Economist Letters Over Time – The Editor’s Burden, Michael Mainelli, Economist Groupie

The reaction to getting a printed letter published in your favourite ‘newspaper’ always reminds me of Freddie (played by John Candy) in the 1984 film Splash with Daryl Hannah and Tom Hanks:

[Excitedly waving a Penthouse magazine]

Freddie : “They published my letter. Here it is, ‘A lesbian no more’. They published my letter.”

Oddly, a Disney production. Anyway, over time here are ones The Economist has kindly published (quite a few they haven’t!).

E-taxes

Mike Godwin’s law of Nazi analogies states that as an online discussion grows longer, the probability of a comparison involving Nazis or Hitler approaches one. A corollary adage might be that as an economic discussion grows longer, the probability of creating a new form of taxation approaches one. Your leader on the rise of e-money violated this proper economic discussion by creating no new tax (“The digital currencies that matter”, May 8th). In fact, tax got no mention at all.

You summed up well the positive aspects of central-bank digital currencies (CBDCs). Yet government-issued fiat currencies are deeply entwined with tax (fiat currencies are arguably just tax credits). CBDCs provide new tax-collection powers. Complex taxation algorithms can be applied to any CBDC transaction in real time. Once people realise the power of CBDC systems to support various taxation initiatives at low transaction costs, we should expect avalanches of proposals: town taxes, child-noise taxes, sugar taxes, alcohol-consumption taxes, foreign-visitor taxes, and so on.

In 2016 I gave an example of such a CBDC-based tax to the House of Lords. Given widespread sentiment that London is too overweening, imagine a populist redistribution tax whereby transaction taxes rise in wealthy districts. To bring about levelling up, politicians increase the taxation rate as you approach Trafalgar Square, up to 99.9% beside Nelson’s Column, or spend your money in the Outer Hebrides at 0.1% tax. Technology cuts two ways.

Professor Michael Mainelli
Executive Chairman
Z/Yen Group
London

29 May 2021- https://www.economist.com/letters/2021/05/29/letters-to-the-editor

Philosophical musings

Your essay on reinventing liberalism for the 21st century was a wide-ranging, refreshing reminder of where we’ve been, where we are and how we need to improve (September 15th). As you said, “the core liberal causes of individual freedom, free trade and free markets have been the most powerful engine for creating prosperity in all history.” Significantly, at only two points did your essay mention “capitalism”, and even then as something adjacent to free markets rather than integral to them.

Moving forward, liberals need to be clear that their support for free markets does not equate to support for capitalism. The ownership of the means of production clearly merits discussion, but what liberals should all agree upon is that making choices in free markets is a fundamental part of human freedom.

Professor Michael Mainelli
Master
Worshipful Company of World Traders
London

18 October 2018 – https://www.economist.com/letters/2018/10/20/letters-to-the-editor

An ideas revolution

With unproven innovation utility and litigation costs exceeding licence income, as well as frivolous lawsuits, legal bullying, and patent portfolios barring market entry, patent reform is essential (“A Question Of Utility”, August 8th). Patent offices are 19th century fixed fee stamping machines. There is no redress against a patent office if a patent is poorly awarded. Patent offices ration resource inputs (bureaucratic time) rather than balance supply and demand with risk. Poor quality patent issuance is an economic externality borne by society through the legal system and innovation of the past.

It could be reformed through better economics: firstly, patent offices should auction a strict number of tradable options to file patents each year at a fixed application price. Option holders could decide to file and incur the application costs, or sell the application to others if they don’t care to use it. Secondly, patent offices should provide a legal indemnity offer alongside an awarded patent. If the patent is later successfully overturned in a designated court, then the patent office pays a fixed amount towards legal costs. Customers would evaluate patent offices on the cost of an option to apply, the application fee, the scale of indemnity offered, and the supplementary fee charged if they choose to take the insurance offer. Patents would be worth significantly more with such an indemnity, especially to smaller players. Thirdly, competition, why not have more than one patent office per nation offering competing indemnity levels? Combined, these three reforms would provide the economic information society needs to assess the quality and value of patent offices.

MICHAEL MAINELLI
Executive Chairman
Z/Yen Group Limited
London

27 August 2015https://www.economist.com/letters/2015/08/27/letters-to-the-editor

Business quotes

SIR – You began an article with the old saw “that half of all advertising budgets are wasted—the trouble is, no one knows which half” (“Change of track”, June 9th). The remark is frequently attributed by Britons to Lord Leverhulme, founder of Lever Brothers, and by Americans to John Wanamaker, who opened Philadelphia’s first department store. Though references to such a saying date from at least 1919, no authoritative reference has been found linking either man to it. This leads one to observe that at least half the attributions are false, the trouble is no one knows which half.

Professor Michael Mainelli
Executive chairman
Z/Yen Group
London

30 June 2012https://www.economist.com/letters/2012/06/30/on-charitable-donations-china-honduras-nepal-quotations-st-sebastian

A manageable size

SIR – I read your leader on financial companies that are “too big to fail”, and your statement that “on the left, some want banks cut down to size” (“In praise of Doddery”, March 20th). Many on the left would be surprised, then, to find themselves thinking along the same lines as Adam Smith. In “The Wealth of Nations”, he called for free competition: “By dividing the whole circulation into a greater number of parts, the failure of any one company, an accident which, in the course of things, must sometimes happen, becomes of less consequence to the public. This competition, too, obliges all bankers to be more liberal in their dealings with their customers, lest their rivals should carry them away.”

Controlling size in any industry is neither left nor right, but appropriate. Too big to fail is too big to manage as well as too big to regulate, as recent events have demonstrated all too clearly.

Professor Michael Mainelli
Executive Chairman
Z/Yen Group
London

3 April 2010https://www.economist.com/letters/2010/03/31/on-banks-thailand-pornographic-imagery-jerusalem-manchester-health-care