IndependentCitizen
5th May 2011, 23:50
Despite dire warnings from all types of politicians that we really ought to give a damn, it rather looks as if most people entitled to vote in Britain’s first referendum for 36 years will not bother to do so.
Yes, I’m talking about today’s poll on the Alternative Vote. Wake up at the back there! But here’s an idea that might really stir up some interest – and improve our nation’s governance.
Why don’t we restrict votes to people who actually pay something into the system? No, I am not suggesting a return to property-based eligibility; although that system worked quite well when Parliament administered not just Britain but most of the world. Today, income would be a much better test, setting the bar as low as possible; perhaps including everyone who pays at least £100 of income tax each year.
That minimal requirement would include everyone who gets out of bed in the morning to go to work and could easily be extended to include, on grounds of fairness, several other groups. For example, all pensioners – because of the fiscal contributions to society they are likely to have paid earlier – and mothers – because of their contribution to defusing the ‘demographic time-bomb’ of an ageing population.
This modest proposal would, however, exclude large numbers of people who have no ‘skin in the game’ and who may even comprise the majority of voters in some metropolitan areas today. Their contribution is not just negative in financial terms – they take out more than they put in – but likely to be damaging to the decisions taken by democracies.
For example, it is sometimes said – and uncertainly attributed to Alexander Tytler – that: “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury.
“From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy.”
Hard to believe? The credit crisis afflicting democracies around the world demonstrates the truth of this observation. So does the fact that our less democratic competitors in the emerging markets suffer no such crisis.
We have been voting ourselves better benefits than we have earned for decades and – sooner than later – that has got to stop. Restoring the link between contributing to society and voting about how it is run would be a sensible first step.
If all that sounds rather dry, then – with apologies to regular readers – here’s anecdote from Max King, global asset allocation strategist at Investec, which sets out to explain the macroeconomics of tax and benefits in terms we can all understand.
Suppose that once a month, ten men go out for beer and the bill for all of them comes to £100. If they paid their bill the way we pay our taxes and claim State benefits, it would go something like this;
The first four men (the poorest) would pay nothing. The fifth would pay £1. The sixth would pay £3. The seventh would pay £7. The eighth would pay £12. The ninth would pay £18. And the tenth man (the richest) would pay £59.
So, that’s what they decided to do. The ten men drank in the bar every month and seemed quite happy with the arrangement until, one day, the owner caused them a little problem. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your weekly beer by £20.” Drinks for the ten men would now cost just £80.
The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free but what about the other six men; the paying customers? How could they divide the £20 windfall so that everyone would get his fair share? They realised that £20 divided by six is £3.33 but if they subtracted that from everybody’s share then not only would the first four men still be drinking for free but the fifth and sixth man would each end up being paid to drink his beer.
So the bar owner suggested a different system. The fifth man, like the first four, now paid nothing. The sixth man paid £2 instead of £3 . The seventh paid £5 instead of £7. The eighth paid £9 instead of £12. The ninth paid £14 instead of £18. And the tenth man now paid £49 instead of £59. Each of the last six was better off than before with the first four continuing to drink for free.
But, once outside the bar, the men began to compare their savings. “I only got £1 out of the £20 saving,” declared the sixth man. He pointed to the tenth man, “but he got £10!”
“Yes, that’s right,” exclaimed the fifth man. “I only saved a £1 too. It’s unfair that he got ten times more benefit than me!”
“That’s true!” shouted the seventh man. “Why should he get £10 back, when I only got £2? The rich get all the breaks!”
“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!”
So, the nine men surrounded the tenth and beat him up. Funnily enough, the next month the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him.
But when it came to pay for their drinks, they discovered something important – they didn’t have enough money between all of them to pay for even half the bill.
