Mansion Tax: a self-indulgence to make a point, not fix a problem

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Nik Darlington 11.10am

In the 1920s and 1930s the sociologist Elton Mayo conducted a series of experiments to test the productivity of workers at the Hawthorne Works in Chicago. Later in the 1950s, Henry Landsberger interpreted the data to show how people change their behaviour when being studied closely. It is a crucially inherent human bias, called the ‘Hawthorne Effect’ after the location of its first monitoring.

Translate it to the public realm today and it can go some way to explaining why figures of public attention and certain significance embrace a stance on an issue purely for political effect. A psychological underpinning for ‘triangulation’ tactics, perhaps, to wrong-foot opponents; or simply self-indulgence, in the knowledge that one’s every utterance is being watched and measured by others.

Something like a mansion tax is such an indulgence. The only problems it solves are those embedded in its proponents’ own thinking.

True, there is a concerning malfunctioning of the free market in property in Britain. We live on a small archipelago, which as much as it might surprise cultural apologists is actually a very popular archipelago. Demand for scarce land and property is great, compounded by our little archipelago containing some of the most ravishing sylvan scenery known to man.

It is correct for any good Tory to question the proper functioning of free markets. Perhaps the most invidious Tory fallacy of recent decades has been the conflation of capitalism with free market libertarianism.

Yet let’s not chuck the proverbial cherub out with the bath water. Penalising the owners of expensive homes is not the proper way to correct property market imbalances. The unintended consequences of an arbitrary tax ceiling are well-explained by Toby Young here.

Furthermore, while it is true that the London property market is a bit berserk in parts, many marketplaces have their relatively crazy quirks. Should we whack a super tax on the salaries of footballers at Manchester United, because they collectively outweigh the wages of all players plying their trade in the lower leagues of Wales, Scotland and Northern Ireland? Actually, if anyone has proper stats on that, do let us know.

But of course not, that would be daft. What’s more, while we ought by default to dislike the coarse linguistics of ‘mansion tax’, who is the arbiter? This country house is a bit mansion-like; this dearer two-bed flat isn’t. The ‘problem’ of high property prices is not confined to London either. Even the good burghers of provincial towns like Cheltenham could fall prey to the punishments that shall befall ‘unearned’ wealth (again, who is the arbiter of whether wealth is ‘earned’?).

The the fact that good ‘working people’ might one day want to work so hard that the fruits of their labour reap a £2 million property is of no concern to proponents of a mansion tax; albeit such a purchase would most likely be weighed down by several years of mortgage debt and the onus to work on and on to pay it off. Moreover, the fact that someone, somewhere, is being hammered at approximately £80,000 a pop for owning an expensive home is little consolation to the person on an annual salary of one-quarter that figure (if you can identify a consolation, please say it).

The mansion tax’s introduction would be a policy of momentary significance and soon forgotten - relegated into the midst of myriad other taxes and conveniently forgotten by a succession of politicians drawn to the windfall begotten by negligent fiscal drag.

Ultimately, if the sole intention of a mansion tax is to send a message - and I cannot discern a practical fiscal rationale - it is philosophical navel gazing, not pragmatic policymaking. In other words, the type of approach followed by socialists supped on grand ideas and structural-theoretical solutions. Merely meaningless gesture politics.

Yet people can do funny things when they know other people are watching.

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