Tax avoidance through the ages

A sure way to commit suicide would be to hold one’s breath waiting for the G8 leaders to actually clamp down on money laundering, illegal tax evasion, and corporate tax avoidance.  It’s theater in which the politicians can pretend to deal with a problem while listening to the lobbyists who want even more loopholes.

Through the millenia those in the elites have taken for themselves the agricultural and luxury surplus mostly using force or coercion.  With the industrial revolution things changed.  Production increased so that there was some to share and the supply and demand for labor to produce that production was such that workers could claim some.

In this new situation the most effective way to cream off a big chunk of the surplus was to get governments to pass legislation restricting competition.  Thus we have trade restrictions, licensing requirements and patent and copyright legislation.

As the economy has gone into an extended decline tax avoidance has become another effective means for getting an excessive share.

Both of these approaches provide lots of work for lobbyists and most politicians are willing listeners.

So we now have increasing inequality, a concern for some but not all people.   The rich keep getting richer and more people are sliding onto or over the margin.

Even if we come up with a non-violent way to eliminate the rich it would not solve the problem as the rest of us would be lined up to take their places.  The most effective way to deal with the rich would be an economic crash and/or hyperinflation, but that would get the rest of us as well.

Regulating banks and competition

This week’s The Economist has an article about a small bank in Texas which is challenging in court the Dodd-Frank act passed two years ago to increase the regulation of the banking industry.

I have a theory that most if not all economic legislation works to restrict competition and it appears the Dodd-Frank act does this by making life difficult for the small banks.

It also appears small banks, or at least this one, being small have to follow prudent banking practices and have fewer opportunities to gamble with other people’s money.

Maybe the best way to regulate the financial industries is to ensure they are highly competitive and repeal legislation which restricts competition.

Of course the big banks would turn their lobbyists loose on this one.

 

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