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Iraqi elections

December 16th, 2005

The Iraqi elections appear to have gone well, with a high Sunni turnout. Hopefully, the post-election haggling won’t take months like last time, now that there is no longer a requirement for a two-thirds majority.

The big question now is whether this will lead to a US withdrawal, either because the new government demands it or because the Bush Administration decides to declare victory.

Among the possible victory conditions, the holding of elections is the only one likely to happen any time soon. There’s no reason to think that the insurgency will end as long as the occupation continues – similar insurgencies have lasted for decades in many countries.

As for training Iraqi troops, it’s clear that the problems here are not going to be resolved simply by the passing of time. Basic training for US marines takes 13 weeks, and (IIRC) the Iraqis get less, so obviously there has been plenty of time to train troops. The real problem is that any serious armed force is bound to be under the control of one or other of the militias, which might turn against the US.

A staged withdrawal would probably lead to an intensification of the insurgency in the short run. But the end of occupation would reduce support for the insurgents in the long run. It’s not a great option, but it’s hard to see a better one.

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  1. December 20th, 2005 at 18:24 | #1

    Sean, yes. What genuine military types understand (and those like me who have actually researched it), is that basic training really only gives a sort of first fermentation and that – starting from scratch – a fully trained soldier actually needs some two years duty, including some 1% deaths in training, to be as good as is needed (i.e. against similar calibre and equipped forces).

    Some cultures don’t start from scratch, since they have much of the ethos in place during growing up, and the proper use of a reservists’ training scheme (apart from PR) is to provide a sort of pre-cooked pool that “only” needs around six months to be brought up to speed. A while back I wrote an article for the ADA which mentioned these points, which is somewhere on my publications page

  2. Terje Petersen
    December 20th, 2005 at 21:40 | #2

    I’d like to see something backing that up Terje.

    Sure. For more details take a look here:-

    http://www.onlineopinion.com.au/view.asp?article=3351

    EXTRACT:-

    It is commonly believed that the primary role of the welfare state is to redistribute resources from rich to poor. This was its original intended purpose, and there is still some redistribution going on today, but much of the $175 billion spent on the welfare state now goes back to the same people who contributed the money in the first place. We pay high taxes to fund government services (often of poor quality) which we could have purchased better for ourselves if only the government hadn’t taken our money.

    The National Centre for Social and Economic Modelling (NATSEM) estimates that in 2001-02, an average couple with pre-school children paid $374 each week into the welfare state through direct and indirect taxes, but received $320 of this back in welfare benefits and services. Couples with older children paid $474 into the welfare state budget and got $564 back. For these families, the welfare state is not redistributing money, it is churning it.

    Of course, people with low or no incomes at any one time generally get more back from the tax-welfare system than they put in – but over time, they too often end up financing their own benefits. Income mobility is common (only one-quarter of households under the poverty line in 2001 were still there two years later). This means even those who are heavily dependent on the welfare state at one point in their lives often become net contributors at another, so over a lifetime they pay for much or all of what they receive.

    Ann Harding at NATSEM shows that even the lowest lifetime earners end up paying for half of all the income support they receive through their lives and for more than one-third of the value of government-provided health care they consume.

    At least half of the $175 billion of tax revenue spent on the welfare state last year will probably find its way back to the people who paid the money in. If we could eliminate this churning, it would release $85 billion which could fund spectacular tax cuts without making anyone worse off. We could, for example, raise the tax-free income threshold to $20,000 and combine it with a flat 10 per cent income tax.

  3. Ian Gould
    December 21st, 2005 at 13:11 | #3

    >Community life, as you call it, is generally stronger in the communities where the government is weaker. Give it some thought and look around the world. The freer the society, the more the community works together.

    Yes, this is what makes Haiti, Somalia and the Congo the Earthly paradises we all know so well. That and the liberal gun laws , of course.

  4. Steve Munn
    December 21st, 2005 at 21:12 | #4

    Terje, this article is from the smelly Peter Saunders who emanates from the even more smelly CIS think tank. The CIS, like the IPA, receives million in corporate funds but refuses to identify its donors. None of this gives me any confidence in their objectivity.

    I wonder what Mr Saunders has failed to tell us, and whether he has cherry picked figures that favour his claims? In any event, lets read between the lines of this text, from your quote:

    “Ann Harding at NATSEM shows that even the lowest lifetime earners end up paying for half of all the income support they receive through their lives and for more than one-third of the value of government-provided health care they consume.”

    Sanders fails to indicate what percentage of people qualify as “lowest lifetime earners”. In any event, that two-thirds of their health expenditure and half their income is subsidised defeats his argument in my view.

