By DeusExMacintosh

Godwin’s law (also known as Godwin’s Rule of Nazi Analogies or Godwin’s Law of Nazi Analogies)[1][2] is a humorous observation made by Mike Godwin in 1989 which has become an Internet adage. It states: “As an online discussion grows longer, the probability of a comparison involving Nazis or Hitler approaches 1.”[3][2] In other words, Godwin put forth the hyperbolic observation that, given enough time, in any online discussion—regardless of topic or scope— someone inevitably criticizes some point made in the discussion by comparing it to beliefs held by Hitler and the Nazis.

The trouble is, it’s TRUE…

(Please note, for once the photoshop job on the right wasn’t actually mine. Credit goes to the Black Triangle – Anti-Defamation Campaign in Defence of Disabled Claimants on Facebook)


  1. Posted January 25, 2011 at 11:31 pm | Permalink

    Just looked at Atos.

    Yep – bleat on about accessibility – but still most of their publications are provided only in PDF, something the Australian Human Rights and Equal Opportunity Commissioner notes can still be quite inaccessible, while Atos (and others) say “ok you can always save it as text”, any tabular data is rendered a random mess, something that wouldn’t happen with tables in HTML documents.

    The Commission’s advice, current October 2010, is therefore that PDF cannot be regarded as a sufficiently accessible format to provide a user experience for a person with a disability that is equivalent to that available to a person without a disability, and which is also equivalent to that obtained from using the document marked up in traditional HTML.

    Accordingly, organisations that publish documents only in PDF risk complaint under the DDA unless they make the content available in at least one additional format and in a manner that incorporates principles of accessible document design. Additional formats should be published simultaneously with the PDF version, and at least one such format should be downloadable as a single document if the PDF version is available as a single download.

    Yeah, ATOS assesses disabilities, but at least in this instance, they don’t understand the hurdles placed BY THEM on the victims put under their tender mercies, let alone have the competence or compassion to make life easier for people.

    And these ignorami give the government advice?

    If I can note that in a within a few seconds of hitting their website, then what other failures of competence or compassion are tucked away in their offices, out of sight of the public?

  2. Posted January 26, 2011 at 6:56 am | Permalink

    That is, unfortunately, very funny, in a bleak British way.

  3. Nick Ferrett
    Posted January 26, 2011 at 7:02 am | Permalink

    The principle is true as far as it goes, but it’s incomplete. The next stage after the comparison with the Nazis is the person who complains that the person who acted like a Nazi wouldn’t have done so if he hadn’t been provoked by the Jews.

  4. Posted January 26, 2011 at 9:40 am | Permalink

    DM: It’s all “TRUE” – do you mean, that the comparison will certainly arise (something I recall from high school debating long before Godwin put his name on any law) or that the comparison is true?

    Well, it’s true that care or assistance for the disabled has to come in money or kind from somewhere, and if it’s from the government, it’s ultimately from everyone, either as taxpayer or alternative claimant for government expenditure.

    Maybe that’s more of a truism than true, but it’s hardly an observation unique to National Socialists (think, for example, of workers compensation and motor accident compensation schemes).

    The distinctive bit of the Nazi response was the bit which went quite a long way beyond simply withholding or reducing government expenditure.

    Invoking Godwin’s Law seems to be having your polemical cake and eating it. Then again, I guess in the circumstances you need to be able to laugh at something.

    Unless you have some other proposal about where the money should come from, isn’t there at least an argument to be addressed about means-testing DLA?

  5. Posted January 26, 2011 at 9:53 am | Permalink

    Atos are basically doing medical tests and returning results to others, results that can have a significant impact. This is no different from what a pathology lab does.

    Which makes me wonder – are those tests they are doing subject to any form of quality control?

    I once worked in a non-profit path lab (we also did epidemiological research and preventative stuff, industrial hearing tests…- fun work – could have my baby in a sling while I worked – best job ever).

    Every year, we’d get sent samples from the national testing labs. Of course, we didn’t know the samples were from the national laboratory. We just knew we’d get them dribbled across the year.

    The national testing mob knew EXACTLY to the umpteenth decimal point what they had sent, and could thus get a damn good idea of how good or bad a particular lab was at their job. Not good enough – lose accreditation.

    Our lab was consistently in the top 3 in the country – and we were /extremely/ proud of that.

    So… is Atos, and any other disability assessor subject to similar quality assurance measures by the government? What procedures does Atos apply internally to ensure that their employees are competent, and don’t slack off?

    Either the government does a statistically valid number of quality assurance procedures by sending “prepared samples” to disability assessors, and by “preparation” I mean thoroughly assessed by a group of top-in-field types so there is NO argument if the Atos assessor is wrong, then the government isn’t regulating properly.

    What’s the bet there are no assurance checks, no “shape up or you lose accreditation” warnings for quality of assessments by Atos, merely “You haven’t kicked enough people in the guts lately – toughen up”, with all the biases of the kinds of doctors that are paid big bucks by insurers to say the patient hasn’t got a problem?

    How does the government assess the abilities of the likes of Atos objectively?
    (Yes…. hints at DEMs earlier post on objective and subjective).

    Who assesses the assessors?

