I had anticipated that I would be talking about the UK Election result, given that it was approximately in line with my expectations. However, as I only made those expectations public on my Facebook timeline, there seemed little point talking about it here.
On a related note, however, and following a discussion I had yesterday about the election, I thought it might be interesting to look at the phrases “tax and spend” and “magic money tree.” I’m particularly interested in the way in which these phrases frame the policies.
Copper Money Tree in Mirror Frame from 14 North Street
“Tax and Spend”
According to Wikipedia, Arthur Krock, in a 1938 New York Times article, first used the term ‘Tax and Spend’. The story goes that he was paraphrasing Franklin D. Roosevelt’s advisor, Harry Hopkins, who reportedly said, ‘We will spend and spend, and tax and tax, and elect and elect.’ Historically, of course, the “elect and elect” part was absolutely correct, Roosevelt being, at that point, half way through what would eventually be four (well, three and a bit) terms as President. The 22nd amendment, limiting presidents to two terms, was passed by congress two years after his death.
That paraphrasis – ‘tax and spend’ – has become an epithet, employed by the right to denigrate leftist policies that fall under that description. On its surface, it is accurate, and thus few leftists with ‘tax and spend’ policies have seen fit to change the terminology. This has been a mistake. The negative connotations of the term ‘tax and spend’ are concordant with the conservative aversion to higher taxes and “big” (read: interfering) government, and so on. As such the left has trapped itself in an inherently pejorative (and self-defeating) discourse that favours the right.
I thought it might be interesting to re-frame the concepts or, as Daniel Dennett and Doug Hofstadter would have it, “turn the knobs” on the “intuition pump” of ‘tax and spend’ and see what changes.
‘Spend and Tax’
We’re talking about three words here, so the only thing we can obviously do to the phrase itself is change the order of the words. What happens to your gut reaction when the phrase becomes “spend and tax”?
Spend
For starters, because only governments levy taxes, and the more ambiguous word “spend” is now the leader, the visceral reaction to “tax” is neutralized, or at least mitigated. Capitalism (laissez faire or otherwise), the market, commerce – the fundamental bases of Western civilization – all require people to spend. Surely the job of government, then, is to encourage spending? (Indeed George Bush encouraged Americans to “go out and shop” in response to 9/11.) The economy is a circulatory system, the more money moves around (changes hands) – in exchange for work, goods, services, etc. – the better.
Tax
Now that “tax” is second in the phrase it becomes more clearly a response to the spending, rather than a means to create the spending (in truth, the order in which these steps occur in the economy doesn’t matter as much as the order of the words when explaining it to the electorate… kind of ridiculous, but apparently true).
With the words in this order it becomes clearer that taxation is simply extracting the money from the top of the system that the government injected into the bottom of the system in the first place. This, then, is (almost) a zero-sum game – cyclical, and (almost) self-perpetuating. If those at the top of the circulatory system (businesses) are being taxed to take back the money that was injected at the bottom (and to pay for services that the businesses benefit from, including the “spend” policy), tax avoidance and austerity are put in their proper perspective. They are perfectly legal but, nevertheless, they are surefire ways to hobble the economy. Equal parts self-defeating and immoral.
Economy
If the economy was in better health, neither tax avoidance nor austerity would make sense, and that would be obvious from calling the policy ‘spend and tax’ and putting the elements of the policy in perspective. Tax avoidance is a case of companies taking money out of taxation, forcing the government to augment the tax yield in other ways. Austerity is one right wing approach to an unhealthy and indebted economy, but it, too, is constricting the flow of money through the economy. These are, therefore, the corporate and right wing government reactions to and causes of economic ill health.
If tax avoidance were to be reduced, taxation could be reduced. In a regenerative capitalist system, sales tax would be almost all that was needed to perpetuate this particular ‘spend and tax’ cycle (there would be other taxes for other things, but that’s beyond the scope of this post). Due to tax avoidance new ways of extracting tax from the system are sought, and new taxes are created to cover the short fall (and the cost of enforcement). In response to new taxes, new avoidance methods are invented, and so the arms race continues.
‘People Spend and Goverments Tax’
If the phrase ‘spend and tax’ was expanded to better describe the above process as ‘people spend and governments tax’, rather than the horrified kneejerk reaction that the original phrase seems to engender, a more sensible ‘well, duh!’ would be the norm. Sure, some individuals (or should I say individualists?) would still be up in arms, but public services require public taxation (there is, after all, no magic money tree).
In other words…
If we accept that the above description is broadly correct: the government puts money in at the bottom to catalyse spending, and then extracts that money at the top to feed it back in at the bottom (more or less), then we can call it other things that are more positively descriptive.
It occurs to me that any rebranding exercise needs to be conducted carefully. I have no doubt that the same kind of people that called Roosevelt “F.D. Russianvelt”, “Benedict Arnold 2nd”, and “Rattlesnake Roosevelt” would take great glee in turning any new phrase into ammunition (yes, the mentality that considers “libtard” an argument has been around for a while). For example, a “fiscal catalyst” would become a “fiscal cataclysm”, and so on. This is not an argument, but then changing “tax and spend” to “spend and tax” is purely a matter of rhetoric, not a change to policy.
