Thursday, 11 August 2016

Insane subsidy of the day

From The Daily Mail:

* Uber and other ride-sharing services will be allowed to operate legally [in Queensland]
* Taxis will be allowed to charge surge pricing and will receive $20,000
* QLD Premier announced a $100 million industry assistance package
* Queensland is the fourth Australian state to legalise ride-sharing apps
* The move is expected to anger anti ride-sharing app campaigners

The only reason why taxi licences had value was because they restricted supply, raised artificial barriers to entry, thus pushing up prices for passengers and destroying jobs etc. If the government realises its mistake and changes the rules, why on earth would they compensate the people who have unfairly benefitted in the past? The mind boggles.
For the benefit of Striebs, this is anathema to left-libertarians; such compensation is the opposite thereof, i.e. rent seeking and wasting taxpayer's money all rolled into one.

I can sort of see the "left wing" argument for subsidising particular activities if at least it increases output and employment or ensures security of supply (although on closer inspection, other factors usually outweigh the apparent gains), but such a subsidy achieves nothing, it does not increase the number of taxis or passenger journeys one iota and costs the taxpayer money so fails from a left-wing perspective as well as from a "libertarian" perspective.

Similarly, I support the "libertarian" case for removing barriers to entry and increasing competition, although this is usually not a left-wing cause (thus putting the lefties in a dilemma - do they want to restrict supply/boost incumbents' wages with permits; or increase supply with subsidies?)

Taxi driver bleating also reminds me of a terrible KLN: "But I paid for my house out of taxed income!" No you didn't, you paid for it out of the money you were saving on rent; by and large, taxi licence holders have collected more in extra income than they ever originally paid for their licences (bearing in mind they were originally issued for low or zero cost).


Dinero said...

what i don't understand is why people give a thing called "a tip" to London black cabs. They are already paying more when the service is worse ie when there is congestion and the meter racks up more time and each piece of luggage is a surcharge. Am I behind the times do tips to black cabs no longer exist.

DBC Reed said...

I would have thought the argument against Uber is that it pays drivers under the minimum wage.
There used to be plenty of completely unlicensed cabs in South London of a Saturday night with drivers who didn't know the geography.Once travelling with a bunch of tough youths (my family) my slight concern was that that the unlicensed and lost driver would get beaten up.
There are all kinds of libertarian arguments from the point of view of the passenger but as with the dark ages of free-for-all London buses these do not stack up.

Mark Wadsworth said...

Din, I don't haggle and I don't give tips.

DBC, could you "speak to the motion" please? Or "stay on topic" in modern parlance.

You have ignored the main topic (insane subsidies) and are off on hobby horses of your own.

1. Uber itself is a gigantic rent seeking enterprise, but the principle is sound (a platform for putting passengers and drivers in touch).

2. Uber does not "pay below minimum wage" because Uber drivers are not employees of Uber. They are self-employed and pay Uber a commission for each passenger. The minimum wage law in the UK does not apply to self-employed.

3. You are confusing qualitative with quantitative restrictions. If councils want to restrict such services to people who fulfil sensible conditions (clean driving licence, insured car, no criminal record for violence and local knowledge/ability to use sat nav) then that is fine.

Those are qualitative restrictions - the second hand value of a taxi licence is zero because it is personal to the driver and non transferable . It is quantitative restrictions (limit on number of permits) that causes economic damage and makes a second hand permit worth paying for (privately collected tax).

4. I suppose what local councils could do is have a sensible qualitative licensing scheme and set up its own rival app to Uber which can only be used by licensed drivers, charging them a modest fee to pay for the app running costs and minimising tax evasion. That ticks all my boxes.

Lola said...

MW. Don't existing taxis already have their own app - Hailo?

Mark Wadsworth said...

L, yes, but that is the preserve of taxi drivers with tradeable permits, it is part of what the new entrant pays for when he buys a second hand permit.

DBC Reed said...

@MW As a mere hobbyist's aside: a large number of taxi drivers, even when a firm provides than with the vehicle and fuel are counted as self-employed. The whole situation stinks.

Bayard said...

It's not really a subsidy, though, is it? It's a one-off bung to the existing taxi drivers to stop them kicking up a fuss, protection money if you like. More like Aneurin Bevan "stuffing the doctors' mouths with gold".

