Against the Windfall Tax

Like Conor at the Liberal Conspiracy, I can’t really get behind this clamour for a windfall tax on oil companies. I would love to have a dig at Big Oil, but something grates.

Its not that I am like Tim Worstall, who has barrels of faith in the market to sort the problem out fairly. Oil extraction and distribution is a sort of cartel, not a free market. In any case, such a market takes time (maybe measured in decades or centuries) to do its ‘thing’, and in the meantime it is probable that excess profits will accumulate while everyone else is suffering from a recession.

No, my problem is that arguing for a windfall tax is surely another way of saying that you want to change the rules retrospectively.

Economists often argue that to change the rules, and to impose a windfall tax, simply breeds uncertainty in the market, and cause the oil companies to under-invest. Its an irritating argument against taxation, because it has an air of a threat about it: “don’t tax us, or we will mess up your economy”. In the case of a windfall tax, which everyone (even the oil companies) assumes will be a very rare occurrence, it is less believable than (say) the case of top-rate tax-payers. So I can see how the campaigners might discount this economic argument.

But leaving aside the economic risks that a windfall tax entails, surely changing the rules is simply wrong wrong wrong, no further discussion required? Imposing some kind of law (in this case, a tax law) retrospectively is the stuff of wild-eyed dictatorships, surely. Windfall taxes are short-cuts. An easy, lazy solution to a complex situation.

Play by the rules… and if you feel you must change the rules, do so only at the start of the game. If we percieve a problem with the way our country operates, its fine to legislate so that it doesn’t happen in the following tax year. Nationalise the oil companies if we must, or tax them at 99%. Whatever. Only this: we must to legislate for the future, not the past.

There’s a familiar saying, which goes something like “you can judge a society by the way it treats its most vulnerable”. Well, an alternative might be that we should judge ourselves by how we treat our most despised. The oil giants are certainly some of the most resented institutions in the country, but to subject them to anything other than the rule-of-law is not, I would suggest, cricket. Compass should leave the oil companies with this year’s profits, and get busy lobbying for a law that would redistribute future profits. That’s the right way a democracy should approach this problem.

Update 3rd September

The only counter argument that has piqued my interest has been that a large portion of the oil companies profits have arisen because of preferences in the system of allocating carbon credits via the European Emmissions Trading Scheme. However, while this is a definite argument for going after excess profits, I’m not sure it justifies doing so retrospectively, as a windfall tax would.

Pushing the Envelope

Pharmaceutical Chemists, by appointment to her majesty and to HRH the Princess of Wales, At their dispensing establishment, 177 Regent Street

Sifting through my late Grandmother’s scrap-books, I found this set of Pharmaceutical envelopes from the Victorian/Edwardian era. They were collected by her uncle (so that’s my Great-great Uncle) Thomas Lewis, who was a Chemist in Pembrokeshire, Edinburgh, and London.

Walker & Son, Member and Associate of the Pharmaceutical Society of Great Britain

The two things I enjoy about these designs are the innocent and polite text, and the use of typography. One would think that employing several different typefaces would look odd and discordant, but the combination of stencil, gothic, serif and sans-serif faces somehow seems to work. I’m reminded of the illustrator Kevin Cornell’s work, which is unsurprising really – He has an obvious affinity with this era.
Continue reading “Pushing the Envelope”

The Dalry Road Question

Originally posted on The Sharpener, reposted here to avoid link-rot.  Comments still available to view via archive.org.

Apropos of nothing, a thought about Scottish Independence:

In the event of independence for Scotland (presumably following a ‘yes’ vote in a referendum, in the wake of an SNP victory in the Scottish Parliamentary elections), what would be the criteria for citizenship of the new country?

Now, I am registered to vote in Scotland (I even own a flat in Edinburgh, off Dalry Road). I would presumably become a citizen of the Independent Republic of Scotland, if it came into existence. However, I am at present a citizen of the United Kingdom, a country that will persist (albeit in a leaner form) should Scotland choose Independence. In that event, will I be stripped of that UK citizenship? Any mechanism to do so would, I think, be an odd an illiberal thing. In any case, having been born in London to British parents, I would be an unassailable candidate for dual citizenship, even if I did have to actively apply for it.

I imagine the reverse case would be true for the Scottish diaspora elsewhere in the world. They are citizens of other countries, but would be eligible for Scottish citizenship too. Personally, I don’t have a problem with a high proportion of the population having dual citizenship (I am, after all, a dangerous multiculturalist). But surely such a situation would be undesirable for the Nationalists. Gaining independence from the English, only to see hundreds of thousands (maybe millions) of people applying for dual citizenship, would seem to be a hollow victory.

What are the lessons from other partitions and secessions? The Scottish Nationalists claim to be ‘different’ from the English, and yet there are no clashes of religion, ethnicity, or language. Therefore the choice over which side of the border to stand is less obvious. And the reasons for drawing a border in the first place are less clear.

Seven-Seven

Plenty of discussion on the blogs and in the media about the london bombings, this time last year, notably from survivors such as the irrepressible Rachel and the idosyncratic Dave Taurus.

The bombings were a terrible punctuation to a bizarre week. The previous Saturday, I had worn white and joined the Make Poverty History march, along with thousands of others. It was a hot day, and we stopped half-way round to have a pint on George IV Bridge. We chatted to a couple who had taken a bus from Bristol to join in the event. The G8 summit was about to start, and there was a feeling of optimisim in the air. It was genuine.

Watching the ‘Live 8’ highlights on TV that evening, and later that week when another concert was staged at Murrayfield, it seemed to me that those events had a certain falseness. Jonathan Ross and his interviewees kept talking about what an historic concert Live 8 would be, before it had even begun. The whole event was a paean to the original Live Aid concert, a consolation prize for those who had missed it first time around. I remember saying that you cannot package and market those moments that will define a decade, and that history has a certain spontenaity – it does not take place at a pre-arranged meeting point.

Of course, the following day four guys went straight ahead and made some real history, at their own pre-arranged meeting point. Not only did they destroy lives and property, but they destroyed the sense of optimism, a rising tide of political activity and awareness, that had been swelling over the previous week. And do you know what? One year on, I don’t think we have regained that momentum. Instead we flounder in scandal and misdirection.