Plus ça change – tax farming

Matthew xviii:17

And if he shall neglect to hear them, tell it unto the Church : but if he neglect to hear the Church, let him be unto thee as an heathen man and a Publican.

Luke xviii:11

The Pharisee stood and prayed thus with himself, God I thank thee, that I am not as other men are, extortioners, unjust, adulterers, or even as this Publican.

Presumably schoolboys have been told for 400 years to stop giggling, the gospel-writers in the King James version were not suggesting that everyone who runs a pub is an extortioner or an adulterer, deaf to the church. Rather:

In antiquity, publicans (Latin publicanus (singular); publicani (plural)) were public contractors, in which role they often supplied the Roman legions and military, managed the collection of port duties, and oversaw public building projects. In addition, they served as tax collectors for the Republic (and later the Roman Empire), bidding on contracts (from the Senate in Rome) for the collection of various types of taxes.

In modern, accessible versions of the Bible, "publican" is replaced with "tax farmer". No doubt a whole new generation of giggling has arisen at the thought of fields being ploughed, planted with taxes, fertilised and harvested by men in muddy boots.

But that's because we proletarians don't know what "farming" means. It's all about farming out or outsourcing:

Farming is a technique of financial management, namely the process of commuting (changing), by its assignment by legal contract to a third party, a future uncertain revenue stream into fixed and certain periodic rents, in consideration for which commutation a discount in value received is suffered. It is most commonly used in the field of public finance where the state wishes to gain some certainty about its future taxation revenue for the purposes of medium-term budgetting of expenditure. The tax collection process requires considerable expenditure on administration and the yield is uncertain both as to amount and timing, as taxpayers delay or default on their assessed obligations, often the result of unforeseen external forces such as bad weather affecting harvests. Governments (the lessors) have thus frequently over history resorted to the services of an entrepreneurial financier (the tenant) to whom they lease or assign the right to collect and retain the whole of the tax revenue due to the state in return for his payment into the Treasury of fixed sums (rent) in exchange.

Tax farming stayed with us for a long time:

Systems of tax farming similar to the Roman model were used in Pharaonic Egypt, various medieval Western European countries, the Ottoman and Mughal empires, and in Qing Dynasty China. As states become stronger, buoyed up by revenues brought in by tax farming, the practice was discontinued in favour of centralized tax collection systems. In part this was because tax farming systems tended to rely on wealthy individuals outside the state machinery, gangs, and secret societies.

And so did the associated problems:

The key flaw in the tax farming system is the tension between the state, which seeks a long-term source of taxation revenue, and the tax farmers, who seek to make a profit on their investment in as short a time as possible. As a result tax-farmers often abuse the taxpayers in various ways, [causing] them to switch their economic activity from strategic long-term projects to short-term revenue generation. A common abuse by tax farmers is the undervaluation of goods received in lieu of taxes, allowing the tax-farmer to re-sell the goods to create a second profit source. Such abuses stifle economic growth by restricting the ability of the tradesman to reinvest in his business, thereby limiting the quantity of taxes generated over the long-term.

Tax farming continued well into the 18th century in France:

The Ferme générale ... was, in ancien régime France, essentially an outsourced customs and excise operation which collected duties on behalf of the king, under six-year contracts. The major tax collectors in that tax farming system were known as the fermiers généraux, which would be tax farmers-general in English. In the 17th and 18th centuries fermiers généraux became immensely rich ... Before the French Revolution, the public revenue was based largely on taxes known as: the taille – direct land tax imposed on French peasant and non-noble households, based on how much land they held. the taillon – a tax for military expenditure the vingtième (one-twentieth) – based solely on revenues (5% of net earnings from land, property, commerce, industry and from official offices) the gabelle – a system of salt taxes the aides – national tariffs on various products (including wine and tobacco), the douane – a local tariff on specialty products the octroi – a local tariff levied on products entering towns a local tariff levied on products sold at fairs the "dîme" – a mandatory tithe to support the church (and so, not formally a tax) ... The Ferme générale had its headquarters in Paris. It employed in its central offices nearly 700 people including two chaplains. Its local operations included up to 42 provincial offices and nearly 25,000 agents distributed in two branches of activity; that of the offices which checked, liquidated and charged the fees; that of the brigades which sought and suppressed smuggling with very severe punishments (such as hard labour or hanging). The employees of the Ferme générale were not royal civil servants, but they acted in the name of the king and therefore benefitted from particular privileges and the protection of the law. The guards of the service of the brigades moreover had the right to bear weapons ... The Ferme générale was thus one of the institutions of Ancien Régime which were most highly criticized during the French Revolution and were depicted as birds of prey and tyrants ... The Ferme générale was suppressed in 1790. The fermiers-générals paid the price at the scaffold: 28 former members of the consortium were guillotined on 8 May 1794, including the "father of chemistry" Antoine Lavoisier, whose laboratory experiments had been supported from his administration of the Ferme générale ...