    Do you really shiver and quake under your doona every night because of your fears about the “brutal beast� of democratic government? Or are you being less than candid?

  5. Steve Munn
    December 22nd, 2005 at 00:47 | #5

    Terje- I said: ” In many jurisdictions democratic Government has been ahead of public opinion in granting individual rights. For example the abolition of anti-homosexual laws in most Australian states preceded a softening of public opinion. ”

    You replied: “I don’t know if your assertion is true. However in any case I think that this would be an example of government being undemocratic. I support the abolition of anti-homosexual laws. ”

    The site http://www.cpsa-acsp.ca/paper-2003/tatalovich.pdf contains a paper that addresses the issue of capital punishment, abortion and gay law reform in several democratic jurisdictions. You will note plenty of examples that support my point about democratic governments conferring rights (liberties) ahead of majority opinion.

    You further say: “Have you given much consideration as to who made these laws in the first place? Oh thats right it was a democractic government.”

    You are wrong again Terje. Such laws generally date back to colonial or feudal times.

  6. Ken
    December 22nd, 2005 at 07:57 | #6

    The Libertarian model (like most proposed ideal models) sounds like something that would work reasonably well so long as it’s peopled by 100% ethical, honest, clear thinking, educated, courageous, tolerant, philanthropic, discerning types preferably without strong ethnic, religious or other affiliations. I suspect with a population of real people, particularly non-uniform social groupings in close proximity, with lots of unpleasant historical baggage it would be a recipe for third world factionalism and armed conflict even more so than the mess that already exists. I don’t know how to get peaceful law and order established as the norm in a place like Iraq – even overwhelming military force appears unable to get a grip on the problem perhaps because short of total obliteration that kind of force is ultimately not that overwhelming. It’s the “hearts and minds” that need to be won over but changing people’s minds is often a multigenerational excercise that would probably be antithetical to notions like freedom of religion, political affiliation and free speech. Refusing to keep track of or acknowledge the real numbers of Iraqi casualties can’t help either – if the reality on the ground is vastly worse than the official estimates it undercuts any notion that the new regime is going to do and act as they say they will. The foreign military presence is surely both a stabilising and destabilising influence simultaneously. To those who lost family or livelihood directly or indirectly, (no doubt from embargo, Desert Storm days and even earlier), a hated presence. There has to be at least some portion of Iraqis who are fervent patriots who consider any foreign troops in Iraq an anathema that should be fought to the bitter end – something I’d think many US patriots might understand although often one brand of patriot can’t accept that any other kind has any legitimacy. There are the others who fervently want the foreign forces to remain there in the hope that the promised democracy, freedom and law and order will eventuate – these may even be a majority even if they don’t feel any real gratitude or liking but feel the choice is between Bad and Badder. Balancing the need for strong internal security and fairness and justice has to be – a balance. I don’t think any idealogy can do it; it’s by compromise (itself an anathema to most varieties of idealogues) and letting past grievances go, by allowing others to disagree and not taking the law into their own hands yet remaining courageous in standing up to take part but not supporting corrupt and narrow interests that law and order can gain some ground. That doesn’t appear to happening.

  7. Terje Petersen
    December 22nd, 2005 at 08:33 | #7

    It’s the “hearts and minds� that need to be won over but changing people’s minds is often a multigenerational excercise that would probably be antithetical to notions like freedom of religion, political affiliation and free speech.

    Ken, I agree that changing peoples hearts is often a multigenerational exercise. However I would have thought that protecting the freedoms that you outline was a necessary precondition to creating a tolerant and peaceful community.

    You are wrong again Terje. Such laws generally date back to colonial or feudal times.

    Steve, I will accept that point on both accounts. You are right that most anti-sodomy laws predate democracy. And you are right that at previous times in my life I have been wrong.

    Terje, this article is from the smelly Peter Saunders who emanates from the even more smelly CIS think tank. The CIS, like the IPA, receives million in corporate funds but refuses to identify its donors. None of this gives me any confidence in their objectivity.

    So peoples personal hygene now determines the strength of their argument. A petty line of argument.

    The Libertarian model (like most proposed ideal models) sounds like something that would work reasonably well so long as it’s peopled by 100% ethical, honest, clear thinking, educated, courageous, tolerant, philanthropic, discerning types preferably without strong ethnic, religious or other affiliations.

    Most people are reasonably ethical, honest and clear thinking when it comes to the conduct of their own lives. Certainly we all make mistakes and none of us is perfect however I don’t believe that small government or smaller government requires some correction to human nature. In fact it is because of human nature that I believe we should have smaller government.

