Tax the bankers (but not for the reason you think)

Recently, the UK’s Social Mobility and Child Poverty Commission (SMCPC) published a report that suggests that elite firms apply a ‘poshness’ test in recruitment.

‘Poshness’ is a term with strong connotations in the UK but it broadly means the same as ‘well-bred’ or ‘privileged’.

It seems that elite law firms, City financiers etc. select for reasons of cultural fit, because candidates are polished or because they have travelled widely. Sometimes this is called the ‘cab test’. If a new recruit is put in a cab with a client will social disaster ensue?

It may be in the interests of elite firms to select this way – or, at least, they may lose nothing by doing so. But there is a problem.

Let’s take (polished) George and (unpolished) Mildred. Their results at all stages of education are the same. Indeed, we will assume that only polish, and international travel, separate the two. If the SMCPC report is correct, George is more likely to beat Mildred to a top job.

As an isolated case this is un-troubling. But, if the SMCPC report is correct, the Georges of this world have systematic advantages that are based on their social and economic background – not on their ability or effort.

A career in an elite firm gives individuals access to valuable financial and non-financial goods. A corporate lawyer earns more money than a call centre worker and exercises a greater range of his or her capacities. It is deeply regrettable that access to elite careers should be unfair in this way.

One response is that those who suffer from the unfairness benefit economically from the productivity of the polished. Possibly – although the economic benefits might be even greater if access to elite professions were fair. Sometimes less-talented Georges will be appointed over more-talented Mildreds and they may make worse decisions.

But I want to look at a different issue.

Can economic benefits (higher wages, more jobs) compensate for unfair equality of opportunity?

Here is a thought-experiment that suggests not.

Well-connected middle-class parents are required to make choices on behalf of their off-spring. They can use their networks, influence, hire private tutors etc. But if they do their off-spring will receive an income-contingent additional tax – a bit like a graduate tax. Alternatively, they can refrain from doing all of these things and their off-spring will receive a tax reduction.

The choice is a straight trade-off between opportunities and income. Most parents (I speculate) would opt to impose the tax on their off-spring. If this is correct they think that opportunities are more important than income.

Here’s a different case that might explain why. Robert Walpole (1676-1745) was possibly Britain’s first ‘prime minister’. He was not a principled man but ruled by bribery, flattery, and bullying. As many people hoped to be bribed, access to Walpole was highly sought.

Access was partly controlled by Walpole’s porter. The result: the porter ‘earn[ed] more in tips than the income many a country gentleman derived from this estates.’(p.98)

Portering for Walpole was probably very tedious, if well-paid. Would you hope that your off-spring might become a Walpolian porter? Possibly, but only if the alternatives were just as tedious and less well-paid.

Why? One’s work is not just a means to an income. It is a forum in which one can develop and exercise one’s intellectual and socio-emotional capacities. Developing these capacities can be more important than the instrumental benefits one can obtain from work.

If this is correct, equality of opportunity may be a more important component of the fair society than how income and wealth is distributed.

A privileged background tax

The SMCPC’s report suggests that people from some socio-economic backgrounds have unfair access to quite an important set of goods. Those who lose out should be compensated. We could impose an income contingent graduate-style tax on City lawyers, financiers, or consultants. We could call it a privileged background tax.

Envy?

We are not taxing to ‘level down’ but to generate resources to compensate the Mildreds of this world who lose out from unfair access to elite professions.

Double charging? 

Some parents pay school fees to give their off-spring advantages then their off-spring are charged a privileged background tax. Is this unfair? No. School fees are a private investment that can have public effects. Some of these effects will be negative. If so, it is permissible to tax them.

There is an analogy with gas guzzling cars that attract an extra emissions tax. To complain that having paid £30000 for the car, it is invidious to be taxed more than other cars, misses the point entirely.

Summary 

Let’s be frank, no political party will levy a privileged background tax but two points are important. First, I  would feel more comfortable sending my own off-spring to a fee paying school if I thought that their less fortunate contemporaries might obtain some compensation for this. There may be others like me.

Second, access to elite firms is unfair. If a privileged background tax is rejected, what are we to do? Perhaps the answer is ‘very little’. But, if so, this should be stated loud and clear. This is the very least to which the Mildreds of this world are entitled.

Should shorter people be allowed umbrellas?

