Wednesday 21 August 2019

We can't work with this guy.

     Dear America (and especially members of Congress and the Cabinet):

     I'm just a private Canadian citizen with no role in government or official position, which means I can say things which for reasons of diplomatic propriety the leaders of nations can't. What I say has no impact other than to simply place an idea in your head, which you can assess on its own merits and either adopt as your own or discard as you see fit. But I hope you will consider it seriously.

     We (the other countries of the world) have all sorts of relations with the United States, whether as adversaries, rivals, or allies or trading partners, and in all of these it's really important that the United States be able to say something and have it be believed. When you make a trade deal or a treaty, you need your trading partners to expect you to keep your end of the bargain or they won't bother. Even if you want to deceive an enemy, it's really helpful if they have some reason to believe you usually tell the truth.
     And that's the problem. This guy you have as your President right now? We can't trust a word he says. I honestly don't know if he's lying or if he actually believes the absurd falsehoods he tells when he tells them, but it doesn't matter: he is just so fundamentally unreliable in everything he says that we cannot accept his assertions, we cannot trust his promises, and we cannot fear his threats.
     I'm not going to comment on impeachment or the 2020 election. That's your problem, and not something we foreigners can or should get involved in. But your Constitution includes provision for what to do when the President is incapable of carrying out his duties, and it is clear to me that, at least when it comes to foreign relations, your President is incapable of carrying out his duties, because we cannot trust his word on anything.

Tuesday 13 August 2019

An Addictive Policy

     In a recent post I mentioned a game system I designed. I've actually got a fair bit of mileage out of that experience, and ended up writing my MA thesis on something I call the detection principle. Simply put, it's the idea that if you want to enforce a rule, you need to have some way of detecting when people break it, and it's most efficient to have the voluntary assistance of the people most immediately harmed by the violation of the rule.
     A simple example: Suppose we noticed a problem with unsightly and unsanitary bloody noses. So we pass a law that says anyone sporting a bloody nose will be fined $100, thinking that maybe that deterrent will encourage people to avoid getting bloody noses.
     At first, maybe it has a slightly salutary effect in some cases. We find that people invest in carrying  tissues or otherwise take steps to stop their nosebleeds quicker, or at least slip away to address them in private where they're less likely to be liable to the fine. But soon we find that a particular type of nosebleed becomes more common: people are getting punched in the nose.
     Well, we can't have that. Our law has been effective at reducing the reports of most other kinds of nosebleeds, but these miscreants are ruining everything by getting themselves punched. So maybe we need to raise the fine, because clearly the $100 deterrent isn't enough to keep these people from bleeding all over the place.
      That doesn't seem to work though. If anything, it causes more people to get punched. After all, someone who's inclined to hurt you in the first place by punching you now has a force multiplier: they can punch you and force you to pay a fine for being punched!
     Okay, that's no good. Obviously punching people should be deterred, too. So we'll make them liable as well. Except that doesn't really help much. The punching goes underground. We're still catching people for being punched, but mostly on anonymous tips, often (we suspect but cannot prove) from the people who punched them in the first place.

     The policy is obviously stupid in this thought experiment. We recognize that the victim of a punching is not culpable for bleeding, and that punishing them just deters them from cooperating in our efforts to catch the puncher. And that makes the overall problem of punching worse, which is why I titled this essay "An Addictive Policy"; a mild dose of the perceived remedy to the problem makes the problem worse, so it "needs" a stronger and stronger and stronger dose, none of which actually helps but just convinces us that we absolutely cannot afford to reduce the dose. We're already doing all we can, and look how bad the problem is! Just imagine how much worse it would be if we stopped!

