Gareth Morgan has fallen for the oldest populist delusion

In founding his own political party, Gareth Morgan has fallen to the populist delusion that all that is needed is for a great leader to get in who is one of us rather than one of them and she will be alright.

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Source: About – The Opportunities Party.

In common with all populists, Morgan believes there is one will of the people frustrated by a conniving elite rather than many clashing visions of the good life that politicians must balance. Judis explains

Leftwing populists champion the people against an elite or an establishment. Theirs is a vertical politics of the bottom and middle, arrayed against the top.

Rightwing populists champion the people against an elite that they accuse of favouring a third group, which can consist, for instance, of immigrants, Islamists, or African American militants. Rightwing populism is triadic: it looks upward, but also down upon an out group.

Leftwing populism is historically different to socialist or social democratic movements. It is not a politics of class conflict, and it does not necessarily seek the abolition of capitalism. It is also different to a progressive or liberal politics that seeks to reconcile the interests of opposing classes and groups. It assumes a basic antagonism between the people and an elite at the heart of its politics.

John Rawls talked about the need for reasonable pluralism because so many people have different ideas of the way to go forward. Political institutions must be designed with that diversity in mind as David Gordon explained in a book review

The situation that drives Rawls to his theory is that of people in a large society like the United States who are divided by conflicting conceptions of the good. Some of these conceptions may be better than others, and one may in fact be the correct one: Rawls does not commit himself on this question. But none of these conceptions can be shown to be true in the strong sense that it would be unreasonable for anyone to reject it. This state of affairs Rawls terms “the fact of reasonable pluralism.”

Given reasonable pluralism, it would be wrong for the holders of one conception to impose their views on others; respect for others requires that we defend our political views with reasons others could acknowledge.

Our aim, Rawls holds, should not be a mere modus vivendi with those who profess other conceptions of the good. Rather, we should seek a stable society in which people decide disputed questions by democratic discussion.

The idea is to have a political system with sufficient checks and balances that whoever is in power does not do too much harm nor gets seriously out of alignment with the wishes of the electorate. That was the idea behind MMP: divide power between more parties and make all elections close.

It goes back to James Madison’s idea that governments are not populated by angels and so the powers of government and how they are distributed should take account of that. The idea is politicians behave in line with public interest because of the institutions that constrain and shape their choices.

It is wise to design constitutional safeguards to minimise the damage done when those crazies to the right or left of you get their chance in office, as they will sooner or later rather than focus on the powers you and those that currently agree with you should have in your few days in which you fleetingly have a majority.

Too many policies and ideas of the one political party or another assume that they are the face of the future, rather than just another political party that will hold power as often as not and always for an uncertain time. Too many policies and ideas of the Left assume that they are the face of the future, rather than just another political party that will hold power as often as not.

@garethmorgannz gives optimal tax theory a pass once again @JordNZ

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Source: Mankiw, N. Gregory, Matthew Weinzierl and Danny Yagan. 2009. "Optimal Taxation in Theory and Practice." Journal of Economic Perspectives, 23(4):147-74.

The Morgan Foundation gave optimal tax theory a pass in yesterday’s publication about taxes on land and capital. Gareth Morgan is keen on a comprehensive capital tax.

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Source: Taxing Wealth & Property – What Works? A Morgan Foundation Report.

This failure to refer to optimal tax theory is despite the Foundation’s strong commitment to evidence-based policy. Any discussion of tax policy that is evidence-based must refer optimal tax theory.

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Source:  Morgan Foundation, Public Policy Education.

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Why @garethmorgannz wants his great big new tax @geoffsimmonz

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Source: Poll Results | IGM Forum.

@GarethMorgannz the universal basic income is inferior to the minimum family tax credit

Gareth Morgan’s universal basic income appears to make everybody better off except those for whom the modern welfare state was established to protect. Examples of these from his online calculator are single mothers and retirees.

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Source: The Big Kahuna – Tax and Welfare.

To stay even just with single mothers blows a good $10 billion hole in the budget deficit according to the online calculator provided by Gareth Morgan. Retirees are still worse off.

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Source: The Big Kahuna – Tax and Welfare.

Central to the package is a comprehensive capital gains tax despite evidence growing with each day that the optimal tax rates on income from capital and on capital gains are zero.

A universal basic income for New Zealand is a long  trip to where we are now. There is already a guaranteed minimum family income in New Zealand.

The minimum family tax credit makes sure that a family’s annual income (net income after tax has been deducted) doesn’t fall below $23,036 a year ($443 per week). To qualify, you must  work for a salary or wage for at least 30 hours each week as a couple, or 20 hours each week as a single parent, and receive a family tax credit.

The Treasury modelled a Guaranteed Minimum income at the request of the Welfare Working Group in 2010. A  guaranteed minimum income  of $300 per week – the mean benefit income among those on benefits – would cost $44.5 billion or $52.6 billion if we extended it to super annuitants as a replacement for NZ Superannuation or old age pension. The former could be covered by a flat personal income tax rate of 45.4%; the latter, 48.6%. Full fiscal neutrality would require tax rates of 50.6% and 54.4%.

The universal basic income seems to be a big day out for Director’s Law of Public Expenditure. Director’s Law is public expenditure is used primary for the benefit of the middle class, and is financed with taxes which are borne in considerable part by the poor and the rich.

The universal basic income and a comprehensive capital gains tax seems to cause a lot of economic upheaval but still struggles to make the worse off groups in society even break-even on this throwing of all the cards in the air. Brian Easton put it well the other day when he said:

Many advocates put the UMI forward without doing the sums. Those who do, find that the required tax rates are horrendous or the minimum income is so low that it is not a viable means of eliminating poverty. Among the latter are New Zealanders Douglas, Gareth Morgan and Keith Rankin.

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