  6. Posted January 26, 2011 at 11:47 am | Permalink

    [email protected] said

    Unless you have some other proposal about where the money should come from, isn’ t there at least an argument to be addressed about means-testing DLA?

    Actually, the question in this instance is “where are the savings coming from?”

    On other related threads here,

    (1) the demonstrably low fraud rate which means the bottom line could even be worse off if the assessment regime is expensive.

    (2) the regs are sloppy, the assessment could be done, in DEMs words, by a bulgarian homeopath. Means testing of money by looking in a bank account is easy, assessing function is hard, especially for unpredictable variable-course conditions with good days, bad days, and “spoons” involved. I’ll bet you’ll be cut off automatically with little appeal if you are hit with a bad day, can’t make it to the assessment, or get halfway there and have to head home suddenly.

    The other thing to remember is that added stressors, even the worry about being cut off let alone the extra difficulties of living after an allowance is cut, will have a significant negative impact on many conditions, causing a more rapid decline in function, or longer and more frequent “bad days”, and thus increase the costs of care of the individual. For many folk, cuts in state benefits can lead to increased costs to the state – the changes could yield a negative return.
    Prudent spending requires giving a little extra as a safety margin, a little too little, and the person gets pushed across the threshold of a “higher care needed” bracket. It’s just like prudent filling of petrol tanks involves at least a little more than estimated for the journey – run out of fuel before you get there and you are paying big bucks for a taxi or something.

    And then there’s the money multiplier effect – $1 taken from the hard-done-by means two or three bucks subtracted from economic activity, while $1 taken from a financier means $1 less in a cayman islands account. If the objective is government budget rebalancing, the low-hanging fruit with highest cash return on effort should be the first target.

    Oh, the low-hanging fruit isn’t the easy money, it’s the easy victim the government is after, the easy way of appearing hairy-chested to the majority of voters.

    Strange… the tabloids will go “shame shame shame” when a mugger bashes a person in a wheelchair for a near-empty wallet…

  7. Posted January 26, 2011 at 4:01 pm | Permalink

    [email protected],

    My reading of the relevant report suggests that there is not a demonstrably low fraud rate at all. Rather, there is a low demonstrable fraud rate (0.5% of payments), which is not quite the same thing.

    Most overpayments identified in the review used to determine the relevant figures were classified as arising as a result of a change in customer circumstances (7.8% of payments). I’m not sure the fraudulent/non-fraudulent distinction is really the relevant one. And all of this begs the question of the efficacy of the review system from which these figures were derived because so much of the information still comes from the person being reviewed. Absent dobbers or flagrantly inconsistent other evidence or employment information caught by data-matching, we just don’t know how much of that 7.8% is a testimony to the honesty of people being reviewed, or equally, how many people are not included in that 7.8% but might be if they were less careful or more honest reviewees.

    I’m wary of distinctions based on differences in fraud rates for DLA as opposed to other benefits because, as far as I can see, that says more about definitional differences as a result of different legislative policies than any inherent differences in the claimant groups or their relative desert or blameworthiness. It reminds me of the onetime distinction between blood-transfusion contractors of AIDS/HIV (good, deserving, victims) and drug-users and gay men (bad, undeserving, maybe-not-even-really- victims). Of course, the distinction between the deserving and the undeserving poor goes back further than that and is one which almost always carries a lot of baggage.

  8. Posted January 26, 2011 at 4:37 pm | Permalink

    And is almost impossible to shift, Marcellous, hence the ubiquity of means teasting. Which, as Milton Friedman points out leads to the demonization of benefits recipients coupled with – as Beveridge pointed out – high effective marginal tax rates that hit the poor hardest. The best evidence on welfare economics we have indicates that benefits should be low, but universal. Unfortunately, that involves the right giving up the distinction between the worthy and the unworthy poor (or AIDS victim, for that matter) and the left giving up progressive income taxation. When I was wonking for the Tory party, I used to think this was possible. I now have serious doubts.

  9. Posted January 26, 2011 at 5:07 pm | Permalink

    sl on wonking for tories.
    Side question: is VAT over there low non-offsetable and on each transaction, or large and worn only by the final buyer like GST in Oz? A flat-rate low transaction tax (philosophically similar to what banks do with credit cards or cheques) might keep both sides equally meh.

  10. Posted January 26, 2011 at 6:55 pm | Permalink

    Unless you have some other proposal about where the money should come from, isn’t there at least an argument to be addressed about means-testing DLA?

    So far I’m still pushing the same proposal I have been for the last six months which is to raise the tax-free threshold to £10,000 a year as was promised by the LibDems before the election. Do keep up.

    Means-testing DLA is pointless given that it’s a payment meant to address the extra care and/or mobility costs involved in having a disability or long-term health condition. Those costs will arise regardless of whether you work or not and how much money you have. In theory a disabled millionaire could qualify but as the form is sixty-one pages long and needs to be submitted with extensive medical evidence and requires an extended exercise in bureaucracy for the DWP to approve, most don’t bother for the extra £50 a week in higher rate mobility. The general economic principle is that means-testing costs as much to administer as it saves so with an applicant pool of less than 3 million it’s hardly worthwhile.

