Ship money

Acemoglu's latest paper, on institutions, tax revenue, and state capacity, has this bit on the history of England:

The British tax revenues increased by over three fold in the quarter of a century following the Glorious Revolution (while French revenues remained constant). Notably, these revenues were used very differently from how the marginal revenue was spent during the reign of the Stuarts before 1688: instead of financing the consumption or the retinue of the crown, they were spent to strengthen the Navy, which would then play an important role in defending the overseas interests of those in the Parliament (who in fact constituted the main checks against the power of the Hanoverian monarchs).

But wasn't the levying of ship-money one of the big complaints against Charles by Parliament just before the Long Parliament? If I remember my Hume correctly, Charles levied a tax (as prerogative rather than through Parliament) to kit out a first rate navy, and Parliament, who otherwise refused to grant him adequate supply for anything, got mighty ticked off about this imposition despite it being very well used indeed. Charles, seeing the writing on the wall, gave up ship money in the lead-up to the Long Parliament, but Hume suggests ship money nevertheless as one of the spurs for the Glorious Revolution: hardly an indication that the navy was neglected under all the Stuarts.

Or does Acemoglu count ship-money as inframarginal? The marginal dollar, I suppose, under Charles would have been used trying to defend against the incursions of crazy religious fanatics from Scotland: navy not much use there. Or is Acemoglu referring more to Charles' predecessors? If the latter, then does the comparison of revenues pre and post revolution make sense?

Hume's chapter on Charles is depressing.

None of this detracts from Acemoglu's overall point though:

This paper points out why this argument needs to be qualified and why caution is necessary before increasing the fiscal capacity of the state becomes a silver bullet policy recommendation. Because the availability of more efficient means of taxation increases the potential benefits of controlling state power, it also intensifies political conflict aimed at capturing the control of the state. This indirect effect counteracts the benefits from more efficient taxation and may dominate these direct benefits; as a consequence, the allocation of resources may deteriorate when the society and the state have access to additional fiscal instruments.

As Farrant and I have said before, the last thing you want is for Stalin to have more efficient means of taxation. And as I've said here before, I oppose Key making the NZ tax system more efficient (flattening out the income tax and imposing a land tax) because I don't trust Labour not to keep the land tax while re-implementing a 39% top marginal tax rate. The imposition of a new tax needs be accompanied by a commensurate increase in our ability to veto future growth in the overall size of the state. Acemoglu again:

The more general lesson is that while state capacity and states with sufficient economic strength to tax, regulate and provide public goods are essential for economic development, these benefits may not get realized by an autonomous increase in the strength of the state because this will also increase the value of controlling the state and thus induce increased political conflict and infighting. Therefore, the virtues of strong states emerge when the increase in the economic strength of the state is a consequence of, or at least happens simultaneously with, an increase in the political accountability of rulers and politicians. This underscores the need for future work investigating dynamic models of the endogenous emergence of state capacity and its relationship to political accountability.

Indeed. Couple the tax change with a requirement that any future tax increases be passed by supermajority referendum (or big structural decreases in the overall size of government), and I'm all for it.  Otherwise, not so much.

Evidence against the feasibility of a desirable libertarian anarchy

Today's lecture in my Public Choice class will hit on anarchy, the state of nature, the emergence of government, and the feasibility of a desirable market-based anarchic structure.

On the latter point, a small bit of evidence from David Hume's History of England, the reign of Edward I (around 1297)

For this purpose, he [Pope Boniface VIII] issued very early in his pontificate a general bull, prohibiting all princes from levying without his consent any taxes upon the clergy, and all clergymen from submitting to such impositions; and he threatened both of them with the penalties of excommunication in case of disobedience. This important edict is said to have been procured by the solicitation of Robert de Winchelsey archbishop of Canterbury, who intended to employ it as a rampart against the violent extortions, which the church had felt from Edward, and the still greater, which that prince’s multiplied necessities gave them reason to apprehend. When a demand, therefore, was made on the clergy of a fifth of their moveables, a tax which was probably much more grievous than a fifth of their revenue, as their lands were mostly stocked with their cattle, and cultivated by their villains; the clergy took shelter under the bull of pope Boniface, and pleaded conscience in refusing compliance. The king came not immediately to extremities on this repulse; but after locking up all their granaries and barns, and prohibiting all rent to be paid them, he appointed a new synod, to confer with him upon his demand. The primate, not dismayed by these proofs of Edward’s resolution, here plainly told him, that the clergy owed obedience to two sovereigns, their spiritual and their temporal; but their duty bound them to a much stricter attachment to the former than to the latter: They could not comply with his commands, (for such, in some measure, the requests of the crown were then deemed) in contradiction to the express prohibition of the sovereign pontiff.

...Instead of applying to the pope for a relaxation of his bull, he [Edward] resolved immediately to employ the power in his hands; and he told the ecclesiastics, that, since they refused to support the civil government, they were unworthy to receive any benefit from it; and he would accordingly put them out of the protection of the laws. This vigorous measure was immediately carried into execution. Orders were issued to the judges to receive no cause brought before them by the clergy; to hear and decide all causes in which they were defendants: To do every man justice against them; to do them justice against no body. The ecclesiastics soon found themselves in the most miserable situation imaginable. They could not remain in their own houses or convents for want of subsistence: If they went abroad, in quest of maintenance, they were dismounted, robbed of their horses and cloaths, abused by every ruffian, and no redress could be obtained by them for the most violent injury. The primate himself was attacked on the highway, was stripped of his equipage and furniture, and was at last reduced to board himself with a single servant in the house of a country clergyman. The king, mean while, remained an indifferent spectator of all these violences; and without employing his officers in committing any immediate injury on the priests, which might have appeared invidious and oppressive, he took ample vengeance on them for their obstinate refusal of his demands. Though the archbishop issued a general sentence of excommunication against all who attacked the persons or property of ecclesiastics, it was not regarded: While Edward enjoyed the satisfaction of seeing the people become the voluntary instruments of his justice against them, and enure themselves to throw off that respect for the sacred order, by which they had so long been overawed and governed.

The spirits of the clergy were at last broken by this harsh treatment. Besides that the whole province of York, which lay nearest the danger that still hung over them from the Scots, voluntarily, from the first, voted a fifth of their moveables; the bishops of Salisbury, Ely, and some others, made a composition for the secular clergy within their dioceses; and they agreed, not to pay the fifth, which would have been an act of disobedience to Boniface’s bull, but to deposit a sum equivalent to some church appointed them; whence it was taken by the king’s officers. Many particular convents and clergymen made payment of a like sum, and received the king’s protection. Those who had not ready money, entered into recognizances for the payment. And there was scarcely found one ecclesiastic in the kingdom, who seemed willing to suffer, for the sake of religious privileges, this new species of martyrdom, the most tedious and languishing of any, the most mortifying to spiritual pride, and not rewarded by that crown of glory, which the church holds up, with such ostentation, to her devoted adherents.(emphasis added)

The Church of the late 1200s was perhaps best placed of any party to provide private law enforcement services to its members. But it was unable to protect the Clergy when Edward removed the State's protection.

Sure, technology has changed over the interval, and this is hardly decisive evidence about whether Caplan or Cowen is right today. But it is worrying.

Hume's History of England provides excellent bedtime reading. General rule for arts students: read more economics. General rule for economics students: read more history.