2 days ago
In defence of the Trump playbook
The standard explanation for why charges for plastic bags reduced waste is economic. People were reluctant to pay 10p for a bag and so brought their own instead.
This is partly true. But it would still be highly effective if the charge for a bag were merely 1p.
That's because charging any amount, however trifling, was sufficient to change the implicit assumptions about normal retail behaviour. Previously, if you went into Boots and bought, say, a toothbrush and a tube of Anusol, the default was for the cashier to put them in a new bag – it would have seemed rude not to do so. Suddenly, however, the imposition of a charge meant that shopkeepers had to ask whether you wanted a bag or not. Often the answer was 'no'; you had one already, or, if you were a chap, your clothing was miraculously equipped with things called 'pockets'.
There are many ways in which you can achieve large changes in behaviour without imposing large economic penalties. For instance, I contend that you could significantly reduce intergenerational inequality simply by the imposition of a property tax of 0.1 per cent annually on all homes. The relatively small amount raised could be hypothecated to fund child benefit, or to reduce the income tax burden on the young. For the purposes of comparison, the typical property tax levied by those well-known leftists in the State of Texas is slightly over 1.8 per cent. Bear me out.
I am borrowing here from the Donald Trump playbook. This is an under-rated approach to legislation where you impose taxes not for their direct effect, but for their symbolic value. By sending a surprising signal, you can change behaviour by unseating the unthinking assumptions people hold about the future. You don't necessarily have to do anything massive – you simply raise the possibility you might. Most human behaviour runs on implicit deterrents of this kind.
By sending a surprising signal, you can change behaviour by unseating the unthinking assumptions people hold
Before The Donald, it had become an axiomatic assumption in all businesses that no democratic government of any political stripe would ever deviate from the smug Davos neo-liberal globalist consensus in any shape or form. This artificial certainty meant that for decades you could offshore employment with abandon and treat your native staff fairly shabbily, without fear of any adverse consequences. Today it's different: even if you later reduce many tariffs to near zero and stop randomly abusing Canada, the signal has been sent. I hate to say this, but this approach could work well to solve many other problems.
For instance, Britons have been lulled into planning for their future on the assumption that three unwritten rules underpin the tax system.
1) If you actually get up in the morning and do some useful work for which you get paid, you'll be taxed to buggery;
2) If you acquire wealth and then ride the wave of asset-price inflation (i.e. you have more money than you need 'cos you're old), you will be treated very generously;
3) If the asset in question is your own home, you won't be taxed at all, and nor will your good-for-nothing kids when they inherit it all.
A large part of the reason why young people cannot afford to buy homes is nothing to do with the use value of a home – it is driven by the as-yet-unshaken belief that residential property has been sanctified as an asset class. It is this belief which possibly accounts for 25 per cent of the price of a home and a similarly large part of oldsters' pathological reluctance to downsize. Residential property is seen as Britain's only tax haven.
To unseat this assumption, you don't need to rewrite the whole tax code, or go full Henry George – much as I would personally support this. You just have to make the unthinkable suddenly thinkable.
