Income tax is progressive i.e. an effective tax collecting method if we consider about the marginal propensity to consume and save.
But, it has a high risk to disturb "equity" (synonym of fairness).
It discourages the wealth accumulation by hard working and penalises those who bring an income and/or a talent into that economic region.
The most effective tax is on "land"! Land is a common good and its externality such as pollution and over-population is high contiguous to the others.
Furthermore, land based tax is effective to control the business cycle more than income tax.
Income earners may earn their income in a particular region and spend and invest it in outside this region. Therefore, the effect of income tax is contigent to areas which are not accountable to controlling a business cycle of a particular region.
In addition, the means of production of income is a combination their working effort and a reward from investment. Income tax simply means to penalise working effort and investment. Therefore, income tax has a risk to stagnate the economic productivity.
By contrast, if some one uses a land, it simply means s/he utilises the value of this land. People can utilise to live in a household on it, earn income in the firm on it, and invest into a property on it. These activities also contain working effort and beneficiality of investment. However, unlike income tax, people utilise land to do these activities. These activities can cause pollution, over-population, and business cycle overhear or slump. Furthermore, the means of land tax is hardly contiguous because it directly burdens taxes on the land where the economic activity is derived from. All in all, the land tax accounts on the "equity" of utlising and costing it. Thus, it fulfils the condition of "equity" i.e. fairness.
In addition, land tax can be not only fair but also progressive. High income earners are more able to buy and keep the land with a high value and/or high costs than the rest. Then, land tax is able to tax in proportion to the marginal propensity to saving (In terms of the absolute income hypothesis, consumption of permanent items such as households and lands and investment are considered as a part of saving).
P.S.
I support abolition of taxes on consumption such as sales tax and VAT.
As long as the price elasticity of demand is low, it is a fair indirect taxation because individuals pay as they use.
It is regressive but fairer than the inflation tax (High inflation)
Nonetheless, tax on consumption stagnates economic active level because it harms not only on consumers but also producers. If the price elastiicity of demand is high, then the penalty on producers is much higher than on consumers. Therefore, it is NOT FAIR because it pernalises those who increase the sum of utility among individuals!
Tax on consumption is highly contiguous to those who are not accountable to pay the tax. As we know this tax is not able to control over business cycle and burdens those from outside the economic regions where this taxation exists. Therefore, it disturbs the business cycle and causes moral hazard of taxation (Those who are not responsible for the tax also pay tax!).
Corporations which have a high volume of export gain a high volume of tax rebate. This fact discourages small businesses, creates a barrier for new firms to get into the market, and reduces the internal aggregate demand.
Wednesday, January 05, 2011
Wednesday, December 15, 2010
"There is no such a thing like society" because "Human-beings are naturally social"
THERE IS NO SUCH A THING LIKE SOCIETY!!
We'd definitely better say "community" or "institution" if you want to mention the macro environment where a cohort of individuals gathers into.
Human-being is social itself. There is no such a superstitious thing called society! Therefore, human-beings are social each other, so any institute such as a state or a corporation does not need to concern about the empty meaningless superstition called society!
If any instiute enforces individuals to be social by following their vision of sociality, it fails into the oppressive totalitarian serfdom which transforms majority of individual human-beings to beasts!
Only the best alternative policy is to leave individuals and their family alone to allow them naturally social themselves. All in all, the sociability of individuals is not a business of any institute and community!
Oh, I must note that I despise Burkean philosophy so much!
Burke said the tradition is a fundamental guidance of how human-beings should live. I know Burkean theory remains some freedom and liberty, but the idea of common sense guided by tradition is a burden on progress and liberty.
Although human-beings are social, but not capable to define what is a true natural law. Aristotle did not much mention about the tradition although Aristotle is a natural law theorist. Aristotle mentioned the natural law is invisible and difficult to define. Even some academic commentators claimed that although Aristotle said virture is a significant factor of human-beings he has never indicated virture as a moral objective.