    You’ve got a better basis for arguing in favour of means-testing when it comes to income replacing benefits such as the former Incapacity Benefit and its replacement, Employment and Support Allowance.

    The deficit is huge, disability benefits are tiny. Pensioner benefits are huge (and have higher rates of fraud: 5.1% for Pension Credit) but are ring-fenced. The crips aren’t the cost problem so why make us the scapegoats?

    Here’s a useful test: I’ve been having a really bad year so recently I applied to have my DLA Care award (currently for an indefinite period at the middle rate) reviewed. I sent in a letter from my carer, the warden of my sheltered housing scheme, my neurologist and my GP together with the latest nerve conduction test done by a senior NHS neurophysiologist and a liver function test (because the paracetamol pain relief is causing liver damage) plus the list of all my latest medication – it’s a long one.

    Now let’s see if I need a ten minute interview with a Croatian physiotherapist to judge whether I’m really disabled or not…

    @”it’s TRUE” – not only is the comparison being made, there is also a reasonable basis for it.

  11. Patrick
    Posted January 26, 2011 at 7:40 pm | Permalink

    DB, your wet dream doesn’t exist in any civilised economy. It would not be a ‘value added tax’ if it was that, nor a sane idea.

  12. Posted January 27, 2011 at 9:48 am | Permalink

    Yes… Something fishy about Atos, essentially an IT company with a core business of identity management.

    I wonder if they thought up their health assessment division after discussions with a government to merely provide a software package, probably after a tongue-in-cheek comment by a sales rep was thought a serious proposal by a government, like a publisher saying “we do textbooks, maybe we can supply teachers and examiners too”.

  13. Posted January 27, 2011 at 12:38 pm | Permalink

    On the original post, it is striking that there is no equivalent “Godwin” rule about Lenin, or Stalin or Mao, or Pol Pot. Hitler and the Nazis as figures of evil are much more “live” in our culture.

    This reflection was prompted by a piece noting that Hollywood has made its first Gulag film, directed by Oz director Peter Weir:

    I haven’t found any reviews, so far, that hail this as Hollywood’s first Gulag movie, perhaps because hardly anyone noticed that there weren’t any before. Weir told me that many in Hollywood were surprised by the story: They’d never heard of Soviet concentration camps, only German ones. “If you need to explain what a film is about,” the film is in trouble – and this one almost was. Weir had difficulties getting it distributed and some problems explaining the final scene to his financial backers.

    Partly because the Nazis preyed on “people like us” (white folk of Western European stock). There is also that Lenin, Stalin, Mao etc had “respectable” advocates in the intellectual/literary/artistic culture much more, and much longer, than Hitler did. And that there are no “what our troops found” newsreel footage for the the Lenin, Stalin etc killing grounds: there are a bit for Pol Pot’s madness, while he also had the least advocates, and so he ends up as being a symbol of evil far more than Lenin & co.

    The “people like us”, the “power of pictures” and the “advocacy” effects producing a striking inconsistency. So that allegedly educated and knowledgeable for had “never heard” of Soviet concentration camps. And the “Godwin rule” itself expresses that unbalanced historical memory.

  14. Posted January 27, 2011 at 8:44 pm | Permalink

    Just saw this on “openDemocracy” about whether the UK gov is serious about wanting to balance the budget fairly.
    Coalition’s interests lie in business not fairness.

    On taxes, the rise in VAT to 20% will hit the poorest hardest, according to the IFS. For business, they are to be treated to a staggered decline in corporation tax, falling to 24%

    Were deficit reduction the Coalition’s primary focus, maximising tax intake would be high on the agenda. Avoidance is estimated to cost the economy £25bn a year, and evasion £70bn. But HRMC, tasked with bringing this money in, are facing 15% cuts.

    While the government’s new strategy for reducing benefit fraud, according to the Association of Revenue and Customs, is likely to harvest £3 for every £1 it spends; money invested in HMRC to deal with tax avoidance and evasion brings in £60 for every £1 spent

    DEM – your opinion on the best way of getting the money – increased enforcement on the likes of yourself, while decreased enforcement on the wealthiest?

  15. Posted January 27, 2011 at 9:17 pm | Permalink

    DEM @ 10

    Means-testing DLA is pointless given that it’s a payment meant to address the extra care and/or mobility costs involved in having a disability or long-term health condition. Those costs will arise regardless of whether you work or not and how much money you have.

    [emphasis added]

    I don’t think an argument from what the DLA was intended to do will cut the mustard. It doesn’t answer the means test argument which says the question is not whether the costs will arise, but whether without inhumane hardship the potential claimants will be able to meet them themselves or [ominous note] otherwise than by state subventions.

    SL, @8, are you sure that the shades of Beveridge and Friedman would really be so comfortable being cited together in the way you have done so? Surely, their assumptions were rather different. Without calling you names, that seems a spot of quotation collage of which even our own (ie, Australia’s) Gerard Henderson (remember him?) could be envious.

  16. Posted January 27, 2011 at 11:02 pm | Permalink

    Okay Marcellous, now you’re just being a b*tch. Stop it. SL was paraphrasing me from If you tolerate this your pension will be next.

    It doesn’t answer the means test argument which says the question is not whether the costs will arise, but whether without inhumane hardship the potential claimants will be able to meet them themselves or [ominous note] otherwise than by state subventions.