     We don't do this with nose-punching, but we apply almost as stupid and every bit as damaging an approach to illegal immigration. It's perhaps not quite so obvious, because one can argue that an immigrant chooses to cross the border and take work illegally, but the power dynamic is almost identical. Employers may feign being shocked -- shocked! -- to learn that some of their employees are here illegally, but they choose to hire them, and for very good reason: they're cheaper. And they're cheaper because they can't tell anyone if you pay them less than the legal minimum wage, or if you opt not to spend money on expensive legally required workplace safety regulations.
     I am convinced that this is deliberate. Employers want to be able to evade labour laws; they want to be able to pay people less than minimum wage, and they want to be exempt from workplace safety laws. And it's very much worth their while to scream and yell in the public square about how those horrible, horrible immigrants are coming here and stealing jobs and spreading disease and violating our sovereignty and breaking our laws, and we need to really really crack down and build a wall and get rid of them all. They know perfectly well that a wall won't keep anyone out, and that there will always be desperate and disadvantaged people in the country illegally that they can exploit for cheap labour, especially if those desperate and disadvantaged people are deterred from letting anyone see their noses bleed.

    I argue that if you really want to stop illegal immigrants from taking jobs, you need to enlist their help in detecting and punishing the people who hire them. That means you need to stop treating the immigrant as the criminal. Sure, they crossed the border without permission. This is what lawyers call a malum prohibitum (wrong simply because it has been prohibited by the legislature), as distinct from a malum in se (inherently evil). If the legislature decided to allow crossing the border without permission, there'd be no reason whatsoever to be angry at someone who did so, and nothing to deter said person from reporting anyone who paid them less than minimum wage, or who failed to ensure proper workplace safety. Ensure that everyone who works here enjoys the same protections, and there will be no incentive for employers to prefer hiring non-citizens who don't.

Wednesday 7 August 2019

Reply to "9 Big Questions About Democratic Socialism"

     A friend with whom I frequently argue posted this link recently, and I wanted to address the questions it raises.

1. What is the moral basis for taxing some incomes at higher rates than others?

     There's a subtle trick in this question. It's certainly true that equal incomes ought presumptively to be taxed at equal rates, and that we should provide some kind of moral justification for deviating from this. But it's not at all clear that we should expect unequal incomes to be taxed at equal rates.
     To illustrate, let's step back a moment, and consider the head tax, almost universally recognized as deeply unjust. If everyone were required to pay exactly $1000 tax, regardless of their income, that would quite clearly be unaffordably burdensome for the poorest taxpayer, while utterly inconsequential to the richest. Both are paying an equal amount, but the burden is nowhere near equal. Most people would agree that "equal" does not mean "fair" when we're talking about the absolute amount of tax paid.
     So why should we assume that equality of rate is the fairest approach? It's certainly fairer than a head tax, but is it perfectly fair, such that we need to provide a moral justification for deviating from it?
     I have argued on this very blog quite often that it is not. The short answer to the question, then, is that no justification is required to treat different incomes differently according to their differences.

2. Do we imagine that incomes are entirely the result of some random process?

     No, of course not. But neither are they entirely independent of random chance and unearned advantages. Pretending that all inequality of income is 100% deserved is just as ridiculous as pretending that none of it is deserved.
     I tend to think, though, that bickering about what people deserve is a waste of time. I don't care if the poor deserve to be poor or the rich deserve to be rich; I want a system in which all humans enjoy the greatest freedom and quality of live possible, no matter how much we might deserve to be punished with eternal misery for our original sin. Indeed, it's kind of arrogant to try to argue for or against any economic system based on one's eminently fallible and inherently biased personal judgments about what people deserve.

3. Do we understand that people with high incomes are the most mobile people on earth and that such persons are most able to leave one tax regime for another? 