Pablo said...

why on earth would they compensate the people who have unfairly benefitted in the past? The mind boggles.

But does this:
not boggle it more?

Bayard said...

P, more golden mouth-stuffing. The question is, is it better to stuff mouths and achieve your objective or not to stuff mouths and fail? Sadly, the third option, not to stuff mouths and succeed, is rarely available in politics, however morally desirable it may be.

Anonymous said...

The unions down here in Straya are absurdly influential. The payoffs bei mooted for the taxi drivers (Victoria is likely to do the same) are probably quite good value given what it costs to keep other protected groups happy.

Lola said...

DBCR Everybody is de facto 'self employed'. It's just that the tax system has been deliberately distorted to try and mask that fact. It's part of the overall lefty conspiracy of Fabian Gradualism.
(Of course this excludes people employed by the government and paid for by real taxpayers in wealth creating tax paying private business. All government employees are de facto all on benefits.)

Dinero said...

What is the precise law under which PAYE operates. Employers and employees generally negotiate and settle on a salary without any mention that the payment will in fact be made after the deduction, and so by what what law does it come about.

> Lola " All government employees are de facto all on benefits."

So in keeping with that statement if someone who generally works for private sector clients does some work for the government the pay from that client, in that case the government, is best described as a benefit - I think that does not follow a logical thesis on the face of it.

DBC Reed said...

@L Everybody is de facto self employed (and can turn up when it suits them and work for as long as they like ) but this freedom is denied them by a deep-seated lefty conspiracy going back to the times of the strictly non-revolutionary Fabians. Christ almighty. And as usual you give no evidence for these right-wing flights of fancy.
( I was looking at evidence on Taxi driver Employment Status/ Accounting WEB)

Mark Wadsworth said...

D, that's a daft question. Try s698 IEPA 2003 onwards! Most employment contracts expressly mention that PAYE will be deducted from all payments.

Mark Wadsworth said...

P, that is another good example of an insane bribe. Two wrongs don't make a right.

B, they overpaid the doctors to get the NHS up and running and they succeeded, fair enough. That was a subsidy that at least expanded output ( What bothers me is that they have caved in to the doctors and in particular GPs every few years ever since). This bribe won't increase output or anything.

TTG,ta for local knowledge.

Lola said...

Din. Precisely. Lots of fake businesses and fake charities receive 'benefits' in that way. No-one has any idea at all as to whether they actually add any value at all.

Lola said...

DBCR. Oh dear. Being 'self employed' is materially different from owning a business. the self employed - a plumber say as a subbie for a builder can not at all 'come and go' as they please. Work needs to be phased with other trades.

But if like me you own a business I can indeed set my own hours and turn up when I like. In fact that's the whole point. I employ managers. they run what I own. I keep an eye on them.

And everyone is 'self employed'. PAYE is the trap that makes them serfs. It makes the business the tax collector (unpaid) and it is deliberate policy to make 'employees' feel like 'employees' as opposed to someone selling their labour and skills to make a living.

One of the beauties of full on LVT is that PAYE etc is junked. Liberty is returned. Wage slavery is eroded. People receive the full (net) value of their labour.

Fabian Gradualism will hate that. Lots of independently minded self employed. Dangerous.

DBC Reed said...

This starts with some sketchy consideration of the issues: plumbers have to work at the direction of builders but get counted as self-employed. You are considerably better off as a self-employed person and do as you like.
Then we get the flannel:" everyone is self employed" but are everywhere treated as Serfs and all will be well in the LVT millennium ,Ho hum.Plus ringing abstract nouns "Liberty" "slavery".And people get the full (net!) value of their labour. Finished off with a stonking reification
of this week's enemy Fabian Gradualism, that has no physical or personal manifestations.
Please stay in the here and now and apply your airy generalisations to the case of the taxi driver who complains in "Taxi Driver Employment Status/ Accounting Web".
(When first retired, I used to go for a drink most Friday afternoons and met up with some "self employed" tradesmen who were mostly under the direction of a management that was really employing them on a zero hours basis. Brilliant for the employers : no sick pay; no holiday pay; no work pension.
I tried to raise this issue [of faux self employment] at the outset of this thread but MW thought issues of compensation in Australia were paramount.)

Lola said...