    Not everyone agrees what means-testing is for, though there is plenty of econometric evidence for what is DOES. British politicians have acknowledged that DLA is intended to be about evening-up the playing field for people with disabilities to take full part in society despite being faced by additional costs. Now that can easily degenerate into an argument about whether it’s attempting to engineer equality of outcome (favoured of the left) or equality of opportunity (favoured of the right) but you are right that DLA was not the kind of thing Beveridge had in mind. Beveridge was a lot more to the right than most people suppose – read the report, it’s an eye-opener and NOTHING like the bloated welfare system we are now saddled with. Hence my point in that piece that his Report had never actually been tried.

    DLA doesn’t go very far towards the actual costs of meeting most people’s Care or Mobility Needs (£50 a week High Rate Mobility: Indoor/Outdoor Powerchair £8,000+ retail for example) but it is an acknowledgement that it costs more to be disabled and that every disabled person is disadvantaged by that.

    Bringing in means-testing seems mostly to be an argument over the level of existence we should or can afford to support for those with disabilities – medical model: merely sufficient to avoid your “inhumane hardship”, or social model: to allow disabled people full integration in work and society. The former costs less directly, but the latter may cost less indirectly in the longer term by increasing the chances that a disabled person can work and become a taxpayer. It won’t guarantee it, but then cracking down on benefit fraud is going to be so intrusive and expensive that it won’t guarantee savings either (if they really raise £3 for every £1 they spend, I’ll eat my akubra. More like £3 spent for every £1 saved.)

    The argument is how to balance what is right with what Britain can afford. As SL asks, have we reached the limit of what a modern western welfare state can afford? How do you recruit Dave Bath’s “asymmetrically talented” [love it Dave, thanks for that] back into the economy without us costing more than we produce? Costs are reduced for the able-bodied by mass standardisation (of equipment, systems and conditions) in the workplace but AT people need personalisation (of equipment, systems and conditions) in order to capture their labour. You end up doing a CBA on everyone with a disability to see whether they’re “worth it” financially.

    THAT I don’t have so much of a problem with. I’m pro-capitalist, so I want to have an economically productive household (can you tell my family is Scottish?). What really arcs me up is when the question becomes whether disabled people are “worth it” morally. Are we worthy poor? Are we worth the effort? Does economic productivity become the measure of whether our earthly existence is even justified (which is what drove the Nazi T4 Euthanasia program and the compulsory sterilizations of the “genetically unfit” in the 1940s). I’d say no and that history teaches us we should be very careful that this distinction is made.

    As SL has also said, there are some places you really DON’T want your society to go…

  17. Posted January 28, 2011 at 12:19 am | Permalink

    Lorenzo @15: re: unbalanced historical memory. Ask an Armenian.

    Apologies again, your post was eaten by the spaminator and I wasn’t fast enough to catch it. I have deleted the multiples.

  18. Posted January 28, 2011 at 1:09 am | Permalink

    Yes… Something fishy about Atos, essentially an IT company with a core business of identity management.

    Dave, ATOS is owned by US insurance firm Unum Provident.

    … California regulators will charge UnumProvident with more than 25 violations of state law, allegations that the company will neither admit nor deny in favor of settling the case.

    Among the charges: that the company knowingly applied the wrong legal definition of disability in denying claims or ruling claimants were able to go back to work, targeted high-cost claims for denials to save the firm money, misused claimants’ medical records and even the opinions of in-house medical personnel to deny benefits and wrongly sought to file cases under a federal benefits law that severely limits claimants’ ability to successfully sue their insurers.

    Regulators said they uncovered violations of state law in nearly one-third of a random sample of about 1,000 claims handled by UnumProvident.

    “UnumProvident is an outlaw company. It is a company that for years has operated in an illegal fashion,” said California Insurance Commissioner John Garamendi. “Our settlement is designed to make it a poster child of a legal company.”

    I think they’re banned from operating in a couple of states now.

    At the same time a new research centre was being set up at Cardiff University, funded by an American based multinational, Unum Provident, who provide sickness insurance cover to employers. The opening of the £1.6 million UnumProvident Centre for Psychosocial and Disability Research was attended by Works and Pensions minister Alan Johnson and Wales’ First Minister Rhoddri Morgan.

    The aim of the centre is to find out why so many people go off sick with what it refers to as “complaints which cannot be understood in the same way as more identifiable diseases”. The kinds of conditions they have in mind are stress, depression and ME/CFS. The centre is particularly interested in “the doctor/patient relationship and how this affects an individual’s reaction to their illness”. The centre aims, within the next five years, to “facilitate a significant re-orientation in current medical practise in the UK” in order to “bring benefits to employers, insurers and to society as a whole; but more importantly, it will benefit the individual who is healthier and happier when actively involved in work.”

    Or, to put it another way, the research centre hopes to persuade GPs to stop signing so many people off sick with conditions like stress, depression and ME.

    And the person who is to head this new centre, bringing increased wealth to UnumProvident shareholders and big savings to the DWP?