This business of the tax farmers having their own army/gendarmerie was serious. They were a lively lot with a keen interest in enforcement. In December 1775, Voltaire negotiated a tax settlement between the tax farmers and the residents of his estate at Ferney (pp.427-31). As he wrote later to a friend, the night the deal was agreed:

... while the whole province was busy drinking, the gendarmes of the tax farmers, whose time runs out on 1 January, had orders to sabotage us. They marched about in groups of fifty, stopped all the vehicles, searched all the pockets, forced their way into all the houses and made every kind of damage there in the name of the king, and made the peasants buy them off with money. I cannot conceive why the people did not ring the tocsin against them in all the villages, and why they were not exterminated. It is very strange that the ferme générale, with only another fortnight left for them to keep their troops here in winter quarters, should have permitted or even encouraged them in such criminal excesses. The decent people were very wise and held back the ordinary folk, who wanted to throw themselves on these brigands, as if on mad wolves.

Good job they hadn't disagreed.

Considering what Matthew and Luke had to say about tax farmers, one wonders what the two chaplains made of it in the Paris HQ of the ferme générale.

What the author of the long quotation above makes of it is:

Le choix d'instaurer de telles délégations s'inscrit dans les courants politiques favorables au « moins d'État ». Toutefois, on peut faire à l'affermage les mêmes reproches qu'à la ferme générale de l'Ancien Régime : la collectivité publique se prive d'une ressource ; le service rendu n'est pas toujours meilleur, sur le long terme ; le coût peut être supérieur pour l'usager ou le contribuable, qui paie ses impôts plus la marge prélevée par le fermier général ; le recouvrement des créances (des arriérés d'impôts) peut être fait brutalement par le fermier ; se privant d'une ressource, la collectivité doit s'endetter, et affermer de nouveaux revenus pour obtenir de l'argent frais. C'est ainsi qu'à la fin du xviiie siècle, l'État français était considérablement endetté ; des États comme le Maroc ont aussi fini par être colonisés de fait, et durent subir un protectorat, étant entrés dans un cercle vicieux d'endettement/affermage/diminution des ressources disponibles. Inversement, l'affermage permet de combattre la bureaucratie. C'est faute d'une réforme administrative dans ce sens que l'Espagne de Philippe II a perdu toute sa richesse conquise en Amérique au profit de ses rivaux européens et que l'Empire austro-hongrois s'est écroulé en quelques mois.

En anglais, roughly: outsourcing appeals to people who want a smaller state; outsourcing suffers from a lot of the same problems as tax farming; Morocco, for example, got into a vicious circle of budget deficits and that's why it ended up to all intents and purposes being colonised; on the other hand, it was for lack of an outsourced revenue-raising system that Spain lost its American empire and the Austro-Hungarian empire collapsed in a couple of months.

How times have changed.

Not.

Ireland, Greece and Italy have ended up to all intents and purposes being colonised, the Ancien Régime has been re-constituted with added Germany, tax farming is undertaken by the internal revenue services of each of the 28 members of the EU under the control of the ferme générale, the European Commission, which stands no nonsense from member states who cut up rough about paying their dues.

Plus ça change – tax farming

Matthew xviii:17

And if he shall neglect to hear them, tell it unto the Church : but if he neglect to hear the Church, let him be unto thee as an heathen man and a Publican.

Luke xviii:11

The Pharisee stood and prayed thus with himself, God I thank thee, that I am not as other men are, extortioners, unjust, adulterers, or even as this Publican.

Presumably schoolboys have been told for 400 years to stop giggling, the gospel-writers in the King James version were not suggesting that everyone who runs a pub is an extortioner or an adulterer, deaf to the church. Rather:

In antiquity, publicans (Latin publicanus (singular); publicani (plural)) were public contractors, in which role they often supplied the Roman legions and military, managed the collection of port duties, and oversaw public building projects. In addition, they served as tax collectors for the Republic (and later the Roman Empire), bidding on contracts (from the Senate in Rome) for the collection of various types of taxes.