DBCR. You are missing the point. Deliberately? No-one has to work for anyone. It's all voluntary. To get work you have to offer what someone wants from your labour. You get educated or trained to offer that. Or sometimes people who will employ you will also contribute to your training, as it is in their self interest to do so. (I do exactly that). But the employees motivation is to make himself 'employable'. It is exactly the same for the self employed. They need to offer skills that someone else wants to use. Both the 'employee (in this argument someone of PAYE) and the self employed - anyone at all really from plumbers to senior state organisation managers working through service companies are all directed by someone else. (As am I as a business owner - my 'masters' are my customers).

The difference is the way that the State decides that they should be taxed. Arbitrarily differentiating between s/e / 'ed is for the convenience of the state and to categorise people into dependency. And it is also welcomed by many large employers (Davos Men?) as it creates a sort of dependency.

As far as I am concerned, and taking MW, (taking his name in vain) all 'pay' is a form of profit share. (In passing this is one of the delights of an LLP - everyone can be a 'partner').

And I repeat, one of the attractions of full on LVT is that it does away with PAYE. The difference between employer and self employed disappears.

And the Left will hate it. Already unionisation is mostly for those employed by the government (by the 'real' taxpayer). LVT and the scrapping of the tax driven differentiation between s/e and e/d will further erode union membership in the tax paying sector.

Shiney said...


HMRC will now challenge LLP partnership status if the person who is a partner looks like they might be an 'employee' - the definition is fluid so they can classify whomsoever they choose.

They then reclassify the 'partner's' income as from 'employment', make you set up a PAYE scheme (with all the bollocks around RTI etc) and pay employers NHI. I know this from bitter experience as we had it happen to us a few years back.

Lola said...

Shiney. Thank you for the real world example that reinforces my point so completely. S/e v Employed is all about the convenience of the State and tax slavery,

Bayard said...

"Brilliant for the employers : no sick pay; no holiday pay; no work pension."

This is the problem with left-wing ideas (or ideas that were once left wing, but are now mainstream), they treat the workers like subhumans who can't be trusted to look after themselves. The only possible justification for having a workplace pension is that the workers are either too feckless or too stupid to make their own pension arrangements. The money to fund sick pay, holiday pay and workplace pension contributions are all taken from the employees' pay packets. Why not give them that money and let them make their own arrangements?

Lola said...

B. Precisely. The UK had / was developing / trending to one of the very best systems of insurance for all that. Friendly societies. Charity hospital. Pensions etc. etc.
I have worked and watch it progressively destroyed in the cause of the 'client state'.

DBC Reed said...

As Shiney says, the government takes false self employment as a means of the employer avoiding paying people properly and shoving such responsibilities onto workers very seriously indeed. (Look at the Net.)The Guv has issued precise legal codes on the matter, which Lola thinks are background reading ,to be considered alongside fond memories of Pre Welfare State charity hospitals ( which nearly killed my mother during childbirth and disabled my brother for life).
Most of the reactionary ideas on here are sympathetic to crooked and illegal conduct in respect of employment. And I am treated as a Trot for defending the post -war mixed economy consensus; most of the extremist thinking on here is Victorian, pre Dockers' Tanner!
> See Deliveroo Guardian yesterday 13th August "Takeaway delivery firm Deliveroo has been accused by Labour of a return to Victorian Britain with its new pay deal.. which would see guaranteed hourly rates replaced by payment per delivery".
Despite MW's preoccupation with side issues, the way taxi drivers are paid by Uber and others does exemplify false-self-employment scams.
Lola would save a lot of problems with developing his hippified romantic notions by going through the taxi driver's queries in "Taxi Driver Employment Status/ Accounting Web"on Net.As he has been asked to do politely on several occasions.

Lola said...

DBCR. The welfare state nationalised health system nearly killed me in 2007/2008....

Lola said...
This comment has been removed by the author.
Lola said...

DBCR. 1st things 1st. I did not call you a Trot. I said you sounded (in one post) like Trot.

Your comments about all the detailed rules made by The State around se / em confirms my argument. It's a construct.

You also fail to understand the nature of 'tax incidence'. None of those benefits (applied by coercion) is actually 'paid' by any employer. They are all costs of employing someone. They are payroll costs and the costs fall on employee wages. End of. This is one of the things that lefties in general willfully refuse to accept.

