Ponder the graph above. Sixty-nine per cent of Labour supporters would
want a top rate tax of 50 per cent even if it brought in no
money.
I’m sure they’d dispute the premise. I’m sure they’d insist that it did bring money in. And, on one level, they’d
believe it; it’s human nature to start with the result we want and then
rationalise it to ourselves with what look like hard data. I think their
rationalisation would be false, obviously – once the behavioural consequences of
the tax are factored in, it becomes a net drain on revenue – but I might be
subject to my own confirmation bias in the other direction. Envy is an ugly and debilitating condition, but it seems to have an
evolutionary-biological basis. The dosage varies enormously from individual to
individual, but even toddlers often display a sense that, if they can’t have
something, no one else should either. If they had the vocabulary, they would
doubtless, like the 69 per cent of Labour supporters, explain that emotion “on
moral grounds”. Few toddlers, and few Labour voters, openly admit to being
actuated by vindictiveness.
Most policy positions are an expression of some ingrained tendency. For
example, we have an instinct to care for the vulnerable, and also an instinct to
value reciprocity, and our welfare system results from an interplay between the
two. Similarly, the current row about deporting foreign criminals has less to do
with their numbers or the nature of their crimes than with our instinct – again,
a human universal – about hospitality and its abuse. We shouldn’t be surprised
when people who suffer from envy elevate it into a political precept and call it
“fairness”.
I accept that there are advantages in homogenous, Nordic-type societies.
Huge inequalities of wealth can lead to higher stress levels, higher crime rates
and weaker social engagement (oddly, the people who deploy these arguments in
support of economic homogeneity almost never extend them to multiculturalism,
but that’s another story).
The case against state-enforced equality is not that a narrowing of the
wealth gap is in itself a bad thing; it’s that it carries a disproportionate
cost in terms of lost prosperity and lost freedom.
Wealth taxes make societies more equal; but they do so by making them
less prosperous. We can push plutocrats into shifting their money abroad. We can
drive hedgies to Singapore or Switzerland. We can, more prosaically, make
entrepreneurs spend more time with their accountants and less creating jobs. We
can encourage by far the most common forms of legal tax avoidance: shorter hours
and earlier retirement. All these things will make our country more equal. All
of them will make it poorer.
In her last Commons appearance as prime minister, Margaret Thatcher was
asked by Simon Hughes whether she was proud of the fact that, for all her
undoubted successes, inequality had widened during her eleven years in office.
She replied magisterially:
The hon. Gentleman is saying that he would rather that the poor were poorer, provided that the rich were less rich.
Indeed. But here’s the funny thing. We have before us an exact case-study
of what Simon Hughes – and the 69 per cent – say they want. Following the credit
crunch, inequality
fell. City salaries plummeted, average salaries fell slightly,
benefits stagnated. In other words, the 69 per cent got their way: Britain
became poorer and more equal. Yet, in the event, it was Labour supporters who
moaned loudest. There’s no pleasing some people.
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