Friday, October 10, 2008

Of taxes, regulations and other impediments

If logic did not inform us experience should; but despite experience there are still calls in the US and elsewhere for lower taxes and minimal, if any, regulation. A low tax regime and high level of self-regulation are surely at the heart of US woes.

Doubtless we would all like to avoid paying our share of taxes, and often the wealthy can afford to minimize their portion. The trouble is, the sort of social and industrial infrastructure we require comes at accost. US citizens fool themselves if they believe otherwise – what isn’t paid to the government must still be paid somewhere.

I hope we are almost past one odious form of backdoor payment, the PPP (public private partnership). This magic way of offsetting construction costs for everything from schools and hospitals to roads and ports still becomes a burden to the taxpayers it is serving. The money must come from somewhere, or services simply not provided at all.

The other thorny issue is regulation. Those subject to, even potentially subject to intervention and oversight usually run two conflicting arguments; one) we, our industry or whatever, are more capable of regulating our activities than outside regulators. Two) The time and cost of meeting regulatory requirements is a burden on the target industry.

Forget the cost, either way the consumer will pay that, that is how the world works. The problem is, without regulation or with poor regulation the consumer will often pay far more heavily, in cash and/or wellbeing. When governments have to bail an industry we pay in up front or hidden taxes. When products fail we pay in a direct assault on health and wellbeing.

The simple fact is, we pay either way, we are going to be taxed either directly or indirectly – by government or by commerce. The notion of good governance should be to protect wider society from the excess of the few. Under the now dying paradigm a relative few were being promoted over the wellbeing of the many, and we will all pay for the mistake.

Even as the follies of the past three decades or so become evident there is still a strong backlash by the apologists of the free market. I expect there are still a few bodies to bury, evidence of misdeeds to dispose of. Though, as usual, fixing the mess won’t allow much time for retribution, we need clear forward thinking now.

2 comments:

D.K. Raed said...

Great thoughts! And it wasn't just the lack of regulation or oversight, it was also putting the foxes in charge of the henhouse. Expecting an industry to police itself never works, human nature being what it is.

Cart said...

We'll see just how far this crisis will take us, but it seems regulation is being accepted as a must for now.