    Step forward Professor Mansel Aylward CB, former Chief Medical Officer at the DWP, recently appointed Chair in Psychosocial and Disability Research at Cardiff University and now Director of the UnumProvident Centre for Psychosocial and Disability Research. And those of you with less “identifiable diseases” rejoice: within five years the Professor of Limited Feedback will have you healthier, happier and back at work.

    Unfortunately this [email protected] has the ear of IDS when it comes to Incapacity Benefit and DLA reform. Senior ATOS staff are usually advisors on the DWP advisory panels (they’re often former DWP staff) and now they’re also bidding for a slice of the [Welfare to] Work Programme… despite being the ones whose “medical professionals” decide whether you’re too disabled to work or not (usually not).

    Can you say ‘conflict of interest’?

    More info here.

  19. Patrick
    Posted January 28, 2011 at 4:02 am | Permalink

    DB, I am 99.99% confident that the stats you cite on the return on money invested to fight tax avoidance are utterly wrong.

    No developed country has ever reaped anything like that kind of pay-off from additional tax enforcement, and I can’t imagine that there is anything so exceptional about the UK.

    As for the cuts in corporation tax, if you think corporations are really people who pay tax, more power to you, I guess. I think there is a broad consensus that cutting corporation tax makes a lot of sense if you want the economy to grow beyond the rate of immigration – in fact I am not aware of a serious contrary recommendation to any government besides Latvia (starting rate: 10%) in the last 10 or more years. Not from IMF papers, not from OECD papers, not from various Treasuries or government bodies like ours (the Henry Review and Ralph Report were pro-cutting) and not from anyone besides mildly deluded eurocrats (who are excluded by the qualifier ‘serious’ above).

  20. Posted January 28, 2011 at 5:13 am | Permalink

    [email protected] Thank you and indeed. I was once at an academic conference where an Arab academic was wittering on about mass murder being a plague of Western not Muslim history: to this day, I regret not yelling out ‘who remembers the Armenians?’.

  21. Posted January 28, 2011 at 5:27 am | Permalink

    [email protected]

    are you sure that the shades of Beveridge and Friedman would really be so comfortable being cited together in the way you have done so? Surely, their assumptions were rather different. Without calling you names, that seems a spot of quotation collage

    [email protected] has partly answered this: you are working off a mythical view of Beveridge, who was a British Liberal. You are also working off, I suspect, a mythical view of Friedman, who advocated negative income tax: he observed if you took all the money government in the US was spending to stop poverty and divided it amongst the poor people, no one would remain officially poor: so why not give them the money directly in the easiest and simplest fashion?

    No one has ever implemented Milt’s radical suggestion, apart from local trials, though such measures as the US earned income tax credit and the Australian Family Income Supplement-cum-Family Allowance-cum-Family Tax Benefit are derivatives.

  22. Posted January 28, 2011 at 8:35 am | Permalink

    [email protected] – read those links – I had only bumped up one level in Atos ownership so hadn’t found Unum, but so much of what you point to, taxpayer funds going without oversight or appeal, … it is surreal.

    My analogy with lack of path lab accreditation and quality assurance underestimated the horror.

    Atos as judge, jury and executioner, with no appeal, the opinion of DEMs “Bulgarian nurse”, after a two-week training course in disability assessment , trumping any number of specialists or deans of medical faculties… Imagine if tax investigators or police prosecutors had the same unquestioned authority? Can anyone say the words “procedural fairness”. And it’s not just guilt-by-accusation of individuals, it’s of an entire class of people.

    As to the institute at that welsh uni – it’s just like the health minister taking acting on the advice of the “Philip Morris Lung Cancer Epidemiology and Aetiology Institute”…. Even “Sir Humphrey” and “Frank Weasel” combined couldn’t ratonalize that.

    I’d have thought this is the sort of thing that one political party would use to slaughter another in government. Lay down misere.

    [email protected]: My opinion on the RoI of investigating tax avoidance by the big end of town is colored by once working within earshot of a famous yacht-loving amnesiac mining/media magnate and watching 20-odd billion (yes, with a B) go “off the books” in one hit. Whether hassling the disabled returns £3 for £1 or £1 for £3 of investigation as DEM suggests, it’s still an abysmal investment when investigations of the big end of town are cut, given the numer of countries supported almost totally by being tax havens.

  23. Patrick
    Posted January 28, 2011 at 10:11 am | Permalink

    given the numer of countries supported almost totally by being tax havens.

    Presumably someone of your humanitarian bent would consider that a reason to allow them to continue supporting themselves?

  24. desipis
    Posted January 28, 2011 at 12:12 pm | Permalink

    Presumably someone of your humanitarian bent would consider that a reason to allow them to continue supporting themselves?

    Just like humanitarians advocate allowing bank robbers and pirates to keep doing what they’re doing because those people need to support themselves too?

  25. Patrick
    Posted January 28, 2011 at 1:31 pm | Permalink

    Well they break the law, and cause harm to people. Tax havens do not usually break any laws, nor, often, do the people who use them.

    In fact, tax havens substantially facilitate international commerce by providing certainty and tax-neutral intermediate jurisdictions. The only differences in practice between Australia’s ‘Australia as a regional financial centre’ regime and the average tax haven’s offshore companies regime are:
    – the Australian version comes with conditions such as using an Australian investment advisor;
    – the Australian version is tightly ring-fenced and aggressively policed by the ATO; and
    – the Australian version requires you to sift through 16,000 pages of tax law to be certain that it works!
    Whereas, if you want to invest in a variety of jurisdictions from a variety of different investors, you know that the Caymans won’t tax you on the mere pooling of the funds.

