AH Challenge: Classical Liberal revival in the UK

How would you go about keeping Laissze faire policies the 'status quo' as such and so social issues becoming a significant divider between parties?
No idea; I am not really all that knowledgeable on British politics. Though I will note that I was thinking the other way around; I find it unlikely that laissez faire policies would be the status quo, but if we have two parties with more similar social outlooks (IE, neither can play the social conservative card;)), they'd have to differ themselves more on economic policy, which, in the Liberals' case, would likely be more to the right. This would get you one party that is closer than classic liberalism than either of the three major parties are today.
 
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No idea; I am not really all that knowledgeable on British politics. Though I will note that I was thinking the other way around; I find it unlikely that laissez faire policies would be the status quo, but if we have two parties with more similar social outlooks (IE, neither can play the social conservative card;)), they'd have to differ themselves more on economic policy, which, in the Liberals case, would likely be more to the right. This would get you one party that is closer than classic liberalism than either of the three major parties are today.

So basically if the Labour party went socially Libertarian?
 
Well I seem to remember that one Liberal MP proposed a negative income tax as a replacement to the welfare state and income tax, if this is implimented as a alternative to the welfare state the Liberals could be in business. This leads to William Beverege and the like defecting to Labour, whilst many tories defect to the Liberals after an unknown tory scandal, leaving a free market liberal party and a statist labour party as the two main contenders and a smaller tory party.

A negative income tax isn't a replacement for the income tax - it in fact relies upon the income tax to function. And while it is less statist than a welfare state in certain aspects, it's not a free market idea. I know that Friedman, et al. like it because it involves less bureaucracy than the welfare state, but it's still a massive intervention in the market distribution of income. At some point, they're just going to have to accept that they can't tolerate the full impact of totally free markets on society.

So you'd still see "New" Liberals vs. Labour, rather than "Classic."
 
A negative income tax isn't a replacement for the income tax - it in fact relies upon the income tax to function. And while it is less statist than a welfare state in certain aspects, it's not a free market idea. I know that Friedman, et al. like it because it involves less bureaucracy than the welfare state, but it's still a massive intervention in the market distribution of income. At some point, they're just going to have to accept that they can't tolerate the full impact of totally free markets on society.

So you'd still see "New" Liberals vs. Labour, rather than "Classic."

I don't really understand what you mean, why do you need an income tax if you have a negative income tax.

Also it's not a major re-distribution of income, just enough to prevent a layer of society being in absolute poverty. It works within a free market system, and whilst far from being a perfect free market it does however appease the general population who by this point want some kind of social reform and avoids the creation of the welfare state; I can imagine any reformed classical liberals accepting it as the price for a continued domination of UK politics
 
I don't really understand what you mean, why do you need an income tax if you have a negative income tax.

Also it's not a major re-distribution of income, just enough to prevent a layer of society being in absolute poverty. It works within a free market system, and whilst far from being a perfect free market it does however appease the general population who by this point want some kind of social reform and avoids the creation of the welfare state; I can imagine any reformed classical liberals accepting it as the price for a continued domination of UK politics

A negative income tax is essentially an attachment on the progressive income tax that redistributes wealth from the top brackets down into "negative brackets" for the poor. If we're talking about a redistributive tax policy that's not attached to the income tax, then the proper term is a Guaranteed Minimum Income.

And a GMI has major implications for the free market. One of the conditions of a free market is that income is dependent either on wage income or capital gains - by creating a GMI, you reorient the relationship of income to labor in a fundamental way. This is going to have massive implications on unemployment and wages - many low-wage workers are going to quit their jobs rather than work themselves to the bone for a pittance; the number of applicants per job is going to shrink dramatically, which increases wages and provides labor with much more bargaining power.

A GMI isn't cheap either. Just taking the U.S for example, we have 13% of the population living in poverty (or 39 million people). To provide a GMI that brings people up to the poverty line, which is too low to begin with, would cost about $624 billion a year (39 million people times $16k for an average household of 2.59 persons).

You cannot fund a GMI without taxing wealth - whether we're talking about income, inheritance, property, or capital gains, the revenue has to come from somewhere. Which means we're shifting 4.4% of GDP annually from the rich to the poor - a classical liberal will tell you that this is an unconscionable attack on property rights.

But part of where I think you and I are at odds on this is what our definition of free market is. I would define the free market as commodification in land, labor, and credit without restriction or remediation from the government. If that's not what your definition is, I don't see why the welfare state should be any more of a divergence from the free market than a GMI, unless we're rather arbitrarily defining non-free market as "income transfer programs but only if they involve large numbers of administrators."

I'd also note that we're only talking about the welfare state here - how are we possibly going to avoid a regulatory state in the face of the massive social and environmental externalities caused by the industrial revolution? How are we going to deal with a rising union movement is at an ebb in 1929 at 29% of the workforce, and will by the late 30s return to growth and peak at about 50% of the workforce?
 
A negative income tax is essentially an attachment on the progressive income tax that redistributes wealth from the top brackets down into "negative brackets" for the poor. If we're talking about a redistributive tax policy that's not attached to the income tax, then the proper term is a Guaranteed Minimum Income.

