On the Intelligence of Politics and Politicians

During dark days I’m convinced that those who set themselves up to rule over us are knaves and poltroons to a man and woman: on the good days I’m willing to admit that there might indeed be those of probity, worthy of honour, amongst them. However, I’m never willing to admit that the end results of the activities of politicians, the produce of the political process, is intelligent. I’m not sure quite why I’ll have to admit. Is it because those in politics are not intelligent or is it because the process makes a sensible end product impossible?

Rather than screaming about the stimulus bill, that which will deliver a large percentage of the money long after even the proposers of the bill tell us that the money won’t be needed for the stimulus, allow me to concentrate on two much smaller points.

The first is this outrage over the bonuses paid to those in AIG Financial Products. Despite having specifically passed a law only a few weeks ago stating that retention bonuses can be paid, the House of Representatives has now decided that such should, if they are over $250,000, be taxed at 90%. Methinks that the Congresscritters have forgotten something really rather important here.

U.S. tax law applies to those who live and work in America, of course, as is true of every other country around the world: live and work somewhere, pay taxes there. However, uniquely, U.S. tax law also applies to US citizens who live and work in other countries. So an American living and working in London is subject to both UK and U.S. tax laws (what happens is that he will pay UK taxes and then deduct that from whatever is owed to Uncle Sam, well, roughly speaking that is). But, and this is the important point, U.S. tax law does not apply to non-U.S. citizens who do not live and work in the U.S.. Yes, even if they work for a U.S. company, even a US financial company in receipt of TARP funds.

So, to take a not random example, AIG Financial Products is based in London. It employs people from many nations. Only the U.S. citizens who work for it are subject to this 90% taxation of bonuses. The English, German, Spanish, whatever (and I don’t know the composition of the staff, AIG wouldn’t tell me) are entirely untouched. So the effect of this law will be that U.S. citizens working outside the U.S. for an American company will be taxed much more highly than foreign citizens who do so. In effect, the wages for foreigners will be higher than those for Americans. It’s not difficult to see where this will lead: Americans will leave American firms and go to work for foreign ones without this taxation. Their jobs will be taken by foreign workers who are not subject to the tax.

The nett effect of this new law on the taxation of bonuses will be that the TARP funds will be spent to provide jobs for foreigners while forcing Americans out of those same jobs. This is from a tax law deliberately set up to punish those getting bonuses at AIG Financial Products. As I say, it’s difficult to espy intelligence in this: someone clearly forgot that US tax law doesn’t apply to non-Americans working in London.

The second story is even simpler. When Gordon Brown, the British Prime Minister, came over to see President Obama there was the usual ritual exchange of gifts. Gordon gave Barack some bits and pieces made out of a ship that had been on anti-slavery patrol a century and more ago. Roughly standard for these sorts of gifts, something not really valuable per se but with resonance, historical meaning perhaps.

Brown, on the other hand, presented a rather more thoughtful gift to the American President in the form of a penholder carved from the timbers of an anti-slavery ship. The sister ship, in fact, of the one that was broken up and turned into the desk in the Oval Office.

In return he received a boxed set of DVDs of classic American films. OK, again, not too out of the ordinary for these sorts of gifts. However:

Alas, when the PM settled down to begin watching them the other night, he found there was a problem. The films only worked in DVD players made in North America and the words “wrong region” came up on his screen………A White House spokesman sniggered when I put the story to him and he was still looking into the matter when my deadline came last night.

Perhaps both of these stories show not a lack of intelligence, but a lack of knowledge of the outside world. Either way though, having people either this ignorant or this stupid in charge of our lives is a dang strange way to run the world, isn’t it?



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