     I've seen this argument before. If we raise taxes on the rich, they'll just pick up and move somewhere where they can pay lower taxes.
     Oh no. They'll take all those dollars somewhere else, and we'll only be left with our land and natural resources, our buildings and infrastructure, and our labour force! Whatever shall we DO!?
     (This is actually a bigger problem for the rich person moving abroad than it is for us. Either they exchange their Canadian dollars for the currency of the lower-tax jurisdiction, and those dollars come back as foreigners spend them to buy Canadian stuff, or they just hang onto them and don't spend them and soon discover that money is useless by itself, while we print new money to mediate our own transactions.)
     Yes, people with high incomes often have valuable skills and it might be a shame to lose them, but if those skills tend to be focused around how to squeeze the biggest share of the surplus value of trade from a transaction, it's not necessarily such a bad thing if they take those skills elsewhere.
     Have some faith in the free market. If we find that we really desperately need more surgeons, we'll start offering them more money to come here and work, taxes and all. The skilled people we need to attract, the market will attract. But we don't need to attract people whose primary skill is gaming the system to concentrate wealth in their own hands.

4. Related to question 3, do we realize that governments exist in a competitive landscape, very much like businesses do? 

     The core of this, related to question 3, is the premise that governments are competing to attract the wealthy people to come live in their territories and pay taxes. But this is only incidentally true, and it's grave mistake to structure your whole idea of government around this objective. Governments compete for all sorts of reasons -- territory, scarce resources, access to markets, prestige -- and competing to attract investment capital is just one of many ways they may or may not compete, depending on scarcity and demand.
     But all of these things are incidental to the role of a sovereign government, which is constitutionally incompatible with competition. At its core, a democratic government is simply the means by which a population organizes itself and resolves internal conflicts about what is to be done. In practice, it usually needs material resources and labour to carry out its policies, and so yes, it does compete both within and without its sovereign territory for the things it needs, but its main task is governing, and if it is to be sovereign, it must have no competition in this role.
     I've written about this before, but if you really want to think of a government as a business, then you should think of citizens as shareholders, not customers. A government's responsibility is to its shareholders, not to its customers, and while it might compete with other entities for customers, it really makes very little sense to think of it competing for shareholders. And if all the shareholders decide to liquidate their shares and go invest their liberty with some other government, so be it.

5. Do we have a right to treat wealthy individuals and organizations as a resource for our benefit? 

     Individuals? No, of course not. Organizations? Well, yeah.
     In nature, there's no such thing as a corporation. Corporations exist entirely as creatures of law; they are ways of organizing our activities to facilitate achieving certain goals. You don't have an inalienable right to form a corporation; you are given that option by a sovereign government enacting legislation allowing the creation of corporations (and other organizations, such as non-profit societies, for example) and the government can attach any conditions it wants. Want to form a corporation so you can raise capital to build a factory and manufacture widgets without exposing your personal assets to liability risks? Cool, go ahead, the government will protect this bundle of rights here, and you need to divert this proportion of your profits to government coffers.

6. Will democratic socialism damage innovation and economic growth?

     The article doesn't clearly define "democratic socialism", but the answer it offers to this question seems to equate it with "steeply progressive tax rates". I'll quote it in its entirety to respond fairly.
"Steeply progressive tax rates provide a substantial disincentive to earn income above a certain level. The natural result would be to opt for more conservative returns from known methods and products. There is little reason to take risks for breakout success when the profits will be subject to a confiscatory rate."
     Seems superficially plausible, but there are a number of mistakes here.
     First, progressive tax rates are not a disincentive to earn more money, because there is no point at which earning an extra dollar fails to put at least some money in your pocket. Rather, the incentive to earn an extra dollar diminishes, the more you earn.
     Second, remember that taxes are assessed on profits, which are calculated after deducting expenses. And money invested in R&D, to develop risky but potentially lucrative new products, counts as an expense.
     Third, a low tax rate doesn't necessarily encourage innovation, at least not of the sort we want to encourage. There are two principle ways to profit from investment, when you buy shares, for example: income (dividends, for example) or growth (capital gains). If the tax on income is very low, you might well prefer to opt for the "conservative returned from known methods and products" since you know you can keep most or all of those proceeds. Why bother risking putting all those profits into R&D when you know you can keep pulling out cash now, especially if capital gains taxes are relatively higher? So whether sharply progressive taxes inhibit or encourage innovation depends on a lot of other factors.