Brodie Clark's evidence 3

The Home office has launched three investigations into the Brodie Clark affair:

One by Dave Wood, ex-Metropolitan Police detective, currently the UKBA's head of enforcement and crime group. This is a two-week inquiry designed to discover to what extent checks were scaled down, and what the security implications might have been. One by Mike Anderson, an ex-MI6 official, presently director general of the strategy, immigration and international group at the Home Office. This will investigate wider issues relating to the performance of UKBA. It was announced on 5 November 2011 by Theresa May that an independent inquiry would also be undertaken, led by the Chief Inspector of the UK Border Agency, John Vine.

On 8 December 2011, the Home Affairs Committee released new testimony submitted to them by Mr Clark which includes this:

I remain concerned that the only independent inquiry into matters is that of the Home Affairs Select Committee. I took from some of the exchanges in evidence with others that the HASC shares some of my concern. The investigation by Mr Wood is unsafe as he is a participant. He was at the Board meeting referred to above and as the committee noted, Mr Vine is a witness.

Brodie Clark's evidence 3

The Home office has launched three investigations into the Brodie Clark affair:

One by Dave Wood, ex-Metropolitan Police detective, currently the UKBA's head of enforcement and crime group. This is a two-week inquiry designed to discover to what extent checks were scaled down, and what the security implications might have been. One by Mike Anderson, an ex-MI6 official, presently director general of the strategy, immigration and international group at the Home Office. This will investigate wider issues relating to the performance of UKBA. It was announced on 5 November 2011 by Theresa May that an independent inquiry would also be undertaken, led by the Chief Inspector of the UK Border Agency, John Vine.

On 8 December 2011, the Home Affairs Committee released new testimony submitted to them by Mr Clark which includes this:

I remain concerned that the only independent inquiry into matters is that of the Home Affairs Select Committee. I took from some of the exchanges in evidence with others that the HASC shares some of my concern. The investigation by Mr Wood is unsafe as he is a participant. He was at the Board meeting referred to above and as the committee noted, Mr Vine is a witness.

ChristmasList: Misfeasance in public office

It was Christmas day in the harem,
The eunuchs were standing round [that's us, the public, we're the eunuchs],
And hundreds of beautiful women [or, at least, £710 billion of our money]
Were stretched out on the ground,
When in strode the bold bad sultan [or mandarin, Sir Gus O'Donnell]
And stared at his marble halls [or Whitehall]:
"What do you want for Christmas, boys?"
And the eunuchs answered tidings of comfort and joy
[viz. charges of misfeasance in public office
being brought against various satraps
e.g. Sir David Nicholson, Chief Executive of the NHS]

ChristmasList: Misfeasance in public office

It was Christmas day in the harem,
The eunuchs were standing round [that's us, the public, we're the eunuchs],
And hundreds of beautiful women [or, at least, £710 billion of our money]
Were stretched out on the ground,
When in strode the bold bad sultan [or mandarin, Sir Gus O'Donnell]
And stared at his marble halls [or Whitehall]:
"What do you want for Christmas, boys?"
And the eunuchs answered tidings of comfort and joy
[viz. charges of misfeasance in public office
being brought against various satraps
e.g. Sir David Nicholson, Chief Executive of the NHS]

Mobile phones – location tracking

Did everyone spot it?

The Killing, Series 2, Episode 7, 17'30".

Raben's father-in-law tells him Special Branch are following him. Raben instantly takes something out of his pocket, fiddles with it and puts it back.

He was taking the battery out of his mobile phone – the only way to be (fairly) sure that it isn't being used to locate/track him.

Him. Or anyone else. You, for example. Your mobile phone is a voluntarily worn electronic tag. Your mobile phone, and mine, is an electronic ID card.

Mobile phones – location tracking

Did everyone spot it?

The Killing, Series 2, Episode 7, 17'30".

Raben's father-in-law tells him Special Branch are following him. Raben instantly takes something out of his pocket, fiddles with it and puts it back.

He was taking the battery out of his mobile phone – the only way to be (fairly) sure that it isn't being used to locate/track him.

Him. Or anyone else. You, for example. Your mobile phone is a voluntarily worn electronic tag. Your mobile phone, and mine, is an electronic ID card.

The case for midata – the answer is a mooncalf

Ed Davey, Minister at the Department of Business, Innovation and Skills, is promoting the midata initiative. In this, he is guided by a management consultancy called Ctrl-Shift. Ctrl-Shift have recently issued a report which makes the business case for the investment of public money in midata.