    If you think that people are generally unethical, dishonest and muddle headed then why would you let them vote or appoint them to high office. You seem to be arguing that government is populated by exceptional beings rather than people who are representative of the wider community.

    Do you really shiver and quake under your doona every night because of your fears about the “brutal beast� of democratic government? Or are you being less than candid?

    Few things cause me to loose sleep. Although occasionally a good idea or interesting question will keep me thinking such that I don’t fall asleep until the late hours of the morning.

    Perhaps the word “brutal” carries for some people too much implication of willfully evil. I don’t think democracy is willfully evil. I think it is like being in a pen with a 100 ton gorilla. The gorilla may not be evil but it will still cause you lots of problems and put limits on what you might otherwise do with your day. I would find the pen more comfortable if the gorilla (ie government) had a few restraints.

    My prefered form of government is Liberal Democracy with a federalist system that distributes most power (eg the power to tax the people) to regional government. I would contrast this with Social Democracy.

    I can’t envisage any system of government that I would support that did not include an element of democratic accountability. However I don’t think democracy implies conscent and I don’t kid myself that democracy guarantees freedom.

  8. Ian Gould
    December 22nd, 2005 at 17:39 | #8

    >The Libertarian model (like most proposed ideal models) sounds like something that would work reasonably well so long as it’s peopled by 100% ethical, honest, clear thinking, educated, courageous, tolerant, philanthropic, discerning types preferably without strong ethnic, religious or other affiliations.

    It also requires that you believe that everything was marvelous back before the insidious evil of the welfare state started ruining people’s lives.

    You then have to believe that the populations of the developed countries allowed themsleves to be conned into having their living standards and freedoms massive reduced while simultaneously bleieving that the descendants of those same peopel whould unerringly and infallibly make the correct decisions about such issues as which drugs are safe to take if only the darn government would let them.

    So you have to believe that past populations made incredibly stupid choices but that future populations will make extremely smart ones.

  9. Terje Petersen
    December 22nd, 2005 at 18:07 | #9

    So you have to believe that past populations made incredibly stupid choices but that future populations will make extremely smart ones.

    Actually you also have to believe in the tooth fairy as well. And you can’t believe in the merits of smaller government unless you tatoo the word “Gazoo” on your bum first. Very, very, very, very few people are aware of these necessary pre-conditions.

  10. Steve Munn
    December 22nd, 2005 at 18:47 | #10

    Terje- Have you thought about immigrating to Somalia? I believe they have a very small government.

  11. SJ
    December 22nd, 2005 at 19:45 | #11

    So, was the tattoo painful? Hope so.

    You make libertarianism sound like some kind of fruitcake religion…

  12. Ian Gould
    December 23rd, 2005 at 00:32 | #12

    Terje,

    But the key belief is that any and every social, political or environmental problem can be solved by a massive cut in marginal tax rates and sacking a few hundred thousand public servants.

  13. Terje Petersen
    December 23rd, 2005 at 09:40 | #13

    I will attempt to ignore all the drivel and stick with the meaningful comments.

    But the key belief is that any and every social, political or environmental problem can be solved by a massive cut in marginal tax rates and sacking a few hundred thousand public servants.

    So long as we want to talk about beliefs that lead to Libertarian thinking I can make myself a case example.

    I believe in smaller government and I believe that smaller government would create better overall outcomes. From a utilitarian perspective this is what my life experience, my reading, my debating with others, my intellectual reflection have lead me to believe. It was not some disease that I caught. It was not something that I was indoctrinated with as a child. It is the product of considerable life long reflection.

    You could just dismiss me as a nut job, however it would be you that was poorer for it and I am not going to cease existing just because you don’t like my perspective. You can suffer my perspective, ignore my perspective, debate my perspective or seek to influence my perspective. However my perspective still exists and I am not going to pretend otherwise.

    I don’t believe that every social, political or environmental problem can be solved with more government.

    I believe that a lot of governnment programs start out with good intentions but rapidly loose focus and drift into counter productive or inefficient activities. Too much focus is placed on the benefits of such intiatives without any real appreciation of the costs. Generally because the benefits are specific and tangible whilst the costs are distributed and intangible. Those responsible for managing government programs are not removed from the costs they incur but are intimate with the benefits they deliver.

    I believe that when you take resources from the community through taxation there is a significant opportunity cost. You lower the resources that are available for a creative civil society. You reduce the means that families have to look after themselves and eachother. You reduce the resources available to individuals and the creative solutions that they might otherwise develop. You reduce the capacity for businesses to grow and create jobs and products and services that serve the community.

