From: Soren <sorens@workmail.com>
Date: Wed, 11 Nov 1998 22:15:28 +0800
To: cypherpunks@cyberpass.net
Subject: Re: most of what govts do can be done by business, and done better (Re: How to solve the tax problem w/o anarchy or force)
In-Reply-To: <199811102039.UAA09523@server.eternity.org>
Message-ID: <3649A4FF.3631965C@workmail.com>
MIME-Version: 1.0
Content-Type: text/plain



Adam Back wrote:
> 
> Vladimir Nuri writes:
> > the distinction between govt and business is sometimes an
> > arbitrary one. for example govt agencies typically contract
> > with private companies to perform govt services. a massive
> > example of this is the defense industry. what I would tend
> > to propose is a system where this is augmented and finetuned
> > to the point the govt become a very efficient sorting mechanism
> > for channeling money to businesses that are the most efficient.
> 
> Even when government does sub-contract, the inefficiency is usually I
> think pretty horrendous by industry standards:
>  ...
>  ...
> > it really does seem to me like there is a legitimate role for a
> > certain amount of money to be collected for govt service.
> 
> I think you can privatise everything.  Things which are called natural
> monopolies could be managed by trade organisations or companies
> bidding for management getting efficiency related fees.  Why should
> politicians and the rest manage roads, why not a company.
> 
> > imho it is far, far less than whatis being collected today.
> 
> zero I think woudl be best, or very very close.
> 
> > if taxes were 5-10% people wouldn't give as much a damn about the
> > govt and how it worked.
> 
> What all could you spend 5-10% of GNP on that couldn't be privatised?
> Sounds like an awful lot of legalised theft yet!
> 
> > libertarians tend to be awfully realistic some times. who pays for
> > roads when everyone uses them?
> 
> don't pay not allowed to use.  not everyone uses them to drive cars
> on.
> 
> 
There is a real live example of this kind of transition.  New Zealand.

New Zealand is the nation that coined the term 'cradle to grave
socialism' (and also the first to offer women the vote --
coincidence?).  In 1986, the country was as close to bankrupt as was
possible to be.  The socialists were ousted and taxes slashed from 60+%
to 28%.  A GST was introduced, government monopolies were sold off --
mail delivery, post offices, power generation, water supplies, telephone
service, ports, airports, medical, road maintenance etc. Military
investment was reduced to a coast guard and a professional
infrastructure required for UN involvement.

The (almost) immediate result of this divestiture, was for affluence to
skyrocket due to the release of the entrepreneurial spirit (remember the
kiwi-fruit?) By the early '90s New Zealand was upgraded from 17th
standard of living in the world, to 3rd. Since then, taxes have been cut
thrice more.  Currently income taxes are at 21% and plans have been made
to eliminate them entirely in '00.  The entire economy is supported by
the GST of 12.5% (consumption tax).

Welfare still exists, although the population is steadily being weaned
off it.  Most of the diehard dole-bludgers have moved to Australia
(coinciding with a move of many businesses from Australia in the reverse
direction), which still has a 45% income tax rate to support them.  Much
to the chagrin of the doomsaying socialists, the standard of living
actually improved for all the population.  The atmosphere of economic
repression was replaced by cheerful optimism within 6 months of the
transition, and has been growing ever since. Currently, along with
Argentina, New Zealand is the only other country in the world to be in
the black.

Income taxes were kept on solely for the purpose of eliminating foreign
debt. This is due to be completed by '00.  The change in people's
attitudes has been radical. During the latest asian economic crisis, New
Zealand found itself severely affected by the decrease in its markets. 
Rather than a return to printing money and increased taxation, New
Zealand has further reduced its tax burden in the belief that the free
market will find the correct solution.

One other interesting change happened at the same time as the above. 
During the post world war II period, New Zealand (and Australia) were
afflicted by something that was known down-under as the 'English
disease' -- viz: trade unionism.  This second government was virtually
abolished in New Zealand by the passing of the Employment Contracts Act
of 1986.  Under this act, all people are considered to be self-employed
in the sense that everyone has the right to negotiate their own
employment contract, or to collectively bargain as they see fit. What
this means, is that there is no single standard of employer to employee
relationship defined by the government (or trade union).  For a
corporation to require exclusivity of its hired help is considered to be
an invalid employment contract under the act. Consequently, becoming an
'employee' in this sense implies that the income, derived from such
employment, is tax free.  This has been tested in the courts
successfully on a number of occasions.

Several benefits have ensued from this: firstly, everyone has developed
an understanding of how to organize their own financial affairs to
minimize their tax burden; secondly, being self-employed means the 20%
tax rate can be largely reduced through business write-offs; thirdly,
negotiation of contracts, in such an atmosphere, has largely eliminated
the 'us and them' mentality between the corporation and the worker.  Now
it is just a lot of independent co-operating peer companies; fourthly,
because there are no 'bosses' as such, people have a lot more latitude
on how and where they perform their work.  This has led to an incredible
amount of home office and business de-centralization and flexibility.

Its not yet perfect by libertarian standards, but the direction has been
chosen towards a model of government limited to an arbitration function
and to provide a common foreign policy.

My belief is that the creation of a libertarian environment in the US,
is unlikely without much social disruption and bloodshed.  Similarly for
the EU.  A more productive course of action is for libertarian minded
folk, to relocate themselves to countries that are amenable to such
changes in direction (Max! where can we go? Argentina maybe?), and work
to effect the creation of a showcase example of how it can work in
practise.  With the examples of New Zealand and Argentina and the growth
in their stability and affluence, this would be a constructive means of
affirming your libertarian beliefs, without violating the principle of
not initiating force, fraud or coercion.