And a GMI has major implications for the free market. One of the conditions of a free market is that income is dependent either on wage income or capital gains - by creating a GMI, you reorient the relationship of income to labor in a fundamental way. This is going to have massive implications on unemployment and wages - many low-wage workers are going to quit their jobs rather than work themselves to the bone for a pittance; the number of applicants per job is going to shrink dramatically, which increases wages and provides labor with much more bargaining power.

A GMI isn't cheap either. Just taking the U.S for example, we have 13% of the population living in poverty (or 39 million people). To provide a GMI that brings people up to the poverty line, which is too low to begin with, would cost about $624 billion a year (39 million people times $16k for an average household of 2.59 persons).

You cannot fund a GMI without taxing wealth - whether we're talking about income, inheritance, property, or capital gains, the revenue has to come from somewhere. Which means we're shifting 4.4% of GDP annually from the rich to the poor - a classical liberal will tell you that this is an unconscionable attack on property rights.

But part of where I think you and I are at odds on this is what our definition of free market is. I would define the free market as commodification in land, labor, and credit without restriction or remediation from the government. If that's not what your definition is, I don't see why the welfare state should be any more of a divergence from the free market than a GMI, unless we're rather arbitrarily defining non-free market as "income transfer programs but only if they involve large numbers of administrators."

I'd also note that we're only talking about the welfare state here - how are we possibly going to avoid a regulatory state in the face of the massive social and environmental externalities caused by the industrial revolution? How are we going to deal with a rising union movement is at an ebb in 1929 at 29% of the workforce, and will by the late 30s return to growth and peak at about 50% of the workforce?

I think you misunderstood what I was saying, I was saying that you wouldn't have an income tax ONTOP of an negative income tax if you see what I mean. The citizens wage you're talking of does have significant issues you're right and that is why I am not proposing it.

Union membership is a significant hinderance to a deregulation along invisible hand lines, perhaps an organised business response and supply side ecconomics is used to tackle the depression restoring some faith in business?
 
I think you misunderstood what I was saying, I was saying that you wouldn't have an income tax ONTOP of an negative income tax if you see what I mean. The citizens wage you're talking of does have significant issues you're right and that is why I am not proposing it.

Union membership is a significant hinderance to a deregulation along invisible hand lines, perhaps an organised business response and supply side ecconomics is used to tackle the depression restoring some faith in business?

I guess I don't understand what you mean by on top of.

The thing is that union membership had been growing well before the crash. From 2 million in 1900 (approx 18%) to 4 million in 1913 (approx 30%) to 8.3 million in 1920 (52%).

The U.K tried to do a non-Keynesian approach to the Great Depression. In 1931, the government cut spending and public sector wages to balance the budget, in other words a liberal approach. That didn't work. Unemployment rose to 17%. They shifted off the gold standard and adopted tariffs, which is neither Keynesian nor liberal, but unemployment remained very high at an average of 14% throughout the 1930s (trending very slowly downwards).
 
I guess I don't understand what you mean by on top of.

The thing is that union membership had been growing well before the crash. From 2 million in 1900 (approx 18%) to 4 million in 1913 (approx 30%) to 8.3 million in 1920 (52%).

The U.K tried to do a non-Keynesian approach to the Great Depression. In 1931, the government cut spending and public sector wages to balance the budget, in other words a liberal approach. That didn't work. Unemployment rose to 17%. They shifted off the gold standard and adopted tariffs, which is neither Keynesian nor liberal, but unemployment remained very high at an average of 14% throughout the 1930s (trending very slowly downwards).

By that I mean that a NIT would obvs. incorporate a tax on income as part of it however you wouldn't be taxed under a NIT system and then have to pay MORE tax under a regular income tax system as well.

In terms of de-regulation and union membership, all I can think of is major crisis a la 1970's that the Labour government has to deal with in the 20's and forced them to take on the unions their natural supporters discrediting the idea of major regulation.

From the looks of the ideologies poll the classical liberal revival can begin on AH.com :p
 
By that I mean that a NIT would obvs. incorporate a tax on income as part of it however you wouldn't be taxed under a NIT system and then have to pay MORE tax under a regular income tax system as well.

In terms of de-regulation and union membership, all I can think of is major crisis a la 1970's that the Labour government has to deal with in the 20's and forced them to take on the unions their natural supporters discrediting the idea of major regulation.

From the looks of the ideologies poll the classical liberal revival can begin on AH.com :p

Ah, I see. There wouldn't be two separate taxes, but rates might need to be higher to fund the transfer plus regular government, but that depends on the overall budget.

If Labour has to "take on the unions," that's essentially what happens in 1931 with the split of Labour under MacDonald. It didn't lead to more laissez-faire government, but rather a long period of Tory rule that the union movement survived and recovered from. So I don't know if that'll do it.
 
Ah, I see. There wouldn't be two separate taxes, but rates might need to be higher to fund the transfer plus regular government, but that depends on the overall budget.

If Labour has to "take on the unions," that's essentially what happens in 1931 with the split of Labour under MacDonald. It didn't lead to more laissez-faire government, but rather a long period of Tory rule that the union movement survived and recovered from. So I don't know if that'll do it.

Perhaps the creation of a major (i.e. Germany, France, USA, Russia etc) socialist/marxist state in the 20's and installs major regulation/control that fails by the 1930's and sets in place a revival of classical liberal thought
 
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