I should do that. My long-suffering editor no doubt expects it as will both loyal readers, but my soul is recoiling from that prospect with the same force that drives me to avoid a dental appointment. The problem with commentators is the need to comment on everything, when ignoring something can be a more powerful statement.
This Budget does not matter, is today’s thesis, and I am going to rely on Karl Marx to make my point.
Marx, that magnifically hirsute student of everything rejected the idea that history was driven by great men. Events are driven by underlying macro trends, not the whims of princes, was the idea.
I’m not convinced. I think great men can knock history off one trajectory and onto another, and ironically Karl Marx was one of these individuals. Sadly. But in the absence of great men or women I find his version of history compelling.
Meanwhile, as Marx was ignoring his family in favour of his real passion of toppling capitalism, civil unrest was brewing in France. In the years leading up to the 1848 revolution the nation was a mess of regulation, monopolies and expanding welfare.
Frederic Bastiat, a remarkable economist who lived through this madness, observed that the state cannot procure satisfaction for some without adding to the labour of others, and that it is a “…great fictitious entity by which everyone seeks to live at the expense of everyone else.”
A little over a decade later Adolf Wagner, a German economist writing in 1863, developed a theory that as a nation becomes wealthier, the demand for government services increases.
Wagner’s Law is Bastiat’s observation put into effect. As our neighbour’s get richer, we want the state to tax them so we can live off their productivity. Like my reflection, it’s ugly but it’s true.
A century later, in 1950, Austrian economist Joseph Schumpeter wrote a book; Capitalism, Socialism and Democracy. It’s really good. He predicted capitalism would give rise to individuals whose self-interest lay in dismantling the capitalist order. The economic success of the free market would breed its own destruction; the intellectual class.
These intellectuals, Schumpeter believed; “…wield the power of the spoken and the written word, and one of the touches that distinguish them from other people who do the same is the absence of direct responsibility for practical affairs.”
They do not understand the nature of the system that produced the enormous surplus that allows a society to employ unproductive intellectuals.
Our universities, media and political class is full of Schumpeter’s children. Those who do not understand where the wealth they wish to re-distribute comes from but are insufferably righteous in their demands and showered in accolades for their piety and compassion.
Into this mix we bring democracy. Now. Democracy means we are run by laws, and not by the capricious whims of a prince. This is so ingrained that we find it unremarkable that we can defy the directions of a police officer if they step outside the power parliament has granted them.
But democracy comes at a price of allowing the electorate to vote on how much to tax their neighbour and how much free stuff they can get.
There is, for each individual, an optimal level of government. The lower you earn the greater the amount you want the state to tax in order to pay for things you want, like roads, healthcare, pensions, etc.
The rational outcome is to tax the rich hard because there are not as many of them, and give it to the poor who will hopefully vote for you. But you cannot tax them too much or they will either stop working or leave the country.
Add to this complex system the opportunity for a democratically elected government to go into debt and then elect political leaders for a limited period, so they will not be around when the debts become due.
What you get is an equilibrium where the productive are taxed about 30-40% of their income, the state runs a permanent deficit and most residents pay a low marginal rate of tax and happily vote for centrist parties who will not upset the status quo.
This will continue until necessity forces those in power to adjust. Which is what happened here in 1984 and will, in time, happen again. Until then it doesn’t matter who the Finance Minister is because all we are doing is changing the uniforms of the crew. The Ship of State is still heading towards disaster.
To defy Marx’s model of history a great man, or woman, is needed to intervene......The full article is published HERE
Damien Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor for Stuff, writing from a libertarian perspective
I’m not convinced. I think great men can knock history off one trajectory and onto another, and ironically Karl Marx was one of these individuals. Sadly. But in the absence of great men or women I find his version of history compelling.
Meanwhile, as Marx was ignoring his family in favour of his real passion of toppling capitalism, civil unrest was brewing in France. In the years leading up to the 1848 revolution the nation was a mess of regulation, monopolies and expanding welfare.
Frederic Bastiat, a remarkable economist who lived through this madness, observed that the state cannot procure satisfaction for some without adding to the labour of others, and that it is a “…great fictitious entity by which everyone seeks to live at the expense of everyone else.”
A little over a decade later Adolf Wagner, a German economist writing in 1863, developed a theory that as a nation becomes wealthier, the demand for government services increases.
Wagner’s Law is Bastiat’s observation put into effect. As our neighbour’s get richer, we want the state to tax them so we can live off their productivity. Like my reflection, it’s ugly but it’s true.
A century later, in 1950, Austrian economist Joseph Schumpeter wrote a book; Capitalism, Socialism and Democracy. It’s really good. He predicted capitalism would give rise to individuals whose self-interest lay in dismantling the capitalist order. The economic success of the free market would breed its own destruction; the intellectual class.
These intellectuals, Schumpeter believed; “…wield the power of the spoken and the written word, and one of the touches that distinguish them from other people who do the same is the absence of direct responsibility for practical affairs.”
They do not understand the nature of the system that produced the enormous surplus that allows a society to employ unproductive intellectuals.
Our universities, media and political class is full of Schumpeter’s children. Those who do not understand where the wealth they wish to re-distribute comes from but are insufferably righteous in their demands and showered in accolades for their piety and compassion.
Into this mix we bring democracy. Now. Democracy means we are run by laws, and not by the capricious whims of a prince. This is so ingrained that we find it unremarkable that we can defy the directions of a police officer if they step outside the power parliament has granted them.
But democracy comes at a price of allowing the electorate to vote on how much to tax their neighbour and how much free stuff they can get.
There is, for each individual, an optimal level of government. The lower you earn the greater the amount you want the state to tax in order to pay for things you want, like roads, healthcare, pensions, etc.
The rational outcome is to tax the rich hard because there are not as many of them, and give it to the poor who will hopefully vote for you. But you cannot tax them too much or they will either stop working or leave the country.
Add to this complex system the opportunity for a democratically elected government to go into debt and then elect political leaders for a limited period, so they will not be around when the debts become due.
What you get is an equilibrium where the productive are taxed about 30-40% of their income, the state runs a permanent deficit and most residents pay a low marginal rate of tax and happily vote for centrist parties who will not upset the status quo.
This will continue until necessity forces those in power to adjust. Which is what happened here in 1984 and will, in time, happen again. Until then it doesn’t matter who the Finance Minister is because all we are doing is changing the uniforms of the crew. The Ship of State is still heading towards disaster.
To defy Marx’s model of history a great man, or woman, is needed to intervene......The full article is published HERE
Damien Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor for Stuff, writing from a libertarian perspective
4 comments:
A very insightful commentary. Describes so well the rise, influence, and intellectual bankruptcy of NZ’s chattering class today.
He has carefully exposed the problem but needs to enlarge on the answer
Where and how is the great man great man or woman going to change anything?
"...as Marx was ignoring his family in favour of his real passion of toppling capitalism..."
Ignoring his family is an understatement. He was paying more attention to his indentured servant maid whom he fathered a child with. He spent most of his life sponging money off his parents. Only three of his children survived to adulthood because he refused to work and spend most of his life being drunk. If it weren't for sponging money off others his entire family would've died. Search for "Marx's Family Life - Why Philosopher's Moral Lives Matter.
"...as Marx was ignoring his family in favour of his real passion of toppling capitalism..."
Yes indeed. The dry accuracy of that statement didn't escape me.
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