Someone who actually knows what they\’re talking about says:
Sorry Richard, but while I don’t agree with Tim Worstall on much stuff – particularly his hatred of the European project, and greater backing of tax evasion than I would support – I have never, ever, ever read an argument of yours that managed to refute an argument of his. As an objective reader who sits somewhere in the middle of you both, politically, that is my honest opinion.
The Richard being referred to is, of course, our favourite retired accountant, R. Murphy Esq.
Ritchie of course responds here.
Only in saying that he depends upon an Institute for Fiscal Studies report that assumed that the efficient market hypothesis was valid – a somewhat big leap of faith these days – but to which he obviously subscribes.
Sigh, once again, Ritchie manages to misundertand what the EMH actually says.
It does not say that a market is always the best or most efficient method of organising something. It does not show, nor even attempt to show, that all markets all the time markets markets in everything is efficient. Nor desirable.
It says something which is trivially and obviously true. When prices are set in a market then markets are efficient at processing the information available to them as to what prices should be in said market.
That\’s pretty much it really. The weak version really is as I\’ve just set it out. The strong version is that even information which is not generally available gets incorporated into prices (proprietary information being incorporated by the effects of those trading on it).
There are implications of this, for sure. Like, you can\’t beat the market except through luck or such proprietary information. That price changes come as a result of new information becoming available.
But whether or not pension funds bear the burden of Stamp Duty is precisely sweet fuck all to do with the EMH.
As to the rest of Ritchie\’s argument its, look, you rightist bastards, I don\’t have to prove that my favourite tax will do anything bad. I\’ll just insist that it will stop what I don\’t like and it\’s up to you to prove that what I don\’t like isn\’t bad.
Which is a very sad indictment of Richard\’s view of the world. Of freedom, liberty and the Rights of Man.
I do not have to prove that my actions or activities are socially useful, desirable or to your taste before I am allowed to do them. You do have to prove that my activities are actively harmful to the rights or person of another (no, you don\’t get to stop me if my activities are harmful only to me) before you are allowed to devise methods to stop my actions or activities.
Which means that Richard\’s argument fails. For he hasn\’t proved, hasn\’t even tried to prove, that liquid trading in financial markets produce harm to either the rights or persons of others.