We, the people, must pay more taxes

by Usvatte-aratchi

Everyone, including voluble politicians, give tongue that ‘the last government’, no matter which, was responsible for the crippling debt burden that we have suffered from for well over 30 years. No matter which party ran the government, the present debt burden is the accumulation of overspending by the PEOPLE under the baleful leadership of shortsighted governments. None, university professors and pundits included, have blamed us the people who have lived beyond our means. Joan Robinson, who came here in 1958 (?) politely upbraided us somewhat. The government is but us organized for the purpose of governing ourselves democratically. If government overspends and borrows domestically or abroad, it is we who borrow to spend beyond our means. We, the people, will pay back the loans.

Our government leaders kiss babies and shout out loud their deep concern for the next generation. Yet at the same time they set huge loads of debt on the slender backs of presently five-year-olds to pay back when older, huge amounts of taxes to pay interest on accumulated debt and the debt itself. Think about it: government who act as agents of the people have the alternatives of either collecting revenue out of taxes or loan proceeds. In the absence of government income as profits or rent, there are no other sources of revenue. Our governments receive 98 percent of its revenue from taxes and loans. Loans are repaid by people as much as taxes are. They are two different ways of taxing the same public: tax the living or tax the unborn. (You ‘tax the dead’ if there are death duties.) To shout out that they care for future generations and at the same time to leave them burdens paying back what we now consume is either utter folly or contemptible hypocrisy. The people who cheer them and hold them as parodies of statesmanship are similarly not using their minds. The people must realise that either as taxes or as loans they part with their income to the government. When the people permit a government to borrow, they simply agree to pay another part of their income to the rich whether here or abroad who lend to government. Payments to government whether as taxes or loans are certain as death, with some payments to government, unlike death, shiftable in time. I remarked that government is but an agent of the people. On the principle that the principal is responsible for actions of the agent, we the people are responsible for all actions of government. Our constitution goes on to lay down: sovereignty lies with the people and it is inalienable. All authority, legislative, executive and judicial is derived from the people. When Parliament decides to tax you or borrow on your behalf, it is you with government behaving as your agent, as the law permits. You have no exit from your responsibility that it is you who decide to borrow and pass on the costs of your profligacy to the younger generations whose wellbeing that you so volubly attempt to promote. Stop lying and being hypocritical; tax yourself; pay for the garbage trucks that help keep your corner of the street clean.

Last week, I paid my municipal rates. I had noticed that the trucks that collect garbage on my street were gifts from the people of Japan and the people of Sweden. We are a city that cannot pay for the collection of its garbage. And yet city taxes here are pitifully low. I understand that taxes are hard to pay but it is harder to live in garbage dumps, unless you are Oscar the monster who devours garbage and lives in a garbage can in Sesame Street. It might surprise Oscar that there live and mightily prosper in this land whole clans of garbage (jarawa) monsters, although of different feathers. To connect up with the earlier paragraph, it is borrowing that generates far more garbage than tax revenue. Loans are often tied to large infrastructure projects, the execution of which is undertaken by an organization in the lending country itself that generates so much garbage (jarawa). Oscars that live here on Main Street in the city and in magnificent mansions in back-of beyond, grow in mass with surprising velocity. (Simply keep an eye on members of Parliament, who become ministers. It is a fundamental law of physics that faster an object moves, the heavier it grows.) When the lending country itself is mired in garbage, this arrangement blesses both the lender and the receiver. That often explains why large and expensive infra structure projects are so popular with our politicians, the loot they collect is a percentage of the cost of the project, larger the loan the larger the garbage (jararawa) collected. The people must understand that they or their progeny pay the taxes with which to service these loans and eventually pay back the loans. If the collector of the garbage lives on a street other than Sesame, well then, he grows rich on the loot and flies back to the temperate climes far north, ‘where …. and the buffalo roam… and where the sky is not cloudy all day.’ Here it is cloudy always, at least in the afternoon. The darkness helps theft.