By contrast, Burke seemed to insist that virture is an objective and derived from the tradition. But, using tradition as a moral guide line is a dangerous idea. As Bentham said the moral guide line should exist for the future not the past. Tradition, i.e. the past experience, might have been functional in the past, but never 100% significantly functional in the future. This guide line is not able to the existence level and the future optimum level of the pleasure and the pain for individuals. We are able to regress some past data sets and experiences to construct our future plan, but there is always an error in them! The errors derived from psychological senses and indoctrinating moral entreneurs should be omitted by civil action and people's party!
All in all, I declair to say that I am strongly against the statement "Society is the only true state of nature, and reason is to be conducted within tradition". Only the thing whose reason is to be conducted within tradition is a mal-functional guidance of miss-used moral entrepreneurship. It is waste of time to define society as there is no such a thing like society: There are only individuals and their family...!
We'd definitely better say "community" or "institution" if you want to mention the macro environment where a cohort of individuals gathers into.
Human-being is social itself. There is no such a superstitious thing called society! Therefore, human-beings are social each other, so any institute such as a state or a corporation does not need to concern about the empty meaningless superstition called society!
If any instiute enforces individuals to be social by following their vision of sociality, it fails into the oppressive totalitarian serfdom which transforms majority of individual human-beings to beasts!
Only the best alternative policy is to leave individuals and their family alone to allow them naturally social themselves. All in all, the sociability of individuals is not a business of any institute and community!
Oh, I must note that I despise Burkean philosophy so much!
Burke said the tradition is a fundamental guidance of how human-beings should live. I know Burkean theory remains some freedom and liberty, but the idea of common sense guided by tradition is a burden on progress and liberty.
Although human-beings are social, but not capable to define what is a true natural law. Aristotle did not much mention about the tradition although Aristotle is a natural law theorist. Aristotle mentioned the natural law is invisible and difficult to define. Even some academic commentators claimed that although Aristotle said virture is a significant factor of human-beings he has never indicated virture as a moral objective.
By contrast, Burke seemed to insist that virture is an objective and derived from the tradition. But, using tradition as a moral guide line is a dangerous idea. As Bentham said the moral guide line should exist for the future not the past. Tradition, i.e. the past experience, might have been functional in the past, but never 100% significantly functional in the future. This guide line is not able to the existence level and the future optimum level of the pleasure and the pain for individuals. We are able to regress some past data sets and experiences to construct our future plan, but there is always an error in them! The errors derived from psychological senses and indoctrinating moral entreneurs should be omitted by civil action and people's party!
All in all, I declair to say that I am strongly against the statement "Society is the only true state of nature, and reason is to be conducted within tradition". Only the thing whose reason is to be conducted within tradition is a mal-functional guidance of miss-used moral entrepreneurship. It is waste of time to define society as there is no such a thing like society: There are only individuals and their family...!
Tackling on criminal acts with the utilitarian philosophy
In terms of my consequentialist point of view, the legislation system should have provided the incentive which prevents individuals to commit a crime serious act. If there is a criminal act, there is often a derivative branch of the mischief of a criminal act. There is a raison d'etre of a criminal act. In order to decline the number and the quality of criminal acts, the priority is to tackle on the "cause" of crime.
We certainly need a negative sanction (i.e. punishment!!) which is measured owing to the equivalent pain to the pain a victim suffers from. "Mouth to mouth and teath to teach" method sounds uncivil but is certainly necessary and works for preventing some criminal acts. Some severe crimes tend not to decrease by this method according to the statitstics. But the system still need to remain this method in order to equate the pleasure and the pain of both sides. In order to decrease these severe crimes, which are not significantly correlated with the level of punishment, we need to tackle on the "derivative branch" of the mischief of these acts!
