Wednesday, 18 January 2012

SOPA blackout

Assorted websites, including Wikipedia, have blacked themselves out today to encourage readers to lobby against the new legislative restrictions on the internet being proposed in the SOPA and PIPA bills in the USA.  Wikipedia has carefully done this in the weakest way: you can access Wikipedia as normal by telling your browser to block Javascript: this can be done only for site if you want other sites to be unaffected.

The protesting sites are careful to say that their opposition to the bills is not based on any lack of respect for Intellectual Property Rights.  I'm against the bills too, but I think the concept of IP has gone much too far.  I am not a supporter of the Amalgamated Union of Tollbooth Operators.

Monday, 16 January 2012

Child Benefit

Chris Dillow points out the clumsiness of the government's proposal to claw back Child Benefit from households whose top earner is in the 40% bracket (or above), and rightly suggests that it would be much simpler to increase the 40% rate to something higher.  He's mistaken about the numbers however: treasury estimates (see page 14) say that £2.5bn a year is at stake.  I agree with Dillow's view that the government is sticking with this ugly policy because it sees inherent virtue in reducing both taxes and benefits.

In general, I hold that government benefits should be of one of two types: universal benefits with no means test (treated as taxable income), or subsistence benefits which taper off with increasing earnings.  (The government's proposed "Universal Credit" is a composite of subsistence benefits.)  Up to now, Child Benefit has been a universal benefit: the current proposal would make it neither flesh nor good red herring. Why should a childless household falling just below the 40% band subsidize a similar household with children, but no such transfer take place if both households fall just above the band?

My opinion is that children are expensive for parents but necessary for society, and that with the UK's fertility rate currently well below the replacement rate it's reasonable for the state to transfer modest sums from the childless to the fecund.  And that universal benefits are generally preferable to subsistence benefits.

Declaration of interest: my household currently receives child benefit which it would lose under the government's proposal.

Rule Britannia

A particularly sycophantic Tory wants us to give the Queen a new yacht for her diamond jubilee.  Her father died on 6th February 1952; I suppose after sixty years she feels less uncomfortable than she once did about celebrating the anniversary.

I'm not sure that an 85-year-old monarch would be particularly keen to have her own yacht: she's been struggling on without since Britannia was decommissioned in 1997.  But if she does want one, I suggest we fund it by public subscription, and create a new chivalric order for the largest donors, which we might call "Benefactors of the Royal Yacht Britannia Endowment".

Sunday, 15 January 2012

One hundred and fifty million points of darkness

JSTOR is a not-for-profit online archive of over 1,400 academic journals and related content.  Many academic institutions subscribe, giving their staff and students online access to a huge body of knowledge.  If you don't have access, you can buy individual papers, but the fees are quite high - $14 for On the Method of Theoretical Physics, which I picked arbitrarily.

In September, JSTOR started making older, presumably non-copyright material freely available, and it has recently announced a "Register and Read" scheme giving restricted free access to 70 of the journals it carries, with the expectation that hundreds more will be added.  This is welcome news.  But the story reporting this in The Chronicle of Higher Education reveals that every year JSTOR "turns away almost 150 million individual attempts to gain access to articles".  (This is not JSTOR's fault.  It's an archive, not a copyright holder.  Access restrictions are the price it pays for being allowed by the journals to carry their content.)

One of the costs of academic copyright is 150 million failed attempts online every year to learn from the corpus of published research.

Thursday, 12 January 2012

Stealing books

Last July Aaron Swartz was arrested for taking direct action against copyright restrictions on academic papers by downloading almost the entire JSTOR archive.  Kevin Drum has just found out and expresses surprise at the outrage provoked by Swartz's arrest.  Megan McArdle has taken this up with a long and confused piece about property rights.

This is less difficult than McArdle makes it seem.  Goods have an intellectual content, which is non-rivalrous, and a physical content, which is rivalrous.  Property rights serve both as a rationing mechanism for rivalrous content and as an incentive to increased production.  Land is very expensive to create (albeit Hong Kong is closer to Kowloon than it used to be) so property rights over land are useful almost entirely for rationing (and non-rivalrous trespass on land is not usually a criminal offence).  Computer files are almost free to copy, so property rights over them are useful only to encourage creation of their intellectual content.  Books, which trouble McArdle, have both physical value and intellectual content.  There's no intellectual problem with believing that the intellectual content of a particular book should not be protected by copyright but that a physical copy of the book should be protected by physical property rights.

It's important to make these distinctions, because they enable one to consider whether property rights are working well to achieve what we want.  It's obvious that 70 years after an author's death is a much longer copyright period than could conceivably be needed to encourage the creation of intellectual content.

Welfare Reform

18 months ago the government published a consultation document 21st Century Welfare.  The document proposed reforming the UK's benefit system with the aim of reducing what it called "Marginal Deduction Rates" for the low paid.  It means by that the percentage of any increase in earnings that is lost in reduced benefits.  It gives an example whereby "a couple with a single earner and two children sees a Marginal Deduction Rate of 95.5 per cent on earnings between £126 and £218".  (That range of weekly earnings corresponds to 22 to 38 hours a week at the then minimum wage.)  The paper proposes to ameliorate this unhappy state of affairs by combining all benefits into a "Universal Credit", which will then be progressively withdrawn as earnings increase at a "taper rate" to be decided.