Associating negative phrases with policies has a significant impact on whether they sink or swim, despite having nothing to do with the validity of the policies themselves. This is a primary tactic of the right, as witness the almost completely negative campaign of the Tories in the most recent UK election, and the success of Trump in associating his opponents with phrases such as “low energy”, “maniac”, and so on.
https://www.youtube.com/watch?v=EW06MlHVxuQ
Circulation
As I mentioned above, the economy is a circulatory system, similar to the human pulmonary system, the plant nutrient cycle, or an internal combustion engine. Maybe we can talk about the economy as the metaphorical engine of a given society, and maybe we can talk about injecting fuel into the system to get the system running. It’s probably not ideal to talk about a “choke” valve, however. Even with an explanation of the metaphor, it would take red-top “news” papers all of about 0.7 of a second to dub the policy as “choke and broke”. Again, this is not an argument, but it does taint the policy with a negative valence that will be extremely hard to shake.
Maybe we can talk about “priming”, squirting a little fuel into the engine to get it started. With the possible exception of certain connotations relating to the banking crisis, the word “prime” has a positive valence. Is it possible to argue against a policy of “fiscal priming”? On the basis of the words alone, unlike “tax and spend”, I don’t think so. Obviously, those who are paying attention to the actual policy, rather than just the words, will say, ‘but that’s just ‘tax and spend’ repackaged.’ The response to this would be something along the lines of, ‘Oh, no, ‘Tax and Spend’ unfairly targets businesses and big earners. No, we would reduce taxes on any earnings below the level of a living wage (which will positively benefit everyone), and slowly phase in a sales tax increase that would recoup that small initial loss as the money passes from living wage workers to local shopkeepers to suppliers and service providers and so on. This would increase spending in the economy from the bottom to the top, and would pay for itself.’ Needless to say, this is just a description of ‘tax and spend’, but if the interlocutor (let’s say they’re a conservative pundit) points that out, then they are also admitting that they are ideologically opposed to the fundamental basis of a healthy economy. That is unlikely to fly with the electorate and would be an own goal.
The “Magic Money Tree”
When I mentioned the various types of circulatory system that we could base our metaphorical description on, I listed the human pulmonary system, the plant nutrient cycle, or an internal combustion engine. I plumped for ‘priming’, a word more closely associated with the internal combustion engine, and with a generally positive valence. The thing about metaphors is that they are somewhat portable, that’s what makes them so useful as tools of thought. This also makes metaphors the source of errors of thought. If we are using the idea of a circulatory system, transporting the reality of spark-plugs from the combustion engine version of the metaphor to the plant nutrient cycle is unlikely to be helpful. Sure, a plant might have some aspect of organic chemistry that can stand in for a spark plug, but ignition is not an inherent part of circulation, and thus extraneous to the metaphor, and confusing to the intended recipient of the metaphor.
This complex plant nutrient cycle, is not useful as a metaphor.
Theresa May’s referring to ‘The Magic Money Tree’ with regard to Labour’s fiscal policies, rather than being a creditable attack on the policies, belies a broken metaphor, and a fundamental misunderstanding of circulatory systems on her part. A magic money tree implies that money is the foliage, or the fruit of the tree. This is incorrect. Money is the lifeblood (human pulmonary system metaphor), or the rising sap (plant nutrient metaphor) of the economy, prosperity is the fruit (of one’s Labour, as it happens).
An easily understood plant nutrient cycle as the basis of a metaphor.
Conclusion
I am suggesting that the framing of a given policy (and its inclusion in a manifesto) has more to do with success or failure at the ballot box than the reality of that policy/manifesto. Even once in play, people’s understanding of policy has more to do with its intuitive acceptability than whether or not it works. This, of course, is why simple answers to complex problems win votes, even though a few minutes of reflection/research will discount many simple answers as not up to the task. It is up to the people with more complex answers to come up with simple and intuitively appealing explanations. Not because the electorate is stupid, but because they are more concerned with their own collection of circulatory issues, most of which are short term and directly affecting them, rather than longer term, and affecting other people.
Further reading
The myths about money that British voters should reject, by Ha-Joon Chang
REGENERATIVE CAPITALISM: How Universal Principles And Patterns Will Shape Our New Economy
John Fullerton (formerly of JPMorgan):
My struggle to find a credible alternative framework for economics and finance sharpened my interest in the intellectual and scientific underpinnings of “systemic” or “holistic” approaches. I began by studying how we might apply the lessons of living systems to economic systems. Here my re-education became practical as well as intellectual. Through my impact investment projects, ranging from values-based banking to holistic rangeland management, I experienced the economic benefits of systemic decision-making firsthand. I have since observed the practical benefits of balanced social, economic, and ecological health demonstrated in more than 25 stories illuminated in Capital Institute’s Field Guide to Investing in a Regenerative Economy.
I then discovered that scientists were turning the rules by which living systems sustain and regenerate themselves into empirical principles of systemic health and development, which applied as much to nonliving systems, including economies, as to ecosystems and living organisms. The resulting synthesis produced an unexpected alignment of insights from fields ranging from physics and biology to sociology and even the core spiritual beliefs common to all the world’s great wisdom traditions. For me, the message became clear:
We can — and must — bring our economic theory and practice into alignment with our latest understanding of how the universe and our humanity actually work!