    I.e. we are trying to do exactly what they are doing but because we can’t abide the thought that a single dollar might escape we make it practically quite uncertain, whereas they make it practically quite certain.

  26. desipis
    Posted January 28, 2011 at 2:06 pm | Permalink


    Perhaps I think I need to make my point clearer. “Humanitarians” want everyone to have the opportunity to create their own wealth. Bank robbers and pirates don’t create wealth, they simply take it from others. This is why we create laws as a disincentive. Tax havens facilitate people take wealth from others (tax payers) by not paying their fair share of tax, but still utilising the services the taxes provide. Strictly speaking it’s not about stopping countries from having low taxes, rather stopping people from using those countries to avoid paying taxes in their own. Hence why I think there’s a case to create (and enforce) laws (or tax tax structures) to disincentivise using tax havens.

    we are trying to do exactly what they are doing

    Except we have over 300 times the population to support and huge amounts of infrastructure to maintain, which might not be possible with such a minimalist tax scheme.

  27. Posted January 28, 2011 at 2:43 pm | Permalink

    [email protected] The largest tax haven in the world is the US, which does not tax interest on capital deposited by foreigners. This is why attempts to get international treaties against tax havens fail. The US State Department might get interested from time to time, but then Treasury and Commerce veto any such idea.

    Also, you are suggesting all taxation is worthy, a bit of a long bow. Competitive jurisdictions have a long history of encouraging better behaviour by states. For example, by punishing taxation rates that got too out of whack with benefits or sense.

    Competitive jurisdiction effects can work out in complex ways: the Serene Republic of Venice (C15th-C16th), the Dutch Republic (C17th-C18th) and the United Kingdom (early C19th) were the highest taxing states of their time but they also provided the highest level of public goods, so folk accepted the trade off.

  28. desipis
    Posted January 28, 2011 at 3:04 pm | Permalink


    I don’t have a problem with competitive jurisdictions. It makes sense for a business to move to a low tax location because it doesn’t make use of the high tax services. I’m not objecting people or business migrate to other jurisdictions because taxes are too high. The problem is when the business is making use of the high tax services but using accounting to move tax liabilities to the low tax location.

    It’s generally why I think asset taxes (land tax, resource tax, etc) are better than income or profit taxes as you can’t shop around for a low tax jurisdiction.

  29. kvd
    Posted January 28, 2011 at 3:41 pm | Permalink

    [email protected] “The largest tax haven in the world is the US, which does not tax interest on capital deposited by foreigners”

    Reference http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#International_aspects:

    “Federal rules tax interest, dividends, royalties, and certain other income of foreign persons at a flat rate of 30%”

  30. kvd
    Posted January 28, 2011 at 3:48 pm | Permalink

    Or, Lorenzo, are you shorthanding for tax treaty offset credit in originating country?

  31. Posted January 28, 2011 at 5:38 pm | Permalink

    L @ 21:
    I’m not sure that DEM said I was working off a myth of Beveridge or that either of you could know – I once lived with someone who did a PhD on him so I have some vague second-hand memories and of course I’d had the benefit of DEM’s previous post to refresh them.

    [email protected]

    I was puzzled for a moment about the accusation of bitchery and then (after a very little research – I didn’t need to actually click through to the links) I really had to laugh. If it’s what I think you mean, I had quite forgotten Henderson’s past engagement with SL. It just goes to show that irony is tricky on the page. I still think that citing Friedman and Beveridge was a bit of a cheap trick of a kind familiar from Henderson’s work, but the “(remember him?)” was because if I weren’t in Australia and subject to his existence here as a public opinionator, I expect I’d find him pretty immemorable.

    So where and how do you think HMG could or should shave its expenditure instead? Once you ask that question, I don’t think it is quite correct to say as you do @10 that “the crips are not the costs problem” because everything is a costs problem – some things are just bigger costs problems than others.

    Otherwise, you’re winning me over (he concedes reluctantly).

    Still don’t think the Nazi line is such a good one though.

  32. Patrick
    Posted January 29, 2011 at 3:50 am | Permalink

    [email protected], Lorenzo is half-right as are you. The US is one of the world’s biggest contributors to tax minimisation globally thanks to the corporate structures available in the US, most notably the Delaware LLC.

    However, the rules are more complex than you describe with respect of interest. I think the way it works is that whilst you are right, section 861(a)(1)(B)(ii) then deems foreign branch interest to be non-US sourced for individuals.

    Whereas the rules you are describing are correct they only apply to US-sourced income. Also they are usually reduced substantially under a treaty, and the US has the largest treaty network in the world.

    On the subject of appropriate tax bases you would be pleased to know that there is a substantial consensus that you are actually wrong! Economists will usually say that the taxation of profits is the least distortionary and most efficient tax, I believe, and the story of much of the last 20 years of international tax has been the rise to prominence of ‘the transfer pricing method’ which is all about how to allocate profits to which jurisdictions.