---

An incomplete review of
The new personal data landscape
published in November 2011 by Ctrl-Shift
21 pages, price: £500

Ctrl-Shift is a management consultancy specialising in customer relationship management with an impressive list of clients including the UK government. This latest report of theirs predicts the rise of a new personal information management industry.

What's new about it?

• For the first time, Ctrl-Shift say, organisations will give data back to their customers. The kind of organisations they have in mind are banks and energy companies and anyone else who signs up to the government's midata initiative.
• For the first time, Ctrl-Shift say, people will be able to build a comprehensive picture of themselves and use it to make rational decisions.
• In this, people will be assisted, for the first time, Ctrl-Shift say, by forums in which they can share their experience. 

Nothing new about this personal data landscape at all. It's the same personal data landscape we have always grazed in, and not a new "ecosystem", as Ctrl-Shift keep calling it. The banks have always provided us with statements and the energy companies have always provided us with a breakdown of the bill.

Ctrl-Shift advocate the value of placing all your personal data in a single database, a personal data store (PDS), and then curating it.

Curatorial skills come into their own in museums and art galleries where some gifted individuals can assemble and present a few objects in such a way as to inspire interest in the viewers and educate them. If you have no desire to educate your electricity supplier, then a PDS is probably not for you. And if you think that showing them your utility bills will inspire interest in the attractive person you met at a party last night, then you're mistaken.

"Curator" is the wrong word. "Archivist"? No. "Custodian" is better. There is a demand for custodians, organisations that would, for a fee, store your data and protect it, rather as a Swiss bank discreetly stores your money. Swiss banks are utterly reliable. They didn't create their reputation for reliability by announcing "we are reliable". They created it over the decades by demonstrating that, come what may, they would protect their clients' privacy. The need for trust is recognised by Ctrl-Shift. But they seem to think that trust can be created just like that, overnight. Wrong.

To Ctrl-Shift, unlike a Swiss bank, privacy is nothing more than an irritating constraint (p.17):

If organisations try to share customer data with each other they invade individuals’ privacy and risk breaching the Data Protection Act. The result is duplication, waste and missed opportunities.

What Ctrl-Shift seem to be promoting instead of privacy is Californian narcissism mixed with an unreconstructed hippy's enjoinder to let it all hang out and share it all with the commune/forum. Hippy communes are either terminally dull. Or terminally fascinating, see David Koresh and Jim Jones. Either way, to be avoided.

Which organisations do Ctrl-Shift recommend that people trust with their PDS?

In the UK, a company called Mydex (p.15).

Two of the founders of Mydex are William Heath and Alan Mitchell. Alan Mitchell is also the strategy director of Ctrl-Shift and William Heath is the non-executive director of Ctrl-Shift. These are two individuals who genuinely would be empowered by the adoption of midata. Unlike the rest of us. They have a vested interest. This interest is not declared in the Ctrl-Shift report. That undermines trust. So who would want to use Mydex as their custodian?

Ctrl-Shift repeat the claims made by Mydex that having a PDS puts the customer in control of his or her own data. It doesn't. It confers no more control over what happens to your personal data than the situation we have enjoyed for the past 5,000 years during which civilisation has flourished without PDSs.

Ctrl-Shift repeat the claims made by Mydex that having all your personal data in one pot will allow you to analyse yourself, learn things about yourself and make coherent, utilitarian choices as a result. The possibilities are limitless. On p.12 we find this example:

Tallyzoo, a service dedicated to self monitoring, allows users to measure anything from their caffeine intake to the number of times they cut their grass. Users collect data using a mobile device or website program which creates interactive flashbased graphs enabling them to spot trends and patterns in their consumption habits, work, health and fitness goals. Data is manipulated so that users can share statistics and compare the end results.

The impression is that Ctrl-Shift have somehow managed to preserve into adulthood a childlike fascination with technology so intense that they ignore the banality of its use – just how many people do they imagine want to see William Heath's coffee consumption statistics? (Do not assume that the answer is zero. He made this reviewer a very good cup of coffee once. But the number isn't going to be big enough to support Ctrl-Shift's multi-billion pound projections for the industry.)

Access to such data represents a ‘holy grail’ data to companies because it explains why people do what they do and predicts what they are going to do next.