    I believe that a lot of the social problems that government seek to fix are a product of too much government regulation or interference in the first place.

    I do not believe that the correct size of government is zero.

    I do not believe that we should abolish the police force.

    I do not believe that we should abolish national defence.

    I do not believe that we should cancel elections.

    All up this list represents a snap shot of what I believe.

    You are right to question the foundation beliefs that lead somebody to a course of action or a state of mind. All creative endeavour, all motive and direction is based on belief. This is not unique to Libertarians but is true of all people.

    I think that one of the things that makes me comfortable with the Libertarian outlook is a high degree of tolerance and regard for alternate lifestyles. I find that I generally like and get on with people of good will from any background. Even those that have a worldview radically different to my own.

    I believe that our communities, our families, our businesses, and our body politic would be healthier and more effective if we had smaller government. Obviously governments have qualities other than size. While I prefer small government over big government I also prefer honest government over dishonest government, just government over unjust government, efficient government over inefficient government, stable government over unstable government, accountable government over unaccountable government. Size is obviously only one of many variables.

    I seek creative ways to avoid government involvement in social and economic problems. In common with most Libertarians I look at a particular social problem and ask how can this problem be solved without government. Not because I think government can’t solve problems but because I am very conscious of the opportunity costs created when government based solutions are used. Socialist tend to see this approach as being bizzar. They generally misunderstand this reaction as being idealogically opposed to government. And I believe this is because they discount the diffuse and intangible costs of government action and generally look only at the tangible and obvious benefits. I think they lack a holistic appreciation of how one little thing effects another like so many ripples in a pond.

  14. John Humphreys
    December 24th, 2005 at 10:55 | #14

    Wow. Congrats Terje for being so patient. I haven’t learnt that skill yet.

    It seems the pre-requisite for attacking libertarianism is ignorance of what it means and a refusal to enter reasonable debate. Peter Saunders is ignored because the CIS is privately funded. People make absurd claims about libertarians all being selfish, and also believing that all people are perfect and philanthropic. Both are not only wrong, but inconsistent with each other!

    And when all else fails, the lower class riff raff start using the good old ‘get out of our country’ & ‘get your own blog’ routine mixed with a bit of spiteful wishes of pain.

    Ian — I don’t know any libertarian that believes what you say is the ‘key belief’ of libertarianism. Libertarianism does not require that you believe everything was marvelous in history, that people have historically been stupid or would in the future be extremely smart. Just plain wrong.

    The truth would be closer to — things are better now then they have been, but could be better still if people had more freedom. People always make some mistakes, but tend to be better judges of their own welfare than of others and practice rational ignorance in politics.

    In fact, there is almost nothing anti-libertarian on this board that starts with a correct understanding of libertarianism. Amazingly, some people here consider themselves thinkers.

    Good luck explaining it to them Terje…

  15. December 24th, 2005 at 11:33 | #15

    If government (on all levels and all sizes) did a better job, then there would be no need for libertarianism.

  16. Ian Gould
    December 24th, 2005 at 12:40 | #16

    >I do not believe that the correct size of government is zero.

    >I do not believe that we should abolish the police force.

    I know a number of libertarians who would argue that these statements automatically exclude you from being a libertarian.

    Tell you what, why don’t you nominate what you believe the optimal tax take for a developed country is?

    I’ve already said that I think the optimal figure is around 22-24% of GDP – soemwhat higher than the Us and Japan currently, soemwhat lower than Howard-era Australia.

  17. Ian Gould
    December 24th, 2005 at 12:43 | #17

    “the lower class riff raff”

    … so much for the purported libertarian egalitarianism.

    I come from the lower classes, I disagree with you regarding libertarianism, forgive me for not realising previously that this makes me “riff raff”.

  18. Ken
    December 24th, 2005 at 16:45 | #18

    Terje, my point was that changing people’s minds is not a quick or easy matter, and when ideas and beliefs abound that don’t accord with what those charged with the security of nations might feel are appropriate there is a potential for them to be restricted in ways that don’t fit with those ideals of freedom. If changing minds en masse is an objective, especially the supplanting of “undesirable” belief systems with another, it isn’t compatable with those ideals.

    How much democratic choice is real choice, well reasoned from sound knowledge and how much is it ongoing exposure to ideas and beliefs provided by those with an agenda? I don’t have to look far to see how much of current affairs in our mass media is reduced to emotive simplifications, by people and organisations with their, not our community’s, interests foremost. For most people there simply isn’t time or opportunity to consider these matters deeply, so political choices become that of choosing a team to be loyal to according to the quality and quantity of emotive rhetoric they are exposed to.