7. Why do we prize many other kinds of freedom more than economic freedom?

     Where to begin? I guess my first observation is that this is just so vague as to be meaningless. What on earth is meant by "economic freedom" as distinct from "other kinds of freedom"? I would argue that most freedoms are economic freedoms, or are at least heavily impacted by economics. Someone with money has, in practice, more freedom of speech than someone without. Someone with money has more ability to cast a ballot that will be counted. Someone with money will find it much easier to stay out of jail than someone without. And recursively, someone with money will find it much easier to exercise their economic freedom to earn more money than someone without.
     So I would turn this question around: why do you want to prize some people's economic freedom at the expense of everyone else's?
   

8. Do we really need higher taxes or do we need to rethink the way we spend our money now?

     Yes to both. We always need to rethink the way we spend our money, because that's always going to be an ongoing, self-renewing problem. But we do need higher taxes, particularly on the wealth, and for reasons that really have nothing at all to do with funding government, because...

9. Are we getting taxation wrong?

     ...yes, we are absolutely getting taxation very very wrong. Taxation is not, contrary to all our intuitions, about funding the government. At least not the federal government. It is to some extent about funding provincial and municipal governments, but the federal government is the one that issues currency; it can in principle print all the money it wants, but it really shouldn't just do so with wild abandon because that will lead to hyperinflation. So taxation is really about preventing that, not funding the government.
     In the post before this one, I talked about how the sovereign actually has practical ownership of everything. Consider that for a moment, in the big picture: Parliament can in principle pass a law imposing any rules it wants on how any given object, commodity or land can or can't be used. If parliament passes a law saying you must eat this apple and I must not, any talk about me owning this apple is essentially meaningless. Now, it's certainly true that we have a written constitution that prevents Parliament from certain sorts of enactments, but the Constitution itself is an Act of Parliament with an amending formula. In this context, it makes sense to say that the property laws in effect within Canada by which I can meaningfully claim this apple is mine and not yours are really just the system of rules that the sovereign has chosen to apply in deciding how its apples are to be used.
     And so, paying people to build bridges or serve in the military or manage fisheries is just the way that the sovereign has chosen to effect its will. The sovereign wants these things done; it could pass a law requiring people to build bridges, but finds that it is more effective to use a money system instead. Money's a fine system, but it takes a certain amount of maintenance to keep it functioning smoothly, and taxation is part of that. Not to provide the money for the government to spend, but to keep it circulating.
     We tend to think of money as some scarce good that we need more of, and on an individual level that's probably how we ought to think of it, or it won't work the way it's supposed to. But on the national level, the level of making policy and debating the ethics of taxation, it's dead wrong. One can criticize any tax policy as bad policy and likely to fail, but when we talk about it violating people's property rights to money they've earned, we're getting taxation very wrong.

Saturday 3 August 2019

Some LARP-inspired thoughts about sovereignty, property rights and taxation

     About thirty years ago, I designed a set of rules for a LARP. Unlike most LARPs, it didn't use padded boffer weapons, but a simple dice-based conflict resolution mechanic. (We didn't want to exclude people with no athletic ability from playing mighty warriors if they wanted to.)  Since the resolution system was dice based, it was convenient to represent game items with cards that had the relevant stats and descriptions printed on them. So, for example, a typical broadsword might be a piece of paper with "Damage 5" and three durability boxes to cross off as it gets damaged, while a high quality one might do 6 damage and give you a bonus of +1 to Combat skill. 
     Now, these cards of paper became prized trophies sometimes. If you killed the Doom Dragon on last September's quest, you might be very proud of the magic amulet you took, and what's more, you'd want to be able to use it when you came back to play on the May long weekend. Usually, it would be a different organizer writing and running the next quest, and so the plot might take place in a completely different fictional land, but traditionally we would allow items from previous games to be used in the next game. It helped players get more engaged with the game, and it's always nice to have older players be able to tell stories around the campfire about how they got this or that item. Makes it more immersive.
     But here's the problem: If you won that magic sword card and took it home, you could quite rightly claim that scrap of paper as your own personal property, subject to the laws of Canada and everything. I cannot take your personal property without your permission, or I might be guilty of violating the Criminal Code. But if you bring your sword to the quest, and in game my character successfully picks your pocket or slays you in battle, then I absolutely can help myself to that slip of paper, whether you want me to have it or not, and after the game is over it's entirely appropriate for me to take it home as my prized trophy, with the tale of how I valiantly wrested it from you. 
     So the way we resolved that problem was simple: All game items become the property of the game organizers, and subject to any rules they impose. You want your magic sword to be recognized and have an effect in game? Fine: it becomes the property of the game organizers, who allow you to possess it subject to the condition that it can be taken from you, damaged or destroyed under certain circumstances. You want to keep as a trophy, protected from theft? Keep it at home.