Source

This may sound an odd question (or possibly worse). But I live in rainy England and am above-average height. And, anyway, answering this question can help us think about different theories of justice.

Distributive justice: how to share out benefits and burdens?

Keeping dry in wet weather is a benefit. Having to take evasive action so you don’t experience an umbrella spike in the ear is a burden – as is an umbrella spike in the ear.

We must also remember that streets, walkways, and paths are shared public spaces. The abandon with which people wave their umbrellas in the confines of their own homes may be no-one else’s business. But in a public place how you use your umbrella can be my business.

The communitarian

Communitarians doubt that there are universal values that can help us settle questions like ours. We live in ‘thick’ moral relationships: if we abstract from these, we cannot properly understand the value of what we care about.

Married life is a good example. Most people care deeply about their own spouse. But if you abstract from the particular history of any couple – their joys, pains and shared experiences – it is hard to make sense of this caring. There is no universal reason why any couple should care about each other.

The same might apply in other contexts. It could be that in some wet country carrying an umbrella is so useful that only the destitute don’t. Not carrying an umbrella may denote inferior status and so constutiute a moral stigma.

In Adam’s Smith’s day, the inability to appear in public in a white linen shirt was one such moral stigma. The implication is this:

whatever damage shorter people might cause by wielding their umbrellas, limiting their umbrella rights would confer inferior status on them – much as banning prisoners from voting does. The difference is that being shorter is no crime.

But does umbrella-carrying carry such thick moral meaning? Not in the UK. But limits could come to imply inferior status. How?

On average, women are shorter than men and countries like the UK have a history of gender injustice. Any rule that picks out only shorter people would disproportionately pick out women.

On this basis we might rule out limiting shorter people’s umbrella rights because it risks perpetuating and exacerbating historic injustice. But this argument would not apply in countries who have a different history.

The utilitarian

Would a world in which shorter and taller people have the same umbrellas lead to greater overall happiness? I have no idea.

While utilitarianism is theoretically simple, the number of factors to be included in the utilitarian calculation can make it practically impossible.

The philosopher’s response is to look at the possible implications of utilitarianism. If utilitarianism can have odd implications, we infer that it is missing something morally important. And, by golly, can utilitarianism have odd implications.

Imagine the simple-minded shorter person who treats his umbrella as an expression of his personality – unfurling it makes him very happy indeed. His happiness might outweigh the pain of ten (a hundred?) stoics who receive his umbrella’s spikes in their faces.

We are describing a ‘utility monster’ and intuition tells us that such monsters should not be indulged. The general form of this objection is that utilitarianism ignores issues of distribution.

We should not sacrifice the interests of larger numbers of people even if doing so benefits a small number enormously.

The social contract approach

We are to imagine justice in terms of an agreement between suitably suited individuals. What would I agree to if I were fully rational … fully reasonable … fully informed and unbiased etc.?

Or, in John Rawls’s ‘original position’, what would I agree to if I did not know who I was – whether I was rich or poor, talented or not, black or white etc?

What umbrella rights would I agree to if I did not know whether I was taller or shorter?

The key point is that no answer can refer solely to the benefits to shorter people of keeping dry. If I don’t know whether I am taller or shorter, a persuasive answer must include reasons that taller people can accept.

The general idea is that society is fair only if everyone has reasons to accept the rules whatever position they end up in – rich or poor, tall or short.

It should be noted that ‘having reasons to accept’ something is not the same as ‘personally benefiting’ from it. Someone may never personally benefit from their country’s university system but they do have reasons to think it worth having.

Conclusion

All the views canvassed could justify limiting umbrella rights. Any answer would partially depend on the facts – how common are umbrella-related injuries?

Perhaps we should ignore theories of justice and focus on practical solutions. But practical solutions are invariably based on what people are prepared to accept.

And what people are prepared to accept (also invariably) is based on what theory of distributive justice they (often unconsciously) hold.

Practical solutions to the distribution of society’s benefits and burdens, then, do appeal to the kinds of theories explained above. But, mostly, they do so in a haphazard fashion.

Our only choice is between explicitly weighing the relative merits of different theories of justice or of doing so implicitly.

This is why political philosophy is essential for anyone who is required to think about how to distribute benefits and burdens in the public realm. And in a democratic society, this is all of us – including those of above-average height living in rainy countries.