Going back to health care / insurance etc there were / are very good non-nationalised and both commercial and charity based provision, all of which is eminently affordable and works well. The outlier as to cost is private medical insurance and that is largely driven by the monopoly of the NHS (in the same way that non-BBC broadcasting is relatively costly). Again, I have personal experience of the failings of the NHS (and its successes).

But I understand and accept that there probably is a need for an insurer of last resort in respect of health. There is no way that commercial insurers can price the risk for chronic conditions, e.g. asthma - and again I have personal experience as I am asthmatic.

Mind you you could offer parents a policy that covered their children if in the future they produced a child who suffered from such chronic condition. That can be underwritten commercially.

There is no logical basis in your arguments. They are based entirely on your personal prejudices. As of course are mine, but logic and evidence supports me. Not you.

DBC Reed said...

I am not arguing from personal prejudice: my attitude is in accordance with this country's taxation treatment of false self- employment fiddles of which there are many , as are instanced in respect of taxi drivers (the subject of discussion)by the queries on Taxi Driver Employment Status/ Accounting Web. These you are studiously avoiding .

Lola said...

DBCR It is the other way about. It is 'false employment'. The concept of 'being an employee' is an arbitrary construct of the tax system to suit the State.

There are no 'fiddles'. There are efficiencies.

Bayard said...

"As Shiney says, the government takes false self employment as a means of the employer avoiding paying people properly and shoving such responsibilities onto workers very seriously indeed."

Heaven forfend that the poor innocent workers should have the responsibility of sorting out their own tax and pension arrangements. They'll only not do it or get it wrong. Much better that those clever and caring people in the State do it for them, so they don't have to worry their little heads about it.

Shiney said...

@DBCR - For the record.... I said no such thing. It was NOT false self employment at all. And they do not issue PRECISE legal codes - they are all subject to interpretation by HMRC.

And... to prove my point, both the 'employees' left the LLP not long after (one of them most certainly as a result of being forced down the employee route).

One went on to start his own business in a related field and the other scaled back his hours and now does 'contract' work for us (and others). We now use him and a couple more freelancers to get the job done. Not so good for them as they all get a day rate rather than a 'share'.

DBC Reed said...

Make people reliant on private sector providers of these vital services and we will get inefficient private sector profit taking and bureaucracy which has made housing in this country and also health provision and university fees in the US a path of destructive crowding out by private sector billing specialists . Things in question have to remain nationalised : the British public gave the privatise-and-everything-will-be-cheaper shysters a good run at it and they have shown themselves incompetent and corrupt. Fortunately being out of the EU means we are no longer bound by European restrictions on nationalisation.

DBC Reed said...

As soon as you hand over responsibility for major financial arrangements entirely to the private sector in Britain you get fiddles.The housing "market" is a total fuck-up, although as we know it is fairly easily remediated.It is such a fuck-up that GB could be classed as a failed state for its organised ill treatment of its younger generation.
Where I live in a commuter town, middle-class people call for an end to rail privatisation.
It may be that there is a zeitgeist shift and people no longer believe that the private sector can take over everything and run it at a profit and cheaper and more efficiently for the customer.

Bayard said...

"As soon as you hand over responsibility for major financial arrangements entirely to the private sector in Britain you get fiddles"

Sorry, I must avoid the temptation to use sarcasm. I was attacking the idea that all workers should be employees and have their tax and pension arrangements sorted for them by a private sector employer (an arrangement that didn't work out that well with BHS or the Mirror Group, to mention a couple of obvious ones.)

DBC Reed said...

This is what you said "HMRC will now challenge LLP status if the person who is a partner looks like they might be a an employee". The Guv is looking into false self employment scams in other words.( I did not say you were suspected of any such; neither did it occur to me).
@Bayard. You said,very patronisingly "Heaven forfend that the poor innocent workers should have the responsibility of their own..pension arrangements."So the workers should invest their pension pots with private pension providers? Since these do not have the universality of a national scheme and the firms are being tortured by low interest rates to please the Mob (of Homeys),I would have thought pushing people the way of anything privatised would have not been in their interests.
NB I am getting consecutive postings see above because the first one disappears into the ether , then when I more or less repeat it a day later thinking it lost ,it turns up in tandem.