Some criminal acts need to be legal or decriminalised such as usage of some recreational drungs (in philosophy of law, it's called some categories of self-intoxication), ganbling, doing and buying prostitution because these acts bring pleasure and are possible to prevent the pain derived from these act by installing a proper legislation. Or, we need to provide individuals the "substitutions" of these goods and services like what Islamic society does.
The severe criminal acts such as murdering, hatred, conspiracy, and organised crime, need a severe punishment by either a public institution or individuals themselves. But, in order to reduce the cost and the derivative branch of the hatred, we need to tackle on the derivative branch of the mischief of the criminal acts...!
We certainly need a negative sanction (i.e. punishment!!) which is measured owing to the equivalent pain to the pain a victim suffers from. "Mouth to mouth and teath to teach" method sounds uncivil but is certainly necessary and works for preventing some criminal acts. Some severe crimes tend not to decrease by this method according to the statitstics. But the system still need to remain this method in order to equate the pleasure and the pain of both sides. In order to decrease these severe crimes, which are not significantly correlated with the level of punishment, we need to tackle on the "derivative branch" of the mischief of these acts!
Some criminal acts need to be legal or decriminalised such as usage of some recreational drungs (in philosophy of law, it's called some categories of self-intoxication), ganbling, doing and buying prostitution because these acts bring pleasure and are possible to prevent the pain derived from these act by installing a proper legislation. Or, we need to provide individuals the "substitutions" of these goods and services like what Islamic society does.
The severe criminal acts such as murdering, hatred, conspiracy, and organised crime, need a severe punishment by either a public institution or individuals themselves. But, in order to reduce the cost and the derivative branch of the hatred, we need to tackle on the derivative branch of the mischief of the criminal acts...!
Friday, November 19, 2010
Britain, outside the Eurozone, should not lend money to Ireland
Britain doesn't have any accountability to this Irish failure 'cos Britain is not a part of the EMU!
Unless either Ireland leaves the EMU or the Eurozone decided to Federalise itself (i.e. replace the national debts with the ECB bond, and replace the unstable fragmented fiscal policies with a stable common treasury) , investing Ireland contains a high risk premium!
Lending money to individuals with a high risk premium requires charging a high interest rate enough to cover the risk premium because the lender should not make a fatal loss on a budget, which causes the lending country to fall in to another recession.
A relatively well-off country shouldn't be penalised save a country with an insoluble trouble! The current policy will knockdown both the relatively well-off countries, such as Germany and Britain, and the countries under the crisis!
It's highly dangerous to lend money to those which have a high risk premium!
I would have agreed with you if Ireland weren't in the Eurozone.
Under her crisis, the common currency system is a fundamental cause, so the Eurozone countries are much more responsible on her crisis than Great Britain.
The reason why Germany could lend money to Ireland was that the stimulus to Ireland, the same organ of the common currency system, also stimulate the value of Euro, so it is beneficial to Germany in a long term. The value of Euro is influenced by the value of all a whole set of Eurozone countries.
However, the stimulus by Britain, who is in outside the Eurozone, won't encourage Irish economy, the tiny part of the Eurozone. If Ireland had kept her own monetary policy, British stimulus to Ireland causes to the appreciation of Irish economy, therefore it would have induced the healthy inflation which reduces the net present value of the money borrowed at the time Ireland borrowed. Therefore, the motivation to invest into capital in Ireland will be encouraged 'cos of the expected inflation.
On the contrary to this function, the current system doesn't enable Ireland to reduce the net present value of the money borrowed unless the entire Eurozone economy is stimulated. Although the British stimulus to Ireland may boost her economy in a very short run, because the velocity of money invested will be very low or even zero, Irish economy won't be stimulated enough to recover from the recession due to the low inflation expectation.
All in all, the responsibility of Irish economy is based on the accountability of the entire Eurozone. British investment to Irish economy will simply be a waste of money unless Britain charges a high interest rate.
