The view from my window

Berlin, Germany

Economics, Politics

Small states and stability

…smaller states are a consequence of democracy, of peace, and of free trade. Let us hope they continue to thrive. Tim Harford

As a fan of city-states, and international jurisdictional competition, I share the sentiment. However, I worry that the piece from which it comes, while interesting, doesn’t carry the examination far enough. The important question for me is about whether this is an argument for smaller states in general, or for a system which tolerates or enables them. And what does this toleration or enabling mean? What is the exact nature of the trade that France (or the rest of the world) gets from Monaco, and what does Monaco deserve in return? Can small states exist without sponsors – either trading blocks or protective neighbours? Small states may signal a stable world, but at what proportion, and in what conditions? I have added the Jacobs book to my reading list.


Taxing inheritance at destination

Merryn Somerset Webb argues in the Financial Times that inheritance tax should be replaced with a system in which inheritance is treated as income for the beneficiaries. She makes a good argument, and the comments below the post are also of a better quality than I have come to expect online.

This is a step towards a more simplified and flatter system of taxation, which is the direction I would like to see. I don’t put much stock in the ‘double taxation’ objections, if only because one cannot possibly tax, let alone ‘double tax’, a person who no longer exists. It is the inheritors who are being taxed, and this seems fair game: they were not those taxed in the first instance. I do however wonder why inheritance should be taxed as income rather than as capital gain. As long as there are separate regimes for these categories, inheritance seems to be more akin to the latter.


On make-up

Earlier this week, I tweeted:

So I was interested to find this, via the Dish:

[A] recent paper of mine, in press at the Quarterly Journal of Experimental Psychology, and carried at Bangor University, examined just this question. I wondered whether makeup use, like dieting or gym workout behaviours, affected perceptions of attractiveness from same and opposite sex peers. An ideal way of testing this was to examine how much makeup is considered optimally attractive. After all, if women’s ideas of what looks good to others is accurate, then everyone should find their makeup optimally attractive, right? …

The results were clear. Both women and men found faces with up to 40% less makeup than the models applied themselves the most attractive, showing a clear agreement on their opinions for cosmetics. Less was simply better. However, when they considered the preferences of others, the women and men in our study indicated that they thought other people found more cosmetics more attractive, and this was especially true when considering the preferences of other men. However, this couldn’t be further from the truth. The sample of men in our study consistently chose less makeup as more attractive, while at the same time indicating that they thought their peers would find more makeup more attractive.

So women who wear heavy make-up are signalling that they think other people are more attracted to them because of their make-up. Those women who wear less make-up either (a) don’t think everyone in the world is so shallow, or (b) don’t care if the rest of the world is shallow. For me, both options are attractive properties in themselves.


Immigration is overseas aid

Somaliland’s politicians would probably not complain if the West did throw money at them. Most likely they would learn to squirrel it into Swiss accounts like other African elites do. Yet lack of international recognition means no aid, and guess what: no aid doesn’t mean disaster. Quite the opposite, in fact.

Hussein Abdi Dualeh, Somaliland’s minister of energy and minerals, told Reuters during a conference this month that it was the lack of aid, coupled with the related inability to borrow money on international markets, that had instilled in Somaliland’s economy both discipline and self-reliance.

What Somaliland does rely upon is remittances from its diaspora in the West. Which goes to show that sometimes the best development aid policy – the one that gets money where it is most needed, involves the least waste and is by far  the most practical to enact without the intermediation of the state – is to hire an immigrant.