Adele: right about taxes and spending — but wrong about her source of wealth

August 9, 2011 § Leave a comment

Note: Corrections made, new material added, and irrelevant stuff subtracted.The Grammy-winning British singer, of whom this writer is a fan, is now also known for her rant about the UK’s high tax rate (which they recently put up again — in the midst of a recession!).

I use the NHS, I can’t use public transport any more, doing what I do, I went to state school . . . ! Trains are always late, most state schools are s[***], and I’ve gotta give you like 4 million quid, are you ’avin a laugh? When I got my tax bill in from 19, I was ready to go ’n’ buy a gun and randomly open fire.

Read more at National Review.

Stars, particularly in the UK, have been taking shots at the taxman since, well, “Taxman”…

Yet Adele’s remarks, and the publicity they gained, are useful to illustrate some important points.

CORRECT: Most governments seriously waste taxpayers’ money. If the government schools are “s[***],” to quote Adele, and the trains always late, she is as justified as any ratepayer to be pissed about it. That’s why schools shouldn’t be run by the government; they should be run as a private service on a competitive basis, just like almost everything else we buy every day.Parents, children, teachers, and just about everybody–except perhaps bureaucrats, union bosses, and companies used to getting lucrative contracts on extravagant school facilities and busing –would be happier under such a system. (Train transit is a more appropriate project for governments to run, but that’s for another day.)

CORRECT: It’s dumb to fine people for working. The right of self-ownership means everybody has the full right to ownership of 1) himself, and 2) the fruits of his labor or anything he may exchange his labor for. Therefore, don’t tax seats, heat, or feet, to borrow from the Beatles.

By extension, neither should governments fine those who employ other people or capital goods in productive enterprises. Nor  use the promise of a cradle-to-grave managerial welfare state (which mostly fails even in a temporary band-aid sense), which distracts us from the task of securing actual justice — a superior goal by far.

INCORRECT: The assumption that multmillionaire recording artists have “earned” all of their multimillions simply through talent and hard work. Everybody senses it’s not right that a tiny few get showered with millions while the vast majority, many of them equally or more talented, can only scratch out a modest living — or no living at all. In a truly free entertainment market  you wouldn’t see this. The best artists would probably make about as much as the best truck drivers. (Which is nothing to sneeze at, by the way; at least, it wasn’t when the economy was truckin’ along a few years back.)

The problem is that for most of its history the entertainment industry has been sheltered from free competition in various ways. Maybe later I’ll do a piece illustrating those factors. For now, I’ll just mention a few that I can think of. (Fraud, thuggery and payola, though rife in the music industry, are not the point of this piece.)

* Then, historically, in addition to recording and publishing, you have the nexus of the concert and broadcasting industries. The latter two industries depend upon natural monopolies. Venues occupy locations on land, and radio signals occupy frequencies — each a kind of monopoly in that such properties are in limited supply and that a location or class of locations can be said to be unique. Monopolies create monopoly rents to their owners — concert venues and radio/TV license holders. (You want to promote a show at this stadium? You’ll have to pay the house so much, which means you’ll have to charge fans so much …) Naturally, any artist who’s got her wits about her is going to demand as big a piece of this artificially inflated action as she can get.

The limited nature of radio and TV real estate worked to limit competition so that a relative handful of artists would become nationally and even globally famous.

Although digital tech and file-sharing have checked these industry privileges, the big entertainment conglomerates and their biggest acts still live off a long legacy of restrained competition, distribution and marketing dominance, and the accompanying paradigm of huge profits for a tiny few.

A geolibertarian government would not only limit copyright protection; it might completely abolish patent protection for inventions — another government protection that was originally designed to aid innovation, but now serves more to stifle it and fuel corporate monopolies. 

We’d have small governments to provide essential services that really can’t be run any other way (mostly natural monopoly stuff, like infrastructure, or police — though a few folks would differ even with the police bit).

Revenue would come from levies on the fair market value of titles to land and other state-granted licenses — a fair way to distribute the unearned, or socially created, value deriving from ownership of such licenses. (In addition to supplying revenue, we’d find that such taxation works far more effectively than antitrust regulation to break up monopoly and oligopoly.)

With rent as the revenue base, productive activities — working, capital formation, entrepreneurship — could, and should, be completely untaxed. We could stop fining people for being useful. 

Separating the unearned gains of monopoly and privilege, from hard-earned gains from productive activities, would allow us to liquidate the former, while enhancing the latter. This step would introduce a much-sought balance in our economy. Matt Bellamy from Muse gets it.

I don’t expect Adele to reply here for more info, but I bet she could catch up with Matt sometime and the two could have a nice chat — plus stir up some new tabloid publicity while they’re at it.

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