... Politicians tend to lose the perspectives from a financial and economic analyst. If we lend money, all the factors have to be put into a calculus! We must not forget about the dynamic impacts of Financial Engineering on an international public sector economy! The simulation taking the inflation expectation, impact of the monetary union, and risk premium into consideration must be run! It's dangerous to rely on the Pro-Europeanist transcendentalism any more! Realistic financial aspects based on the cost and benefit analysis should be taken into the consideration well!
Unless either Ireland leaves the EMU or the Eurozone decided to Federalise itself (i.e. replace the national debts with the ECB bond, and replace the unstable fragmented fiscal policies with a stable common treasury) , investing Ireland contains a high risk premium!
Lending money to individuals with a high risk premium requires charging a high interest rate enough to cover the risk premium because the lender should not make a fatal loss on a budget, which causes the lending country to fall in to another recession.
A relatively well-off country shouldn't be penalised save a country with an insoluble trouble! The current policy will knockdown both the relatively well-off countries, such as Germany and Britain, and the countries under the crisis!
It's highly dangerous to lend money to those which have a high risk premium!
I would have agreed with you if Ireland weren't in the Eurozone.
Under her crisis, the common currency system is a fundamental cause, so the Eurozone countries are much more responsible on her crisis than Great Britain.
The reason why Germany could lend money to Ireland was that the stimulus to Ireland, the same organ of the common currency system, also stimulate the value of Euro, so it is beneficial to Germany in a long term. The value of Euro is influenced by the value of all a whole set of Eurozone countries.
However, the stimulus by Britain, who is in outside the Eurozone, won't encourage Irish economy, the tiny part of the Eurozone. If Ireland had kept her own monetary policy, British stimulus to Ireland causes to the appreciation of Irish economy, therefore it would have induced the healthy inflation which reduces the net present value of the money borrowed at the time Ireland borrowed. Therefore, the motivation to invest into capital in Ireland will be encouraged 'cos of the expected inflation.
On the contrary to this function, the current system doesn't enable Ireland to reduce the net present value of the money borrowed unless the entire Eurozone economy is stimulated. Although the British stimulus to Ireland may boost her economy in a very short run, because the velocity of money invested will be very low or even zero, Irish economy won't be stimulated enough to recover from the recession due to the low inflation expectation.
All in all, the responsibility of Irish economy is based on the accountability of the entire Eurozone. British investment to Irish economy will simply be a waste of money unless Britain charges a high interest rate.
... Politicians tend to lose the perspectives from a financial and economic analyst. If we lend money, all the factors have to be put into a calculus! We must not forget about the dynamic impacts of Financial Engineering on an international public sector economy! The simulation taking the inflation expectation, impact of the monetary union, and risk premium into consideration must be run! It's dangerous to rely on the Pro-Europeanist transcendentalism any more! Realistic financial aspects based on the cost and benefit analysis should be taken into the consideration well!
Tuesday, November 02, 2010
Eurozone fiscal integration is required soon as possible!!
A country in the Eurozone is required to pay a high interest rate to borrow money from another country in the Eurozone. This is the first attempt to make all the Eurozone countries to be responsible for helping each other without claiming any help from the outside European Union (EU). As long as Maastricht treaty restrict the rate of national debt balance to GDP, Eurozone countries are not able to incur their national debt enough to stimulate their economy. Therefore, the relatively well-off countries joining the European Monetary Union (EMU) are expected to subsidise the stagnating countries.
However, lending money to individuals with a high risk premium requires charging a high interest rate enough to cover the risk premium because the lender should not make a fatal loss on a budget, which causes the lending country to fall in to another recession.
This Eurozone macroeconomic policy is very unstable!
Mr. Jean Claude Trichet(Read about his articule in this blog!) also highly criticised this unstable fiscal rule, charging high interest rate for countries borrowing from another country inside the Eurozone.
Mr. Trichet is remarkably intelligent enough to realise the current Eurozone economic system is notoriously unstable.