Religiose piffle (p.14). Computers may have got more powerful over the years, which Ctrl-Shift find interesting, and data storage cheaper, but there have been no advances in the understanding of human psychology to match, and the ability to predict "what they are going to do next" is not available. What kind of organisation would make such a claim? And what kind of a person would believe it?

Where is the control shift, the quasi-eponymous subject of the Ctrl-Shift report?

There is no control shift in the provision of data by organisations to their customers. That's always taken place. The customers gain no new control over the fate of their data just by putting it in a PDS. The claim that Mydex-users are in control of their data is marketing person's hot air.

The answer is all to do with identity assurance (IdA).

Mydex is the reductio ad absurdum of the Cabinet Office's plans for IdA. Francis Maude and Ian Watmore want people to transact with the government over the web, and only over the web. For that, everyone needs an electronic identity, proving that each person is who he or she says they are.

Not just the Cabinet Office. The Department for Work and Pensions, too. DWP's plans for Universal Credit depend on IdA over the web.

All the verbiage about monitoring your grass cuttings is just that.

Mydex want to issue people with some sort of a token, unspecified in the Ctrl-Shift report, which allows people to log on to web-based services and transact. All web-based services. Accessed via one Mydex token. There's something megalomaniac about it. That's the control shift. You would become dependent on Mydex to transact over the web. That really would be a new landscape. On the web, your PDS would be you. Who trusts Mydex enough, or any other company, to make their existence dependent on that company? No-one sane. Or prudent. Or adult. Only a mooncalf.

The Ctrl-Shift report is one-sided, more like a sales document than a management consultant's dispassionate, objective, even-handed assessment. The downside of "life-logging" is not even mentioned, let alone investigated. The downside is obvious (but for anyone who can't work it out for themselves, ENISA kindly produced a report on it).

Mydex face established competition from the credit rating agencies. Set up in the late nineteenth century to support mail order selling, the credit rating agencies (the personal ones, not the Moody's and the S&Ps of this world, organisations like Experian, in which this reviewer holds 1,324 shares, interest declared) have a well-deserved reputation for the discreet concentration of personal data gathered from multiple sources into a single data store. Not that you'd know it from the Ctrl-Shift report. Mydex have nothing to offer that the credit rating agencies don't already have.

Mydex face established competition from Facebook. 800 million people worldwide already actively maintain their Facebook page, or PDS.

It's a brave try. If peculiar. But the ecosystem isn't going to support this new life form.

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Updated 17.6.14

Just to remind you: "The opportunities for organisations arising from a new personal information economy are game changing. Ctrl-Shift is the world’s leading market analyst and consulting business helping organisations to capitalise on these opportunities".

Back in November 2011 Ctrl-Shift told us in The new personal data landscape (p.14) that ...

Every individual has a vast and rich store of knowledge and information about themselves which, most of the time, sits unused in their heads ... Access to such data represents a ‘holy grail’ data to companies because it explains why people do what they do and predicts what they are going to do next ... In the emerging personal data ecosystem individuals will have the ability to both input this information into their own digital tools and services and to voluntarily share it with organisations in order to access more appropriate services and get things done. Ctrl-Shift’s research finds that the market for these new streams of information could grow to be worth £20bn in the UK over the next ten years.

 ... and a factoid was born – the personal information management industry in the UK could one day be worth £20 billion, whether that's per annum or spread over 10 years it wasn't clear.

Yesterday this factoid was reborn when Ctrl-Shift told us in Personal Information Management Services - An Analysis Of An Emerging Market that:

The research estimates the potential size of the market for PIMS as £16.5bn or 1.2% of gross value added in the UK economy. This is an untapped market opportunity for those organisations able to adapt and respond to new demands for managing, using and sharing personal data.

£20 billion? £16½ billion? Who knows. What's £3½ billion between friends. This is an untapped market opportunity for those organisations able to adapt and respond to ever-moving goalposts and new demands for exploiting personal data.

Ctrl-Shift's research is tied to the Department for Business Innovation and Skills's midata initiative (RIP), to the Government Digital Service's identity assurance service (RIP) and to its sister company Mydex's personal data store business.

And what is the strategic objective of these mooncalf economics?

According to Mydex's CEO, no Mydex, no transactions:

Mydex at the centre of ... everything

The case for midata – the answer is a mooncalf

Ed Davey, Minister at the Department of Business, Innovation and Skills, is promoting the midata initiative. In this, he is guided by a management consultancy called Ctrl-Shift. Ctrl-Shift have recently issued a report which makes the business case for the investment of public money in midata.