Making reform of the tax system academic
One of the third-year economics modules here at UCL is called ‘Economic Policy Analysis’: a hotch-potch of nonsense and various lecturers’ frivolous hobby-horses rammed together into what the university hopes is a coherent package. It is, of course, nothing of the sort. So far, we’ve examined five ‘policy areas’:
- The economics of social welfare programmes (no justification as to why they should exist at all…).
- The economics of abortion (who decides to have an abortion due to the local gender ratio?!).
- The economics of immigration (something I can actually like!).
- The economics of addiction to smoking (as if anyone doesn’t know the harms of smoking).
The first topic this term is ‘Reforming the tax system’. “Yes”, I cry, “Finally, a lecturer that agrees that taxation is unjust!” Sadly, it was not to be.
Instead, we heard a very simple model of optimal taxation: eat the rich. The role of the tax system should be to exact the maximum amount of revenue from the rich, and give it to the poor. The rich ‘exist simply to generate tax revenue’, according to the lecturer: a certain Richard Blundell CBE, head of the Institute for Fiscal Studies, former President of the European Economic Association and Econometric Society. At the end of the lecture, the professor told us, “We hear a lot about taxation from politicians. But this model is simple. And everyone can agree with it.” Not so sure about that.
Blundell is an econometrician: someone that uses mathematical and statistical tools to identify economic relationships. The problem with econometricians is they usually prefer using said tools to common sense. Maths works because it’s based on assumptions like 1 + 1 = 2. Econometric models are often based on ridiculous assumptions. Such as, for example, that the rich have no rights, but exist only to pay for the largesse of other people (who, by definition, therefore, do have rights: not just to their own property, but to other people’s!).
Is it any surprise that the country is going down the pan when even those that are most educated in economics - the people that are supposed to apply critical thinking to our economic woes, hold those prejudices with regards to their own subject?