By November 2010 the government was ready with its white paper Universal Credit: Welfare that Works.  The white paper specified a taper rate of 65%.  For workers paying income tax (at 20%) and national insurance (at 12%), i.e. those earning more than £143 per week, the taper rate would apply to their net earnings, giving a combined deduction rate of 76.2%.

I suggested last month that a marginal tax rate of 52% is discouraging.  How much more so is a marginal deduction rate of 95.5%?  I doubt that anyone could seriously oppose the underlying aim of this reform.  76.2% or 65% still seem much too high, but at least they represent a significant improvement, and create a mechanism to make further reductions administratively straightforward.  I am very much in favour of the proposal.

In February last year, the government was ready with its legislation.  (The full text of as currently proposed is here.)  The bill sets out a whole new system of benefits, and some of the proposals reduce benefits to some claimants.  Three of those cuts, affecting sick and disabled people, were defeated last night in the House of Lords.  It's impossible to reform any system of payments without either spending a lot more money on it or leaving some people worse off, but, according to the BBC report, the government is defending these proposals not as a necessary part of the package but on the grounds that tough decisions have to be taken to cut the government's deficit.  It's a pity that the government is making it difficult or impossible for some people to support an important reform by combining it with a package of cuts.

I would like to more towards a system in which the marginal rate of deduction for the lowest earners is zero.  Then I would like to abolish all laws forcing claimants to seek employment on pain of loss of benefit.  And at the same time I would abolish the minimum wage.  The effect would be to subsidize low-paid employment rather than trying to force people into it.  I would be quite comfortable with employers taking advantage of this to hire people on very low pay rates, knowing that the employees are working of their own free will, that they are financially better off with the jobs than without them, and that they are doing something productive with their time.  My hope is that there would be many things worth employing people to do at £2 per hour that would be automated or left undone if you have to pay £6.08 an hour.  While the government would get no direct tax income or benefit savings from the employment, it would receive indirect taxes, and the economy would be better off by the added value of the labour performed.  I suppose that the right would hate the unrestricted benefits, and the left would hate the low wages, but society would benefit from both the economic and human effects of reduced unemployment.

Sunday, 8 January 2012

Encouraging investment

I missed it at the time, but my attention has been drawn by discussion of the woes of corporate pension funds to a policy document published early in 2010 by the Conservatives setting out George Osborne's plans for the economy.  Section 2 is the plan for "Creating a more balanced economy"  "We will create the conditions for higher exports, business investment and saving as a share of GDP".

The section laments low levels of business investment in the UK, and lists some rather insubstantial ideas to increase it.  Then it goes on to discuss savings " Over the longer term, we will reverse the effects on pension savers of the 1997 abolition of the dividend tax credit for pension funds".  This is a reference to Gordon Brown's so-called 'raid on pension funds', which I thoroughly approve of.

So having identified insufficient business investment as a problem for the UK economy, Osborne proposed a tax break which would encourage businesses to pay dividends rather than reinvest profits.

Saturday, 7 January 2012

FA v Suárez

The independent Regulatory Commission which heard the FA's case against Luis Suárez published its report this week.  It's a long and thorough document: judging by media commentary on the case I may be one of the few people not actually on the Commission who's read it.  In short, it was agreed that Evra and Suárez had an unfriendly conversation in Spanish, which is Suárez's native language and one that it turns out Evra is capable of holding a conversation in.  Suárez admits to having called Evra "negro" (in Spanish) once, and has issued a sort-of apology for it.  Evra says that Suárez called him "negro" seven times.  The Commission had no other direct evidence on what was said, but chose to believe Evra, on the grounds that Suárez made the claim to the Commission that he was attempting to be "conciliatory and friendly", whereas television pictures suggested that there was nothing friendly about the conversation, thereby damaging the credibility of his evidence in general.

After due reflection, Liverpool FC has decided not to appeal, presumably feeling that it has done enough to demonstrate its loyalty to  Suárez, and not wishing to do anything further to discourage any current or potential future players who would prefer their employer to be unambiguously opposed to racist abuse.

Interestingly, the Commission became in part a linguistic enquiry: including hearing expert witnesses on South American usage.  We learned that:
- Evra at the time understood Spanish "negro" to be the equivalent of French "nègre", whereas he now understands that it translates as "noir".  The whole case might never have arisen without this misunderstanding.
- Evra's opening remark to Suárez, having earlier been fouled by him, was "Concha de tu hermana".  The Commission accepted that that is not as insulting as it sounds, and colloquially would not be taken as a direct reference to one's sister's anatomy, just as English swearwords should not usually be understood literally.  In any case, Suárez, who perhaps wasn't expecting to be addressed in Spanish, didn't grasp what Evra had said.
- Evra was interviewed by French television shortly after the match, and said (in French) "You can even see clearly on his lips what he told me at least ten times".  Evra claimed to the Commission that "ten times" in French is just a figure of speech meaning "many times".  The Commission accepted this, and so held that Evra's credibility as a witness was undamaged by it.  I think French viewers would have understood "at least ten times" to mean "at least ten times".  But there again, television interviews and evidence to a quasi-legal hearing are not the same thing.

Overall, I think that low-level and not unprovoked abuse like this could best be dealt with in private - players can sort out among themselves what's acceptable.  But that once it's come to official attention, it has to be firmly censured.