The Best Tax System on Earth Is in the Remote North Atlantic
Back in October I spent a week in the Faroe Islands reporting on their tax system, called TAKS. I interviewed the head of the tax authority, some government ministers, several academics, and a bunch of other folks. I discovered not only that TAKS keeps continuous track of all normal employment income and automatically adjusts your tax withholding on the fly, meaning most people never have to think about taxes at all, it also automatically disburses any welfare payments to its recipients instead of each different welfare agency having to fuss with enrollment and payments. Then because the system is so automated, TAKS has cut its spending and staffing while also increasing audits of the rich.
It's the best tax system on the planet:
The Faroes have a tax system that is unique even among their Nordic neighbors, and probably the best in the world. Its operating principles are centralization, efficiency, and simplicity. It’s not the most riveting subject for a travel holiday, I’ll readily admit. But it’s beautiful in its own way—and it makes a major difference in the lives of every Faroese person, from the lowest worker to the owners of the biggest businesses. It’s hard to imagine fully implementing such a system in the United States, but we still might learn from their example.
At the risk of self-flattery I think the article came out quite well. I also did a podcast recorded from a Faroese hotel you can listen to here. And now that I'm over 1,000 subscribers with this newsletter (thanks everyone!) I'm into a more expensive subscription tier here on Ghost, so any support on here is much appreciated to defray expenses. I've also got a video on the crypto meltdown coming soon, so keep your eyes peeled for that.
On to the articles! President Biden messed up on the rail strike question:
It’s Biden’s most high-profile labor action to date, and over an objectively tiny demand — just four days of sick leave. It also comes at a time of perhaps the greatest surge in labor militancy since the 1930s, when there is a real prospect of a serious union movement after decades of decline. That alone should make standing with the railway workers political gold for Biden. Not only were Democrats very seriously harmed by the decline of labor’s institutional heft, today, unions have a 71% approval rating in a Gallup Poll, the highest figure since 1965 and a 23-percentage-point increase since 2010.
How the 2022 economy is clearing out the post-2008 dead wood:
This led to a paradox: Huge profits produced an enormous pool of money at the top of society, but precisely because the rich were getting so much, there was nowhere good to invest. Interest rates on government bonds didn’t keep up with inflation and sometimes sold at actual negative rates; ordinary businesses had no prospects for large growth. The economy was like a man who is sick and feeble because a third of his blood and nutrients are being sucked up into an enormous tumor hanging off the side of his head, which for the purposes of this story we’ll call “Jeff Bezos.”
Elon Musk and his fellow ultra-oligarchs command resources comparable to those produced by a small wealthy nation over an entire year. Economists assume wacky stuff like “hugely overpaying for a company and immediately driving into a ditch” won’t happen, because all the monetary incentives are against it. But while Musk has lost nearly half his net worth since its peak, and probably will lose a lot more once all this is finished, he will almost certainly still be a multibillionaire at the end. Guys like him can lose more money than any single person has ever lost in history, in less than a month, and still have enough to live 10,000 lifetimes in resplendent luxury.
Tech companies should unionize immediately:
In my experience, tech workers are often resistant to the idea of unionization because they tend to be paid very well. But high pay in itself doesn’t mean they still aren’t being ripped off relative to the value they are producing for the company. The fact that companies like Alphabet and (until recently) Meta churn out enormous profits, and their executives are rich beyond the dreams of avarice, is proof of that. Even if a software engineer is making well into the six figures, the fact that so much money is pooling at the top of the company shows that owners are capturing far too much of the corporate surplus.
Republicans don't actually have a realistic plan to cut the number of abortions:
It is all but undeniable that overturning Roe had only a small impact on total abortion numbers. The Society of Family Planning produces high-quality data, and its survey (by design) doesn’t even measure some kinds of abortions. And this result makes some sense — after all, many states with new restrictions had already made it very difficult to get a legal abortion with onerous regulations and legal harassment. On the other hand, while abortion seekers are disproportionately low-income, more than half are above the poverty line. It’s often difficult for them to arrange transportation across state lines or acquire abortion pills, but it’s seldom impossible.
Republicans are not going to like having a very small House majority:
McCarthy has categorically ruled out their initial demands, but he will need almost every single Freedom Caucus vote to be elected. He will probably end up granting the crazies considerable concessions. This dynamic is nothing new; it’s what has made the GOP burn through House party leaders every few years even when they had huge majorities. John Boehner cruised to power in 2010 by pandering to right-wing lunacy; then the lunatics he enabled caused one pointless crisis after another, and so he gave up in 2015 to become a lobbyist. Paul Ryan replaced him, passed some tax cuts for the rich in 2017, but whiffed on his key concern—repealing Obamacare, which went down in the Senate—lost the 2018 midterms, and so gave up and cashed out.
See you again soon!