Just give the young more votes

Young people seem to get a raw deal. But what should they expect? Only half of 18-24 year olds vote while 75% of those 65+ vote (2010 UK General Election figures).

One cannot really blame the politicians; they respond to incentives. As John Stuart Mill noted (in a slightly different context)

‘however honestly disposed [the ruling classes are], they are in general too fully occupied with things which they must attend to, to have much room in their thoughts for anything which they can with impunity disregard.’(105)

But there are solutions.

How raw is the deal?

In 2012, university tuition fees were tripled. Students benefit from university and repayment is income-contingent. Isn’t that fair?

Yes, but who will pay unpaid student debt? Not universities, and not current taxpayers. Future taxpayers – that is current young people – will pay that as well.

There is also a proposal to make under-25s ineligible for housing benefit. A generation ago a politician told unemployed people to get on their bikes to look for work. Should under-25s leave home and find employment, they may have to sleep on their bikes as well.

The baby-boomers 

While many old people face significant financial hardship, as a generation, the baby-boomers do quite well. Many have retired with defined benefit pensions while insisting such schemes are too costly for the next generation.

All pensioners qualify for free bus travel; most for a winter fuel subsidy. In fact pensioners are the only age group to become better-off during the last few lean years.

None of this is intrinsically bad but it is odd. Two dominant themes of 21^st century politics is that public money should be ‘invested’ on things that improve economic growth (e.g., education) and that people should be helped only if they cannot help themselves.

So, why spend so much money on those less likely to be economically active and more likely to be responsible for their poverty? This second point needs care. There are many pensioners who are in poverty through no fault of their own. Perhaps this is true of most.

But if you randomly selected one poor 20 year old and one poor 65 year old and had to bet on which was responsible for her poverty, where would your money go? (Hint: on the one who has been an adult for more than two years.)

Baby-boomers are not selfish but their moral concerns tend to favour their own. As David Willetts noted in The Pinch, baby-boomers have been ‘better parents than citizens’. But not everyone can rely on a previous generation.

What can be done? 

One – largely ineffective – solution is to implore the young to vote. They are young. It is hardly a surprise that more of them (though not all) don’t think long-term or have the settled lives that encourage long-term planning.

But we could give the young who do take an interest more political power. If the young lose out because fewer vote, and the interests of the young are similar, then we should increase the voting power of those people whose interests are most similar to the non-voting young, i.e., the voting young.

More voters for the young

Let’s assume that there are one hundred 18-24 year olds but only half vote. To ensure that the total political power of the young is realized we double the votes of those who do vote.

We can apply this idea to all age-groups. But as long as fewer young people vote their voting power will increase more (see below).

Age category	A: Assumed number of eligible voters	B: %-age who actually vote	C: The increase in voting power of each voter (A * B =C, e.g., 100*0.518 = 1.93)
18-24	100	51.8%	1.93
55-64	100	69.8%	1.43
65+	100	74.7%	1.34

 (NB: the voting percentages are taken from the 2010 UK general election.)

This proposal is a form of plural voting. Plural voting was made (in)famous by Mill.** Fearing the great unwashed Mill wanted to give more educated citizens more votes. My proposal is very different: it is based on shared interests not a better education or greater intelligence.

The proposal is also sensitive to the numbers of people who actually vote. As more people in each age group vote, the voting power of each vote declines. And the total voting power of 18-24 year olds can never be greater than the total number of 18-24 year olds.

There are moral objections. But none, in my view, are serious and all are too complex to address here. So, would giving the young more votes improve their lot?

Let’s test it

Researchers could stratify constituencies by age and see whether election results would be different if the young had more votes. Where results would change we can see whether the hypothetical winner has more young-friendly policies.

These results would not settle the question. In the longer term, politicians – knowing that the political voice of the young would be louder – would compete more for their votes. This might correct some distortions.

Conclusion 

The democratic state must treat the interests of the rich and poor, old and young with equal seriousness. Where politicians compete for votes and where older people vote in larger numbers this does not happen.

In difficult times, more votes for the young is one way to correct for this. Let’s at least do the experiment and see what we learn.

**My proposal also owes a lot to Philippe Van Parijs’s magnificently entitled ‘Disenfranchising the Elderly’.