I often wonder–as the debates rage on about government budgets, deficits, and taxation–how many people realize that most taxation is an assault on their productivity.
You see, all you have available to you in life is your time and your effort, collectively referred to as your productivity. You choose to invest your productivity in a certain way, then along comes the government who says that a certain amount of that productivity–quantified as income–belongs to them off the top. Then, they say another amount belongs to them if you take your quantified productivity and do anything with it–that is, spend it. Finally, the government says that they are going to spend the productivity they took from you on infrastructure, products, and services it is now going to force you to use–literally force you, as the government has engineered a near monopoly on the use of force–and they’re going to take even more of your productivity in the form of fees for the privilege.
As far as I can tell, this system of robbing people of their productivity means that people, in general, have become less productive. Why should anyone work hard and apply themselves if the government is just going to come along and take what you’ve done, especially since it takes more as you are more productive.
So, the reason that local, state, and federal governments are going broke, and are taking all the rest of us down with them, is that they have effectively capped the amount of productivity their citizens can produce even as they demand more of it to pay for their infrastructure, products, and services they are going to force you to use by taking even more of your productivity.
This is a self-defeating system and can only result in collapse. What’s ironic about this whole mess is that this is not the first time in the history of the world this very thing has happened, nor will it be the last. People think that letting the government force them to do something certain ways in return for giving up their productivity seems like an easier way, but it always fails. There is no such thing as something for nothing, and as the number of people to cease to be productive goes up, it’s not possible for those who try to continue to be productive to make up the difference. The system collapses into an tragic, entropic heap, usually a lot of people die, and those who worked the hardest–that is, those who were most productive–rebuild on the ruins.
The manifestation of this condition in 2011 is massive global budget shortfalls. The US federal government alone has spent $14 trillion more productivity units than it managed to collect since the end of World War II, or 280 million household-years worth of productivity. That means that, even at full employment (unemployment around 4 percent, or about 68 percent of the total population working), it would take all of the salary of all of the households two years to pay off the debt, and that would not provide a dime to the government to maintain anything.
So, what’s the solution? It’s easy: stop penalizing people for being productive. How do we do that and still keep all of our pet programs? In short, we can’t do that exactly. The pet programs will have to change, get cut back, go away altogether, but that reality cannot help but be offset by the benefit most people will gain from having access to more or most of their own productivity.
In real terms, this probably means some sort of flat or “fair” tax, probably in the form of a transaction (sales) tax on things regulated by the government. And, no, I do not believe such a scheme would penalize the poor more because, frankly, the poor would be less so as wages rose because businesses could grow because they would have more money being spent by people who have more of their productivity back.
Of course, these sorts of things rarely resolve themselves by way of reason, dedication, and hard work in any kind of mutually beneficial way. Again, history tells us, they usually resolve themselves by bloodshed and hardship, but there is always a first time for everything. What this first time would take is the people demanding their productivity back at the ballot box.