    As for your thoughts about small government, I’m not convinced. I think small communities are more, not less, likely to select and preselect according to affiliations and loyalties rather than by abilty and integrity. The right family, the right schools, the right church, the right friends and associations as well as favours and endebtedness are crucial criteria (although these aren’t missing from selection criteria with bigger governments when the process works through boys club type political orgs that openly state that loyalty to the Party is paramount and every utterance must be made in accordance with the agreed rhetorical party position).

  19. avaroo
    December 27th, 2005 at 05:59 | #19

    The US withdrawal will have to be a staged one. You don’t move 150,000 troops simulataneously. The elections are a huge milepost and a finger in the eye to the insurgents. Anyone in sympathy with the insurgents, wouldn’t have been interested in voting. I believe that Bush admin has already said that troops put in place specifically for the elections will be withdrawn, something like 9,000 troops. Could’ve been more, I can’t remember the exact number.

    While elections were important for the Iraqi public, it’s just as important to help the Iraqi police ans security be able to stand up to internal disturbances. There is no reason to believe that insurgents will magically stop killing Iraqis after the coalition leaves Iraq. The people must be able to defend themselves.

  20. Ian Gould
    December 27th, 2005 at 08:20 | #20

    The wonders of democracy Iraq-style:

    http://www.theaustralian.news.com.au/common/story_page/0,5744,17663906%255E1702,00.html

    THE bound and bullet-riddled body of an Iraqi student leader has been found, a few days after he led a campus march alleging fraud in last week’s election, a students’ group said.

    The body of Qusay Salahaddin was found close to a hospital in the northern city of Mosul with his hands bound behind his back and marks of strangling on it, a hospital source said.

    Gunmen took Mr Salahaddin, president of Mosul University’s students’ union, from his house last week and bundled him into the trunk of a car before driving off, said Mohammed Jassim, a friend of the victim. He said Mr Salahaddin used his mobile phone to make last-ditch pleas for help.

    “Save me, the Peshmerga have kidnapped me,” Mr Jassim quoted Mr Salahaddin, a Sunni Arab, as saying before the line went dead, apparently referring to Kurdish militia groups operating in northern Iraq.

    http://www.guardian.co.uk/worldlatest/story/0,1280,-5500000,00.html

    BAGHDAD, Iraq (AP) – Large demonstrations broke out across the country Friday to denounce parliamentary elections that protesters say were rigged in favor of the main religious Shiite coalition. ..

    Several hundred thousand people demonstrated after noon prayers in southern Baghdad Friday, many carrying banners decrying last week’s elections. Many Iraqis outside the religious Shiite coalition allege that the elections were unfair to smaller Sunni Arab and secular Shiite groups.

  21. December 27th, 2005 at 13:37 | #21

    Avaroo wrote “Anyone in sympathy with the insurgents, wouldn?t have been interested in voting”.

    We’ve been over this point before. There’s a catch 22 in the mechanisms of democracy, that if you aren’t interested and abstain, you get marginalised and they carry on without you, claiming public backing from the percentage of the actual vote they did get.

    On the other hand, if the people who don’t want it vote so as to stop that happening, the spuyrious democrats keep going, claiming that the people against accepted the principle by voting in the first place.

    The only way round this dilemma is the one the Irish worked out in the 19th and early 20th centuries: vote, join, but then sabotage from within, making it clear all the time to bystanders that the participation is purely tactical to stop the catch 22 working. If they don’t make this continued public stand, many people buy into the catch 22 part about accepting the vote but then complaining.

    This is precisely what the current US approach is trying to do, labelling people as “rejectionists” so they can be marginalised, as though a condition of playing the game must be that they accept the key points that the USA wants to build in. Oh, try looking up the “no true Scotsman argument” sometime – deporting and disfranchising rejectionists works a treat, just like it did when the US rebels expelled the loyalists to create a “people” that agreed with them.

  22. Terje Petersen
    December 27th, 2005 at 13:54 | #22

    Tell you what, why don’t you nominate what you believe the optimal tax take for a developed country is?

    I’ve already said that I think the optimal figure is around 22-24% of GDP – soemwhat higher than the Us and Japan currently, soemwhat lower than Howard-era Australia.

    Ian,

    You think that Australia should be taxed less. I am happy to move to your target rate of taxation at 22-24% of GDP. At that stage I may may call for less tax still, however in the interum at least we should be allies.

    Personally I think that taxation above about 10% of GDP is excessive. However it is obviously dependent on the situation.