     The rules that the game organizers impose can be completely arbitrary, depending on the sort of game they want to run, though in practice they tend to be at least somewhat sensitive to the interests of the players. After all, nobody will play your game if they don't think they're going to enjoy it. (Also, enforcement of rules depends on some degree of cooperation from the players, if only to detect violations; if all the parties to an interaction agree that a particular rule is stupid or inconvenient, they can and often will ignore it, and the rulemaker may never know.
     But apart from those pragmatic concerns, there is nothing constitutionally preventing a game organizer from enacting whatever rules they want. If the game organizer wants to make a rule that your magic sword will instantly disappear if you use it against an innocent, so be it.  Players have no inherent rights to their magic swords or anything else in the game universe. Although the game organizers may delegate a great deal of decision-making to the players (and it is of course inherent to the whole genre of roleplaying games that the player is exercising the free will of their character), the game organizers are absolutely sovereign over the whole game reality. 

     What I want to suggest here is that the very same principle applies to the laws of a sovereign state, and in particular, that the rules concerning who owns what are nothing more than laws imposed by that state, no different in principle and no less arbitrary in nature than any rule a game organizer might make about your magic sword. Indeed, the very idea of ownership itself is not an immutable natural fact about the world, but entirely a matter of social convention; my claim to own something only has meaning if other people thereby accept that they have a duty not to take or use it without my permission. Otherwise I'm just expressing a personal wish.
     This is why I have little patience with arguments against taxation that go "This is MY money, and the government has NO right to it!" The sentiment is perfectly understandable, of course, but fundamentally it makes no sense; the very idea that the money is yours depends upon a notion of property which is entirely a creature of sovereignty. 
     Now, it's true that a given state might have its legal system constrained by a constitution which implicitly or explicitly guarantees certain rights to individuals, and those rights may well include property rights. I'm not saying one cannot argue against a given tax on these sorts of legal grounds; one can and should make such arguments when they are applicable. Just recognize that even that written constitution is self-imposed, and a sovereign state can in principle amend, alter or abolish anything in it. Doing so may be a bad idea, and one certainly can and should make that argument as well, but the fact that something might be a bad idea does not make it impossible to do it. 
     What I'm objecting to here is rather the visceral, superstitious belief in ownership rights that the state somehow has an absolute duty to recognize, because property rights fundamentally depend upon the existence of a society to recognize them, not vice versa. And the idea that people have an absolute right to "their" money in particular is even sillier, because money is explicitly something that is created by and has no meaning outside of a sovereign state. It is exactly like the paper cards we use as weapons and equipment in the LARP, quite worthless outside of that context, and valuable only because of their function within it.

     The sovereign isn't taking your money by taxing it. The sovereign already owns ALL the money there is, and rather issues it to us for us to use according to the rules the sovereign establishes for it. In an everyday sense, we can talk about my money as distinct from your money, but all that really means is that the sovereign has delegated a certain amount of decision making authority over this amount of money to me, and over that amount of money to you. It's still subject to the rules of the sovereign.