The Eurozone should install the European federalism with the ECB bond by relinquishing the right to incur national debt in all the Eurozone nations! Otherwise, the EMU should be dissolved (i.e. abolish Euro, the common currency), and remove the restriction on incurring national debt stated by Maastrict treatyin order to enable them to set their own interest rate for their own monetary policy to adjust their own money supply and their liquidity to their economic stimulus.
If the ECB bond is incurred, the value of national debt traded in the international market is determined by the economic performance of the Eurozone economy. Instead of penalising a relatively well-off Eurozone country, the Eurozone economy should incur the bond with their collective responsiblity. If the debt is incurred by the collective responsibility, the risk and the interest rate is spread out to all the Eurozone nation. Therefore, one country doesn't have to pay an excessively high interest rate meanwhile a relatively well-off country does not need to be penalised (Although they might need to contribute to pay the interest rate of the ECB bond, but the cost and the risk are still obviously lower than the cost and the risk of lending money to a country in a terminal recession).
In addition, if the entire Eurozone economy is expected to recover by the fiscal stimulus financed by the debt, the value of the ECB bond will continue increasing so that more traders will purchase it. A high volume of finance flow from both private companise, individual citizens, and the government outside the Eurozone will be expected as the ECB bond is introduced. This is the golden rule of the national debt. As the credit rating of the ECB increases, the limitation of incurring the debt will be less restricted unlike the current Eurozone system.
The current Eurozone system will stagnate the Eurozone economy further. In order to avoid this situation, the Eurozone economy "has to" either dissolve the EMU or establish the common treasury under the Euro-Federalism. Nevertheless, in order to establish the more stable system than now by keeping the common currency, a furthermore efficient fiscal policy (spending on the government expenditure with a lower cost of taking tax) needs to be put into practice. On the top of it, the fiscal policy in all the Eurozone country has to be strictly counter-cyclical to their own business cycle relative to the one of the entire Eurozone in order to adjust their economy to be harmonised with the entire Eurozone economic environment. One country will no longer be able to diviate their fiscal policy rule from the other Eurozone countries.
However, lending money to individuals with a high risk premium requires charging a high interest rate enough to cover the risk premium because the lender should not make a fatal loss on a budget, which causes the lending country to fall in to another recession.
This Eurozone macroeconomic policy is very unstable!
Mr. Jean Claude Trichet(Read about his articule in this blog!) also highly criticised this unstable fiscal rule, charging high interest rate for countries borrowing from another country inside the Eurozone.
Mr. Trichet is remarkably intelligent enough to realise the current Eurozone economic system is notoriously unstable.
The Eurozone should install the European federalism with the ECB bond by relinquishing the right to incur national debt in all the Eurozone nations! Otherwise, the EMU should be dissolved (i.e. abolish Euro, the common currency), and remove the restriction on incurring national debt stated by Maastrict treatyin order to enable them to set their own interest rate for their own monetary policy to adjust their own money supply and their liquidity to their economic stimulus.
If the ECB bond is incurred, the value of national debt traded in the international market is determined by the economic performance of the Eurozone economy. Instead of penalising a relatively well-off Eurozone country, the Eurozone economy should incur the bond with their collective responsiblity. If the debt is incurred by the collective responsibility, the risk and the interest rate is spread out to all the Eurozone nation. Therefore, one country doesn't have to pay an excessively high interest rate meanwhile a relatively well-off country does not need to be penalised (Although they might need to contribute to pay the interest rate of the ECB bond, but the cost and the risk are still obviously lower than the cost and the risk of lending money to a country in a terminal recession).
In addition, if the entire Eurozone economy is expected to recover by the fiscal stimulus financed by the debt, the value of the ECB bond will continue increasing so that more traders will purchase it. A high volume of finance flow from both private companise, individual citizens, and the government outside the Eurozone will be expected as the ECB bond is introduced. This is the golden rule of the national debt. As the credit rating of the ECB increases, the limitation of incurring the debt will be less restricted unlike the current Eurozone system.
