This person believed that there should be absolutely no government at all. What made this person’s argument a little weak was that they were extremely wealthy, most of which had been inherited.

I don’t claim to understand libertarians particularly well, but I assume that they feel that there should be no government and that we should simply pay directly for everything we need. Essentially I’m using the word “libertarian” to refer to those who would like to pay very little – if any – tax. My problem with this general view is quite how it is expected to work. The figure below is one I’ve taken from the Office for National Statistics and more information can be found here . What the figure shows is the original income (pink bars) and final income (yellow bars) for all households in the UK, divided into 5 groups (poorest 20%, next 20%, …, richest 20%) for the 2008/2009 tax year. The final income is essentially what a typical household in each division would have after tax and benefits.

What the figure shows quite clearly is that the poorest 40% of households gain quite a lot due to benefits and the richest 20% lose quite a lot. The figure shows some interesting things straight away. The median household income is between £20000 and £30000 per year. I still find it amazing that 50% of households in the UK have annual incomes below £25000. This is also roughly the break even point. Household income needs to be about £25000 in order for the amount lost through tax to be recovered through benefits. This isn’t true for all households with incomes of £25000 as it will depend on various factors (no. of children for example) but is presumably reasonably typical. Why is this relevant? Well if we wanted low taxation and small government then none of this redistribution would occur. The income distribution would be represented by the pink bars in the figures. Households with incomes above £25000 pa would be better off and those with incomes below £25000 would be worse off.

One could argue that the money that was paid as taxes could end up going to the lowest earners, but this would require that employers explicitly decided to take this away from the highest earners. It could happen, but it’s not obvious that it would. Furthermore even if the income distribution did tend towards that represented by the yellow bars in the figures, there are still things, such as education and healthcare, that people don’t pay for directly. Annual education costs are about £3000 per pupil and healthcare is about £1500 per person. A typical family would therefore need an additional £12000 per year to cover these costs. Admittedly they would no longer be paying VAT and other indirect taxes, but it is still hard to see how a household with an annual income of £20000 could suddenly find £12000 for healthcare and education costs. The only way that I can see this working is if the income distrbution were narrower still than that represented by the yellow bars in the figure.

Essentially what I’m arguing is that a libertarian society in which everyone has access to the basics (healthcare, education, accomodation, food, transport, etc) is one in which the income distribution must be very narrow – most people must earn almost the same as each other. Hence my reference to being “communist” in the title. Alternatively, maybe libertarians really don’t care about society and just don’t see why they should have to pay taxes that ultimately benefit someone else. If others haven’t worked hard enough or aren’t skilled enough to get a salary that allows them to afford the basics, tough. It’s their problem. Hence my use of the term “complete bastards”.

The title of this post is deliberately provocative and I don’t really believe that those with very libertarian views are either communists or complete bastards but I do wonder if they’ve thought about the implications of this world view. My gut feeling is that they haven’t and don’t actually realise how income is distributed in a country like the UK and what the implications are for those on the lowest incomes. I’m also not suggesting that some of their views don’t have merit. Big governement is also bad, but it seems – to me at least – that the more unequal the income distribution the bigger the government has to be in order to provide for the poorest in society (there are also arguments – such as those in The Spirit Level by Kate Pickett and Richard Wilkinson – that there are additional problems and costs associated with unequal societies). Those who genuinely want small government should therefore be fighting for a more equal distribution of income so that they can justifiably argue that government doesn’t need to provide for people, because they are able to afford to provide for themselves.

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AV vs FPTP

I haven’t really been following the Alternative Vote (AV) versus First Past The Post (FPTP) debate in much detail. Yesterday, however, I read Tim Gower’s post Is AV better than FPTP and found it very interesting and informative (on another note, I found David Broomhead’s article A formula for fair voting very poor).

I don’t want to re-explain all the details about AV but, it seems to me at least, that FPTP is only really fair if there are only two candidates. If there are more than two, then there is a reasonable chance that the vote will be split and that the winner will be someone that more than 50% of the voters would rather had not won. With AV, it seems that if all the voters were to vote their preference honestly (including voting for only one candidate if that is their choice) the result would at least reasonably reflect the views of the electorate. I should add that my definition of fair here is not that it is fair to the candidates but that it fairly reflects the views of the voters.

What’s been most disappointing about what I’ve seen of the debate is how it hasn’t included much discussion of which system would better allow the views of the country to be represented. Certainly the No to AV group seems to be arguing that we need a system that will produce clear winners and that the AV system will result in more coalitions. Even if the latter is true, it seems fine to me if this actually reflects the distribution of current political views in the country. Our voting system shouldn’t be based on the make-up of the political parties, the political parties should adapt if the voting systems tells them that their policies are not sufficiently popular. In short, we should come up with a voting system that will allow for the views of the electorate to be determined and let the political parties adapt accordingly, not the other way around.

I have, however, found this “it’s the result that matters” attitude quite common. My understanding of what my university does when it decides who should be offered a place is that it uses all sorts of information, not simply the A-level grades that the students get or are likely to get. I think this is quite correct and if done properly (and there is a lot of work going into determining how to do this properly) the students who are most likely to succeed will be offered places. To me, this is what’s important. I have, however, heard others say that it’s not fair if someone’s parents spend a lot of money sending them to a good school and then someone with lower grades is offered a place ahead of them. If grades were a perfect indicator of how someone would perform at university, this view would be quite correct, but they’re not (or at least I have seen studies showing that they’re not). If someone has had extensive help in how to cope with exams and how to achieve good grades, their results may suggest that they will perform better at university than they actually will. The reverse is also probably true.

Similarly, it seems at university that students and staff alike have forgotten that exams are simply forms of assessment. We spend four years teaching students various things about a subject and we need to assess how much they have learned and how capable they are likely to be once they graduate. It’s not a competition to see who can get the highest marks. If it any stage we feel that students are achieving grades that do not reasonably reflect their abilities we should change the system. This is not to disadvantage students but simply because it should – in my opinion – be designed to fairly assess students’ abilities. The voting system should be the same. By and large, the voting system should be designed to produce a result that largely represents the views of those who voted. Proportional representation would be ideal – in my opinion – but given that we value constituency politics, AV seems like a reasonable option. Despite David Broomhead’s article in the Guardian, tactical voting is difficult in the AV system, and if most voters were to indicate their preferences, the winner should be someone preferred by more than 50% of the voters which seems much better than the current system where the winner might get less than 50% of the votes, and more than 50% of the voters would have preferred someone else to have won .