    According to the OECD data that I have the relevant tax as a percent of GDP in 2003 figures for selected countries are:-

    * USA 25.6%
    * Australia 31.6%
    * Japan 25.3%

    http://www.oecd.org/dataoecd/18/23/35471773.pdf see TABLE 2

    As such I don’t know how you arrive at your comment that “I think the optimal figure is around 22-24% of GDP – soemwhat higher than the Us and Japan currently”. Using my OECD figures and your assertion then both Japan and the USA are slightly overtaxed.

    The nature of social security in Australia is also important. We increasingly fund old pensions using a compulsory fee called the superannuation guarantee levy. However we choose not to include this compulsory fee in our calculation of our tax burden. Even though comparable nations do include revenue raised for this purpose as a tax. If we corrected for superannuation then we would find Australia is even more over-taxed.

    Regards,
    Terje.

  23. Ian Gould
    December 27th, 2005 at 14:45 | #23

    The figures you quote include local and state government taxes and also social security contributions.

    Technically, US social security contributions aren’t usually considered a tax (which tends to exaggerate the difference in tax rates between the US and most other developed countries). (This is also how Singapore can claim to be a low-taxing state while forcing citizens to pay 25% of their income in the Central Provident Fund).

    State and local taxes are somewhat problematic since many of them (such as rates) are at least in part a fee for service.

    Incorporating state taxes can also lead to misleading comparisons due to large variatiosn within states – i.e. Alaska not only doesn’t collect a state income tax, it pays a dividend to residents.

    Most comparisons of international tax rates focus on national-level income tax and indirect tax collections as these are more consistent and more readily comparable.

  24. Ian Gould
    December 27th, 2005 at 14:52 | #24

    Avaroo: “Anyone in sympathy with the insurgents, wouldn’t have been interested in voting.”

    Some insurgent groups, such as al Qaeda in Iraq, threatened anyone taking part in elections. Others actively encouraged peopel to vote and threatened retaliation agaisnt any group attacking voters.

    To repeat, the Iraqi insurgents are not a monolithic group, as well as the Islamists aligned with Al Qaeda, there are secular Ba’athist nationalists and also tribal groups determined to secure as much power as possible in the new Iraq. Fighting and voting are simply different strategies towards the same end for some of these groups.

    Some groups seem quite happy to vote on Sunday and go back to fighting on Monday – this is especially true in Mosul where the number of votes each ethnic group’s candidates attracted is being used to advance claims and counter-claism about the ethnic composition of the city. (The Sunnis, Kurds and Turkmen all claim to be the largest single ethnic group in Mosul.)

  25. Terje Petersen
    December 27th, 2005 at 19:51 | #25

    The figures you quote include local and state government taxes and also social security contributions.

    Yes. A tax is a tax regardless of which layer it is imposed at. Given the variety of structures in various nations it seems futile to simply compare national taxes. Nations like the USA are highly federalist so you would hope that the national taxes were lower.

    I can’t bring myself to regard a nation as a low tax nation by excluding all layers of government (and their taxes) except the top layer.

    If we only looked at the top layer of governance in the EU we could claim that Europe is close to a zero tax utopia. Which would of course be a complete joke.

    Any meaningful comparison of juristictions has to look at all taxes paid across that juristiction.

    State and local taxes are somewhat problematic since many of them (such as rates) are at least in part a fee for service.

    Local governments may used the revenue raised through rates to provide services however that does not stop rates from being a tax. Otherwise you could pretty much argue that all taxes are not actually taxes which would be nonsence.

  26. Ian Gould
    December 28th, 2005 at 15:34 | #26

    “A tax is a tax regardless of which layer it is imposed at.”

    So vehicle registration is a tax; how about tolls on public-owned toll roads? How do they differ from tolls impsoed by private road-owners.

    Presumably water rates collected by an Australian local government are a tax but water rates charged by a private French company are not.

  27. Terje Petersen
    December 28th, 2005 at 16:22 | #27

    Vehicle registration is definitely a tax. Petrol tax is also a tax even if it is used to fund roads.

    I suppose you would argue that the medicare levy is not a tax? I would say that it most certainly is.

    At a guess I would say that the OECD answered your questions adequately when it compiled the tables. And hopefully it did so consistently across most nations.

  28. Ian Gould
    December 28th, 2005 at 23:42 | #28

    “And hopefully it did so consistently across most nations.”

    Trsut a man who once had to sit through a two day seminar on the latest revisions to the System of National Accounts (SNA) – it doesn’t.

  29. Terje
    December 29th, 2005 at 08:50 | #29

    Your example of toll roads would not seem to apply to local governments in Australia. All the public toll roads I can think of a state run. However you also exclude state taxes in your assessment.