The current Eurozone system will stagnate the Eurozone economy further. In order to avoid this situation, the Eurozone economy "has to" either dissolve the EMU or establish the common treasury under the Euro-Federalism. Nevertheless, in order to establish the more stable system than now by keeping the common currency, a furthermore efficient fiscal policy (spending on the government expenditure with a lower cost of taking tax) needs to be put into practice. On the top of it, the fiscal policy in all the Eurozone country has to be strictly counter-cyclical to their own business cycle relative to the one of the entire Eurozone in order to adjust their economy to be harmonised with the entire Eurozone economic environment. One country will no longer be able to diviate their fiscal policy rule from the other Eurozone countries.
Friday, August 13, 2010
Analysis of the UK labour market and the immigration
I agree with the statement that "Britain has an oasis of talent only problem is they recruit all the crap." Great Britain has educated so many talented people, especially in Scotland, but they tend to leave this country because of this fact.
My point is that the UK and the Western EU countries tend to prefer the EU imigrant to the non-EU altough the one from the EU has a lower class qualification than the one from the non-EU. I have seen the fact. Furthurmore, they prefer Japaenese citizens who have already got the UK permanent residencial VISA to the Japanese persons who do not like me. It is mainly because of the bureaucracy. The companies tend to want to avoid the extra bureaucracy. This is the statement that the recruit agencies told me as well!
In 1990s in Britain, there was a notorious wage inflation. I am sympathetic to the fact that the UK Labour government wanted the cheap manual labour force imigrants from the EU Eastern European countries to calm the wage inflation down.
But, my concern is that the "intermediate class" job which I have been trying to get. When there is an obvious a world class achievement indicated in the CV, it does not matter. But, such indivdiuals with this sort of CV are not majority. Majority of the applicants of skilled non-manual jobs are highly discriminated between the EU and the non-EU. Because this sort of job is difficult to access propery.
For the manual labour jobs, it is irrelevant to measure the specific skills apart from the efficiency to work under the cheap wage.
But, my situation is not entirely fair condition. I have spent 6 years for the education overhere, and obtained MSc and Honours in Bachelor with a good grade.
As I also studied in microeconomics in MSc, the information on the labour market tends to be assymetric so that the insurrance and the personal connection exist there to avoid the unseen risk.
Of course, people recognise if there is a world class achievement. But, as a matter of fact, this kind of labour force is such limitted.
My point is that the UK and the Western EU countries tend to prefer the EU imigrant to the non-EU altough the one from the EU has a lower class qualification than the one from the non-EU. I have seen the fact. Furthurmore, they prefer Japaenese citizens who have already got the UK permanent residencial VISA to the Japanese persons who do not like me. It is mainly because of the bureaucracy. The companies tend to want to avoid the extra bureaucracy. This is the statement that the recruit agencies told me as well!
In 1990s in Britain, there was a notorious wage inflation. I am sympathetic to the fact that the UK Labour government wanted the cheap manual labour force imigrants from the EU Eastern European countries to calm the wage inflation down.
But, my concern is that the "intermediate class" job which I have been trying to get. When there is an obvious a world class achievement indicated in the CV, it does not matter. But, such indivdiuals with this sort of CV are not majority. Majority of the applicants of skilled non-manual jobs are highly discriminated between the EU and the non-EU. Because this sort of job is difficult to access propery.
For the manual labour jobs, it is irrelevant to measure the specific skills apart from the efficiency to work under the cheap wage.
But, my situation is not entirely fair condition. I have spent 6 years for the education overhere, and obtained MSc and Honours in Bachelor with a good grade.
As I also studied in microeconomics in MSc, the information on the labour market tends to be assymetric so that the insurrance and the personal connection exist there to avoid the unseen risk.
Of course, people recognise if there is a world class achievement. But, as a matter of fact, this kind of labour force is such limitted.
Subscribe to:
Posts (Atom)