Sam Diamond 💎



24.09.2019

August Rot

I was so glad that summer was over. As we rolled into September the trees still had their leaves, so really we were in the pleasant pocket between the burning rot of August and freezing hellscape of true winter. Which suited me just fine. No one I knew was doing anything apart from the people I knew who were doing everything.

I went to the cinema to see Brad Pitt reach the outer depths of our solar system only to find out his dad doesn't like him so much. It seemed as if everything had started to revolve around this same desperate logic. Some acted like they needed others only to be cast aside, even despite their considerable effort and sacrifice. Boris Johnson and his bulb-headed special advisor sent parliament home only to be told that this kind of thing wasn't actually ok, legally, no matter how much they wanted it to be.

I went to a talk about how trying hard to build things that don't destroy the planet is a severly misguided pursuit. What we should be doing, in fact, is nothing at all. You can build all the wind farms and solar panels you like, but you'll still need to mine lithium to store the power they generate. And so you shouldn't build them at all. You should just flee to the woods with all of your friends and never turn on your computer again. Which sounds like a fine life when you think about it.

All of which reminded me of some of the green movements of the 90s, whose taglines I’d thought were outdated until just a few weeks ago. War On Want sounds less preachy when you start to see want as something that you can feel actively hurting you and everyone you know. But it does still sound like inertia, no matter which way you spin it.

I saw Perry Anderson talk about how the best thing the left could conceivably achieve was something similar to the Lula premiership in Brazil. Every time he needed to read one of the notes he’s written he grimaced as if in pain, the skin around his eyes folding into itself. I wondered whether anyone who wasn’t already familiar with them would be able to tell the difference between Anderson, David Hockney and Alan Bennett.

It seemed as if everyone had left the city, which was only partly true, but was still sad, especially in the context of the impending autumn. I stood outside Uniqlo and felt the nice kind of bleakness and then bought three candles from the Muji next door.

29.01.2019

Every Billionaire Is A Policy Failure

‘How Asia Works’ and Wealth Distribution for Growth

The last few weeks have seen an uncommon volume of debate about tax policy. First, Alexandria Ocasio-Cortez proposed a 70% marginal tax rate on those earning more than $10 million. After this proposal had generated foam-mouthed ire from every weasel-faced Fox News pundit going, the World Economic Forum in Davos began.

Here, the focus was slightly different: rather than right-wing libertarians disgusted at the suggestion that a government might impose themselves on private property, what we saw was the apparently well-meaning global elite claiming that although they would be happy contributing a vast amount (though not proportion!) of their wealth to philanthropic foundations under their own control, taxes were regressive, ineffective and, fundamentally, not the answer to rising inequality, social and political unrest and plain-old poverty.

There were a series of Epic Clapbacks from historians and economists, who noted that ‘high’ taxes had never previously impeded economic growth, but it was clear that, despite all evidence to the contrary, the billionaires still thought they knew best — a fact compounded, at least in terms of optics, by Starbucks founder and CEO Howard Schultz’s announcement that he would run as an independent for President in 2020, an act which he seems to think of as an extension of the corporate philanthropy he believes is the answer to the world’s problems. Save us, Howard, we need you!

Coincidentally, I’ve been reading Joe Studwell’s comprehensive economic study How Asia Works. Despite its TED-talk title and dry tone, the book is a fantastic exploration of the material results of macroeconomic policy, ostensibly about Asian economies and the reasons behind their success or failure. But, of course, it’s about much more than Asia specifically, and provides a fascinating contrast to the arguments about tax policy and inequality that are currently unfolding in the West

Often, arguments for higher taxation are made in terms of redistribution, with neoliberal economists and politicians putting forward the idea that the rich should ‘do their bit’. I agree, they should do their bit. But the assumption behind this argument is that it’s their wealth in the first place, that they’ve shown the requisite work ethic, entrepreneurial spirit and innovative nous to attract wealth, and that they are therefore entitled to the fruits of their labour. All we can hope is that they’re kind enough to give some of it back.

How Asia Works demonstrates over and over again how stupid this line of thought is. Asia provides a useful testing ground for economic decisions, as many of the continent’s economies began from similar developmental positions. Their differing states suggest a series of questions: how has South Korea developed successful electronics and automotive industries while Malaysia’s attempts to do the same have fallen flat? Why have many Asian economies industrialised while others, such as the Philippines, still struggle with agriculture?

Studwell provides a series of answers on the level of specific policy that makeup a rough playbook for how to develop an economy: household farming is required to maximise the labour force before larger-scale productivity gains are worth it; export discipline is vital in order to develop a competitive manufacturing operation that can bring in foreign capital and liquidity.

Underpinning these policies is a wider theme. In order to build an economy that works, private ingenuity must be directed by state policy. It’s fascinating to see how the South Korean government, to take one example, gave individual entrepreneurs support and encouragement and, in some cases, applied coercion, in order to ensure that industry grew in the right way. The private sector was allowed to gain wealth, but only if it followed government direction, which was geared towards creating an economy that worked for the entire country, providing technological progress and growth.

One of the biggest killers of economic success is rent-seeking, and it’s vital that governments intervene to prevent entrepreneurs from gaining control of business and sitting on it without innovating, which will benefit the public. In South Korea, for example, automotive manufacturers were required to export vehicles, which led to technological development and global competitiveness. In Malaysia, however, entrepreneurs were able to stick to the domestic market, and so their cars didn’t have airbags, which were required internationally. Therefore, Malaysian entrepreneurs grew rich and sat on the wealth generated from domestic sales, while innovation stalled and the country suffered.

An interventionist state, working in tandem with the animal spirits of the private sector, contradicts the assumptions about wealth that are currently playing out in tax policy debates. In successful Asian economies, private wealth is an incentive to encourage progress that benefits the public, and the right to it comes from the public itself. The public generates wealth and is the source of wealth, and private entrepreneurs should be rewarded only when the public benefit.

According to the Davos elite, the public should apparently be grateful for the personal contributions of the rich, who should be worshipped as wealth-creating geniuses. If only we could all be blessed with such talent!

After reading How Asia Works, it’s hard to argue that that the rich in the West exist as a result of anything other than policy failure. Levelling higher taxes is a good start, addressing a structural imbalance that has enabled them to seek rent while innovation stalls. It’s a useful tool to prevent rent-seeking and spur those without wealth to innovate.

One thing that has been encouraging about the left-wing arguments for higher top rates of taxation has been a redefinition of terms towards this position, a sentiment best put into slogan by Ocasio-Cortez policy adviser Dan Riffle: Every Billionaire is a Policy Failure.