    The reality is that most large companies are not avoiding tax. Even when they use a tax haven, they are doing so only to get certainty that they can put money through a neutral entity without being taxed. It is more outrageous that most Western countries can’t provide that than it is that tax havens do provide it.

  33. Posted January 29, 2011 at 4:42 am | Permalink

    [email protected] I was relying on what an academic said at a seminar: silly of me. I am happy to be corrected on the details.

    [email protected] Lump sum taxes are the least distortionary. Refer to the Poll Tax in the UK to see how politically acceptable they are. The main modern use of lump sum taxes was when the Beijing regime changed the required crop levy to a lump sum, so peasants kept and could sell whatever they produced over quota.

    [email protected] The interesting question is how little tax havens are used. That again suggests one of those trade-off patterns are operating.

  34. kvd
    Posted January 29, 2011 at 5:13 am | Permalink

    [email protected] “Lorenzo is half-right as are you” – then I agree with about half of what you say;)

    My simple comment was directed to one small facet of the library full of tax laws each country seems to maintain, mostly dealing with exceptions to the “simple” rule that profits are to be taxed, just as wage earners are to contribute for the general requirements of a country. You are right that transfer pricing seems to have a whole separate wing to itself.

    [email protected] dunno if I agree with you about lump sum taxes? For example your China crop levy would be ok in good years, but quite extortionate in bad years. I think I prefer Patrick’s “taxation of profits” approach – unless the “quota” you refer to is set after actual production?

    Anyway, off-the-topic as usual; back to Hirtle.

  35. kvd
    Posted January 29, 2011 at 5:20 am | Permalink

    [email protected] note to self: sometimes not take Lorenzo as seriously as one is used to.

  36. Posted January 29, 2011 at 3:24 pm | Permalink

    Back on topic… The targetting of the disabled.

    On other threads, the incentive for couples, both on social security to maintain two separate residences, with state subsidies, was mentioned.

    Even if the money saved by cracking down on this was less than that saved from the disability allowance cuts (and I /do/ suspect cracking down on the disabled will lead to knock-on costs that outweigh any savings), there is another advantage to the least-well-off from a crackdown on the couples-with-two-residences rort: Increased availability of residences, whether entire dwellings, or just more rooms in shared accomodation.

    If supply/demand rules are as advertised, the crackdown on the rort would advantage the government (lower payouts), and possibly the poor through cheaper rents as real demand drops.

    If a crackdown on dual subsidized dwellings isn’t happening already, it’s probably because governments like supply-side constraints on housing – prices bubbling along to the advantage of property renters, and making people feeling wealthier than warranted by the unchanging utility of their assets.

    Then too, there are probably many more voters who either use the rorts, or easily imagine themselves being in a situation of wanting to rort.

    Hell, the social conservatives would probably like the notion that a crackdown on multiple residence subsidies for couples would create an incentive to increase stability of households.

    There are probably many other real rorts budget hawks could more effectively target for economic reasons, crackdowns that would cause less misery, cleaning up what I’d call “middle class welfare”.

    There’s no point hassling even the “unworthy poor” (a meme of little truth or use in my view) when they have so little discretionary income that can be clipped – unless you want them to starve to death and not be a problem any more.

    The more I hear about what is going on in the UK (through relatives of my ex still in the UK that are going through hell with funding hassles for care with an autistic son such going through a horrible period of aggression to himself and others), the more I suspect the government is going through a cynical exercise, one only possible because of many folk too stupid to envision themselves, or their loved ones, copping bad luck, and/or too heartless to care.

    Is it different here in Oz? I don’t think so: solidarity with flood victims is a very fashionable empathy, and we all know the weather gods are bastards, but will distribute their wrath to all over the long run.

    I’d be interested in hearing DEM’s opinion on why the government thinks demonizing the disabled isn’t a political millstone – whether they hope to keep the general public ignorant of the harshness of the policies, or whether the government thinks the public are heartless.

  37. Posted January 29, 2011 at 3:46 pm | Permalink

    This in today’s Age, Fighting for a voice, about a guy copping cuts to something more fundamental: his voice.

    Not only does the 24-year-old South Melbourne resident have autism, Down syndrome and attention deficit disorder, he also can’t communicate without the help of a computer keyboard and special carer – or facilitated communication.

    Mr Hickey’s disabilities make his achievements, including university diplomas and writing poetry, all the more remarkable. The prospect that he may be soon denied the tools that give him his voice is, for Hickey’s supporters, equally terrifying.

    The DHS is being inconsistent in funding arrangements, which are admittedly complex and expensive, but without funding for special accomodation and carers, the poor bastard will have to merely sit in a room and quietly go mad.

    A verse in a poem of Hickey’s:

    I’m in a boat without a compass looking for the way I need to steer. How I’ll make it to shore I don’t know. I just have to keep paddling and looking for lights.

    I’d expect such thoughts would strike chords in many with far fewer misfortunes.

    At least The Age publishes such stories, and I’d expect The Guardian would too, but to an already sympathetic readership, not the majority.

    The issues raised by DEM are probably not unique to the UK – studies in the US showing massive rises in narcissism and drops of empathy among tertiary students in the last couple of years – so there’ll be no obvious light on the hill from other countries to shame heartless governments and populations anywhere.

