First, from Johann Hari. I assume this can’t be from the Tax Justice Network, because they are professionals, and know the difference between a stock and a flow. Surely. Johann wrote a wonderful passionate polemic against revolting tax avoiders. I really enjoyed the piece. But this bespeaks a lack of understanding of the difference between debt (a stock) and the deficit (a flow):
The invaluable Tax Justice Network has calculated that rich individuals “avoid” £13bn a year and rich corporations £12bn. (Indeed, a third of Britain’s top 700 companies haven’t paid any tax at all.) That’s enough to double the education budget – or to pay off Britain’s entire deficit in seven years without a single dent in public spending.
£25bn is a huge amount of money. But you don’t ‘pay off’ a deficit. Both are annual amounts – flows. The deficit would be reduced by ~1.8% for each year if we got £25bn somehow, but the savings from zero avoidance do not accumulate to the deficit, they accumulate to the debt – the stock. Which is due to be £1300bn, not £175bn. Given the moral righteousness on his side, I hope someone from TJN has a quiet word with Johann to make sure that sloppy thinking does not undermine the value of his cause …. this approving blog is not a good sign, however. Cutting avoidance would be a good start to the mammoth task ahead. £25bn every year would be lovely, though if it assumes invariant behaviour from the tax-avoiding oligarchs it is probably unlikely. But it is a bad idea to go around implying that is all we need to do. We need to raise taxes and cut spending as well, I’m afraid. Let’s not weaken the will through faulty logic
Next elementary error: Mark Anthony and Caesar as ego-mad rivals? I’d expect better from the Economist. They should go back and read one of the most gripping scenes in theatrical history (in fact everyone should from time to time). Anthony was Caesar’s man. Schumpeter must have been thinking Pompey and Caesar, Pompey and Crassus, Anthony and Octavian, or something else. How did this get past? Or am I missing something?