That’s how non-contributory democracy led to the credit crisis in a nutshell. Or a joke, on the basis that you don’t need to be solemn to make a serious point. It’s time to restore the link between paying something into society and voting on decisions about how it is run.
http://blogs.telegraph.co.uk/finance/ianmcowie/100010127/a-tax-based-alternative-to-the-alternative-vote/
Yes, I’m talking about today’s poll on the Alternative Vote. Wake up at the back there! But here’s an idea that might really stir up some interest – and improve our nation’s governance.
Why don’t we restrict votes to people who actually pay something into the system? No, I am not suggesting a return to property-based eligibility; although that system worked quite well when Parliament administered not just Britain but most of the world. Today, income would be a much better test, setting the bar as low as possible; perhaps including everyone who pays at least £100 of income tax each year.
That minimal requirement would include everyone who gets out of bed in the morning to go to work and could easily be extended to include, on grounds of fairness, several other groups. For example, all pensioners – because of the fiscal contributions to society they are likely to have paid earlier – and mothers – because of their contribution to defusing the ‘demographic time-bomb’ of an ageing population.
This modest proposal would, however, exclude large numbers of people who have no ‘skin in the game’ and who may even comprise the majority of voters in some metropolitan areas today. Their contribution is not just negative in financial terms – they take out more than they put in – but likely to be damaging to the decisions taken by democracies.
For example, it is sometimes said – and uncertainly attributed to Alexander Tytler – that: “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury.
“From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy.”
Hard to believe? The credit crisis afflicting democracies around the world demonstrates the truth of this observation. So does the fact that our less democratic competitors in the emerging markets suffer no such crisis.
We have been voting ourselves better benefits than we have earned for decades and – sooner than later – that has got to stop. Restoring the link between contributing to society and voting about how it is run would be a sensible first step.
If all that sounds rather dry, then – with apologies to regular readers – here’s anecdote from Max King, global asset allocation strategist at Investec, which sets out to explain the macroeconomics of tax and benefits in terms we can all understand.
Suppose that once a month, ten men go out for beer and the bill for all of them comes to £100. If they paid their bill the way we pay our taxes and claim State benefits, it would go something like this;
The first four men (the poorest) would pay nothing. The fifth would pay £1. The sixth would pay £3. The seventh would pay £7. The eighth would pay £12. The ninth would pay £18. And the tenth man (the richest) would pay £59.
So, that’s what they decided to do. The ten men drank in the bar every month and seemed quite happy with the arrangement until, one day, the owner caused them a little problem. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your weekly beer by £20.” Drinks for the ten men would now cost just £80.
The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free but what about the other six men; the paying customers? How could they divide the £20 windfall so that everyone would get his fair share? They realised that £20 divided by six is £3.33 but if they subtracted that from everybody’s share then not only would the first four men still be drinking for free but the fifth and sixth man would each end up being paid to drink his beer.
So the bar owner suggested a different system. The fifth man, like the first four, now paid nothing. The sixth man paid £2 instead of £3 . The seventh paid £5 instead of £7. The eighth paid £9 instead of £12. The ninth paid £14 instead of £18. And the tenth man now paid £49 instead of £59. Each of the last six was better off than before with the first four continuing to drink for free.
But, once outside the bar, the men began to compare their savings. “I only got £1 out of the £20 saving,” declared the sixth man. He pointed to the tenth man, “but he got £10!”
“Yes, that’s right,” exclaimed the fifth man. “I only saved a £1 too. It’s unfair that he got ten times more benefit than me!”
“That’s true!” shouted the seventh man. “Why should he get £10 back, when I only got £2? The rich get all the breaks!”
“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!”
So, the nine men surrounded the tenth and beat him up. Funnily enough, the next month the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him.
But when it came to pay for their drinks, they discovered something important – they didn’t have enough money between all of them to pay for even half the bill.
That’s how non-contributory democracy led to the credit crisis in a nutshell. Or a joke, on the basis that you don’t need to be solemn to make a serious point. It’s time to restore the link between paying something into society and voting on decisions about how it is run.
http://blogs.telegraph.co.uk/finance/ianmcowie/100010127/a-tax-based-alternative-to-the-alternative-vote/