    You discount the taxes of local and state governments by giving them a weighting of zero. This would seem to be the wrong weighting in my view. I would think that giving them a weighting of one (what I did) would be closer to the truth.

  30. Terje
    December 29th, 2005 at 16:52 | #30

    Terje- Have you thought about immigrating to Somalia? I believe they have a very small government.

    Somalia has been mentioned more than once in this discussion. I thought the following report from the WorldBank was interesting.

    http://rru.worldbank.org/Documents/PapersLinks/280-nenova-harford.pdf

  31. December 29th, 2005 at 23:46 | #31

    “So vehicle registration is a tax; how about tolls on public-owned toll roads? How do they differ from tolls impsoed by private road-owners.”

    This is straightforward. The state charges are all around and cannot be evaded except by encountering another charge from the same stable, while the private ones are not like that. The thing that makes the difference is the all-encompassing nature and tendency of governments.

    “Presumably water rates collected by an Australian local government are a tax but water rates charged by a private French company are not.”

    This is an interesting one. Here, it’s necessary to look behind the veil. The fees there aren’t a tax, any more than in the private toll example above, considered simply as a transaction between the consumer and the supplier. However, the initial privatisation had the character of a tax, capitalised as the sale price to the new owners, much like the sale of monopolies in Elizabethan England. The lower than market price actually paid represents a discount because of the eager (government) seller. The beneficiaries of that have often moved on, diversifying their initial post-privatisation holdings, so the current owners are often no more collecting a tax than any other capitalists – they didn’t get any discount.

  32. Ian Gould
    December 30th, 2005 at 18:09 | #32

    >You discount the taxes of local and state governments by giving them a weighting of zero

    No, I note the practical difficulties involved in making direct cross-national comparisons between them because they are more heterogenous between countries than are national level taxes.

  33. Terje Petersen
    December 30th, 2005 at 23:24 | #33

    Ian,

    Can you spell it out a little for me?

    Regards,
    Terje.

  34. Ian Gould
    December 31st, 2005 at 02:56 | #34

    To follow upon an earlier example I gave: in France water provision is mostly by private companies. This means that local government charges in France are lower than in Australia (for example).

    Speaking of water, in South East Queensland, there’s a for-profit company called Brisbane Water whicjh was created by merging the water processing and reticulation assets of the SEQ local governments and the former Sotuh East Queensland water board. Brisbane Water is owned by the local and state governments.

    Water services are billed to the consumers by the local governments and therefore count as taxes. The local governments then pay Brisbae Water to provide the service.

    If Brisbane Water billed the consumers direct, the charges woudl no longer count as a tax.

    Another example, Energex is a state-owned electricity company which has an effective monopoly over the retail electricity and gas market in South East Queensland. Because it’s a corporation, no element of its income is treated as a tax.

    Back in the 1960′s, Brisbane City Council provided electricity services in the Brisbane area. If the state government hadn’t taken over the BCC assets then corporatised them, those exact same charges would count as a tax.

    Depending on how the individual countries interpret the SNA rules (which depends on stuff like the legal status of various local government-owned entities) there are a wdie range of activities undertaken by local government which may or may no count as a tax.

    To return to BCC, bus fares collected by BCC could be argued to be a tax. On the other had, there’s a private bus company (Connex) which runs some services for BCC. The Connex services are integrated more or less seamlessly with the BCC services, Connex even accepts BCC tickets and Connex, on some routes at least, probably receives more revenue from BCC subsidies than from passenger fares.

    So what I’m saying is, it’s extremely difficult to determine a common understanding of what constitutes a local tax.

    To come back to the original reason this came up, if we’re going to nominate a figure for total governemnt expenditure as a proportion of GDP and include state and local government taxes, I’d need to revise my nominated optimal level.

  35. December 31st, 2005 at 20:47 | #35

    Ah, I see where your concern is, IG. I think the point at issue just there isn’t what actually ends up happening, but the reality of the nexus between paying and receiving services (in this case, water).

    Taxes are unrequited payments, which doesn’t mean that they don’t end up going somewhere useful (though whether there is a net benefit is a different question).

    Rather, taxes go into a common pool of general revenue, and even if there are moves to “hypothecate” them (commit them to particular purposes), it’s impractical to commit future governments as to what they can do with what they have got.

    Separating off the activity – privatising it – produces a more solid if not 100% reliable nexus.

  36. Ian Gould
    December 31st, 2005 at 22:42 | #36

    PM, in addition to that quite valid point, there’s also the fact that at the national level there’s a degree of uniformity in what taxes are spent on – defence, public order; aged pensions; disability support; debt service.