    Boy am I thankful the gods have given me as little grief as they have, and perhaps, thankful I have my chronic condition if otherwise I’d lack the empathy I’ve been blessed wih. Small enough a price to pay for being human.

  38. Posted January 30, 2011 at 11:06 am | Permalink

    [email protected] I am not advocating lump sum taxes, I am merely pointing out that, in the economic literature, they are acknowledged as the least distortionary (i.e. have least impact on behaviour).

    As for quota above production “being quite extortionate in bad years” — yes indeed, that is what Stalin did in the 1930s, particularly in the Ukraine. http://en.wikipedia.org/wiki/Ukrainian_famine“>Millions starved, so yes, quite extortionate.

    In “least distortionary”, there is a presumption that the tax is not so high as to impede continuing to live and work. That would be highly distortionary.

    [email protected] “Unworthy poor” is indeed a meme of little value. Either one is talking about harmful incentives — which are typically not created by the poor — or one is selling effortless virtue.

  39. Posted January 30, 2011 at 11:09 am | Permalink

    [email protected] I would have thought that being correct on misapprehensions, and having one’s thinking improved, is much of the point of commenting and reading a high quality blog such as this.

  40. Posted January 30, 2011 at 11:10 am | Permalink

    I need to go eat, my blood sugar is clearly dangerously low. My 38 should read ‘[email protected]’ and I failed to complete the link html.

  41. kvd
    Posted January 30, 2011 at 12:12 pm | Permalink

    [email protected] totally agree. And your link is perfectly workable as is, thank you.

  42. Posted January 31, 2011 at 3:25 am | Permalink

    Marcellous @31: accusation withdrawn. Please excuse my paranoia.

    So where and how do you think HMG could or should shave its expenditure instead? Once you ask that question, I don’t think it is quite correct to say as you do @10 that “the crips are not the costs problem” because everything is a costs problem – some things are just bigger costs problems than others.

    How about a nice simple start of 10-15% off government spending across the board, no ringfencing, no exceptions and see where that leaves us. If that’s still not enough and the consensus is genuinely that the current boundaries of ‘disability’ are too widely drawn to be affordable then redraw them with honestly in the cold light of political day instead of using “out-grouping” to stifle dissent. The downside of taking this too far is that society risks going back to the days of workhouses and dying in harness, which will now have associated NHS costs so it might be more useful in the short-term to start by applying the Swiss method – which is simply to require patients to be ‘signed-off’ by their specialist or consultant rather than a GP.

    Set a maximum proportion of annual departmental budgets that government can spend on privatisation or external consultants to incentivise better use of the public sector workforce (privatising the Work Programme when we have a large national network of JobCentrePlus offices with specialist disability advisors is sheer lunacy for example).

    If the bankers want to abandon the UK rather than control their bonuses then I’m of the “don’t let the door hit you on the arse as you leave” school. Unless the USA or Australia joins the european union we don’t have much to worry about. (There is also no such thing as too big to fail – the Bank of England can do a perfectly good job as retail bank of last resort in an emergency even if we hit the second dip of the W).

    I accept the government argument that having such a large segment of the working age population being “economically inactive” isn’t sustainable, but raising the tax-free threshold to £10,000 a year will make it worth working for even those on the lowest of wages. Calling people “lazy” achieves nothing. The Universal Credit achieves little more (as it pertains to reducing effective marginal tax-rates in particular).

    Control and reduce immigration into the UK – we’re an island so it shouldn’t be THAT hard, surely?! Yes, even from the EU, and even for skilled immigrants. Let the minimum wage rise naturally (though obviously that’s a longer-term solution).

    Then consider increasing income which I’d suggest by evening up government enforcement powers so that the same standards apply whether you’re talking benefits claims, tax reporting (individuals don’t get ‘let off’ their unpaid taxes, why should corporations?) or parliamentary expenses and increasing consumption tax takings by legalising cannabis and standardising the consumption and supply rules across cannabis, alcohol and tobacco. The end of prohibition in the States seemed to help drag the US out of the depression last century, it may also help here. When rules and standards are consistent, it costs less to police them.

    Dave @36:

    I’d be interested in hearing DEM’s opinion on why the government thinks demonizing the disabled isn’t a political millstone – whether they hope to keep the general public ignorant of the harshness of the policies, or whether the government thinks the public are heartless.

    Uh, because all they have to do is point back at Labour and say… “well YOU started it!” (Incapacity Benefit was abolished under the last Labour administration).

  43. Posted January 31, 2011 at 5:36 am | Permalink

    [email protected] “You started it” is pretty dumb for a government, as it suggests a positive feedback loop is a good thing, that a dialectic to reach appropriate measures is wrong. This would allow VAT to keep increasing indefinitely, for example, or more false premises used for wars.

  44. Posted January 31, 2011 at 8:43 pm | Permalink

    It’s quite difficult for an opposition to criticise the sitting government for acting on a policy that the opposition themselves came up with. It’s rank hypocrisy.

  45. Patrick
    Posted February 1, 2011 at 2:18 am | Permalink

    Oh, I dunno, Labor here criticised their own immigration policy pretty fiercely.

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