    But, to take another example at the local governemnt level, in Britain most public housing is owned and rented by “housing trusts” controleld by local governments. Depending on the legal structure of those trusts and their relationship with the local governments, rents paid ot such trsuts could be considered a tax.

  37. Terje Petersen
    January 1st, 2006 at 05:41 | #37

    Ian,

    My problem is that if you were to compare the tax as percent of GDP for the USA and Australia and you only looked at national government taxes you would be leaving out US state income taxes. On the face of it this would seem to me to distort the picture significantly.

    In Australia public hospitals are funded using tax revenue originally raised at the federal level. Whilst in the USA I understand it to be mostly raised at the state level.

    In the USA policing is mostly a local or state function. In Japan I understand it to be a national function.

    In Switzerland the bulk of the corporate and personal income taxes are levied at a regional level.

    So I acknowledge your concerns. But I still don’t see discarding state and local tax revenue as a helpful fix.

    When I said that you give a weighting of zero to local and state taxes you said that you don’t. However you seem to be repeating your claim that comparisons should best be made only on the basis of national taxes (due to some claimed homogeneous function of national governments).

    If we are to make meaningful comparisons between nations, for the purposes of understanding the effect taxes have on investment, incentives, growth, for an understanding of how tax cuts might effect public revenue etc, etc then we have a few options:-

    {a} Look at the national level only.
    {b} Look at all levels of government within a nation
    {c} Some other formulation.

    You seem to object to {b} however you state that you don’t advocate {a} either. So it would seem that you must have some version of {c} up your sleave. It is this formulation that I was hoping you might spell out.

    Regards,
    Terje.

  38. Ian Gould
    January 2nd, 2006 at 14:33 | #38

    Both measures are flawed but I tend to prefer the national-level comparison.

    This digression really started when you pointed out that my estimates for percentage of GDP taken in tax were low.

    I’ll accept your OECD figures.

    A couple of thoughts:

    1. Go rank those OECD countries by tax as a percentage of GDP and compare those results with their Human Development Index scores then derive the average long-term rate of growth in per capita GDP at purchasing power parity from the link I provide in the Dark Matter thread and see how that correlates.

    2. Given your preferred level of tax of 10% of GDP, why don’t you start, as an intermediate step, by nominating which areas of Australian federal spending you’d cut or eliminate to achieve a 50% cut in Federal spending.

  39. Ian Gould
    January 2nd, 2006 at 14:38 | #39

    http://www.budget.gov.au/2005-06/bp1/html/bst6-02.htm

    An overview of Federal spending by function can be found on page 2.

  40. January 5th, 2006 at 07:10 | #40

    So, despite history not repeating precisely, go and look up some of the episodes I mentioned like Irish constitutional history, then try to draw out more general lessons from that. You may find it more widely valuable, but it will illustrate that the forms of democracy and the sincerity of some of its advocates just don’t get you to the point where it is a good thing in and of itself.

  41. Terje Petersen
    January 5th, 2006 at 11:18 | #41

    Ian,

    Point 2. You start from the premise that every tax cut must be matched by a spending cut. Which is nearly as bad as Howard assuming that every investment must be met by an increase in tax.

    However I do think it would be wise to cut government spending. I would start with corporate welfare and move on to private welfare.

    If Howard had held spending constant when he came to power in 1996 we would have been able to nearly elliminate personal income tax over the last decade.

    Regards,
    Terje.

  42. Ian Gould
    January 5th, 2006 at 12:37 | #42

    Terje, the fuel and energy, transport, agriculture, mining and “other economic affairs” spending lines which would include the great bulk of “corporate welfare” account for around $12 billion.

    If we eliminate those functions completely (and ignore special purpose charges on industry in those areas such as fees for airport terminal use) you’re still be around $80 billion short.

  43. Terje Petersen
    January 5th, 2006 at 13:26 | #43

    Ian,

    You didn’t read what I said, or else you chose to ignore the bulk of it.

    Regards,
    Terje.

  44. Ian Gould
    January 5th, 2006 at 13:56 | #44

    Sorry, I keep forgetting that the incentive pixies will make a trip to Laffer-land and come back with a pot of gold.

  45. Terje Petersen
    January 5th, 2006 at 14:00 | #45

    You are forgiven.

  46. January 5th, 2006 at 22:16 | #46

    It looks as though “Nataly” is a sophisticated spammer putting in text drawn from elsewhere around here so as to look authentic.

    I think some parasites do something like that, covering themselves with proteins stolen from their hosts so as to pass inspection by the immune system.

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