There is a highly influential large group of economists who would say that I am out of my mind. Their ideal society is one in which the state is minimal. Leave it to the market, cut down government interference to the minimum and innovation and enterprise in competitive markets will maximize public welfare. The models they run are perfect and even beautiful in their elegance and simplicity. However, new research has solidified widely prevalent suspicions that those models produced societies where inequalities in the distribution of income and wealth are beyond tolerable levels. The situation in the US is the best researched and known: ‘… black American households earned around 60% of what White households did, and the typical Black family had less than 10% of the assets of a typical White family’. But more stunning in the face is China, which once was poor and almost everyone was poor and rapidly became rich mostly in southern China and that along the coast, with Xingjian, Qinghai, Heilong Jian in the east and the north and Yunnan in the south-west, all of them yet mostly poor. In China in 1981, GDP per capita was about $2,000 and the Gini coefficient was 0.31 and in 2016, $ 6500 and 0.46, respectively. Gini coefficient is and index of the degree of inequality in a set of data: the closer it is to 0, the less inequality and higher the number is and closer to 1, the closer to complete inequality. While China grew richer it also nursed a more unequal society. Jack Ma and others rival Ambani and others in India. Society in that land mass now identified as India has been for millennia one of inequality and a land of epic inequality, whether in wealth holding or in income and in social distancing. (It is but the other day, thanks to Covid-19, that social distancing stopped being a dirty word that was ostracized in civilized company.)

I am not raising a question about capitalist or socialist economies. Those are decisions that the people must take. I am talking about priorities in spending. Huge amounts of money spent by the government of the United States is actually used by private corporations like Boeing or Ford and General Motors. Large research funds generated by government are spent in labs in non-government research institutes, including those in universities. Government revenue may foster private enterprises.

Thomas Piketty and Emmanuel Saez brightly highlighted the rising inequality in the distribution of income and wealth in countries which by and large emulated the ‘free market’ model. Emmanuel Saez’s Distinguished Lecture before the American Economic Association last month demonstrated the importance of factors other than free markets in the efficient functioning of economies.

We must grant that ideology the credit that the enterprise and innovation in regimes where freedom was high permitted the rapid growth of income and standards of living in the long run. Yet we cannot deny that the ‘causes of the great divergence’, from roughly 1700 to 1950 between say Great Britain and China was ‘the role and function of the state’ (Peer Vries, 2017). Daniel Kahneman in 2002 was awarded the Nobel Prize in Economics for demonstrating that motivations of people as economic agents were quite different from those were different from those commonly assumed by free market economists. In my mind there is no contesting that the way governments function is determining in the growth and development of economies. Where governments are periodically elected by the people, the PEOPLE are responsible for what happened in their economies. Stop blaming political leaders; look into your mirrors and see the culprit: you. It is not by accident that Singapore elected Cambridge educated lawyer Lee Kuan Yu as their Prime Minister nor Malaysia elected University of Malaya and UK trained physician Mohammed Mahathir as their Prime Minister.

These were both multi-ethnic poor societies which under the leadership of these two great men achieved spectacular prosperity admirable peace among communities. We who had better educational facilities when Singapore and Malaysia were poor continue to elect persons well below those in the greater society. Move a bit further west on the Indian Ocean and you come to Mauritius. It has a population which is as mixed as we are: 68 % Indian, 27% African, 3% Chinese and 2% French. (Google.) James Mead of Cambridge in 1952 headed a Committee that looked into the society and the economy of Mauritius, then a British colony. It was a very poor country with malaria raging all over. It was riven by interethnic rivalries. Its GDP per capita in 1985 was $ 1100 and in 2019 $11,100. The average expectation of life at birth in Mauritius is 75 years. These three societies managed inter-ethnic relations far better than we did, even after a disastrous civil that ate up massive resources and we missed three decades of spectacular growth in the rest of this part of Asia. The leaders that they elected to office there were learned and wise. Learning that matured wisdom helped them overcome what seemed impossible odds to forge poor and splintered societies into united and prosperous ones. We as a people distinctly were not very bright in selecting our leaders. And continue to be so. Our predecessors were right to provide state sponsored education, especially of women.

They were splendid to provide state paid for health services. Fortuitously, food came to be distributed equitably and at a controlled low price. Malaria was effectively controlled with chemicals applied by trained and committed public health personnel. Infant mortality fell rapidly from 141 per 1,000 in 1939-40 to 71 in 1955; it is now about 6 per 1000 live born. Infant mortality fell precipitously from 1939 t0 1949. (N.K.Sarkar has a lovely graphic bringing this out.) There is no way that government expenditure in this land can be cut down except by the action of the public who refuse to pay for it. If we don’t pay taxes, why ask our children to pay for our needs. Borrowing, no matter from where, is only another and dishonest way to rob future generations from their entitlement to their earnings. If you do not pay more in taxes, you will have to cut down public services. Corruption on the part of those whom you elect to office takes a large chunk of the taxes you pay. If you eliminate garbage Oscars you will pay so much less in taxes; or better you have so much more money to do other desirable things. The remedy is to run them out of town rather than make heroes of them on various irrelevant grounds. That they have not been found guilty in courts is a more a tale of wholly inadequate judicial administration. The evidence stands glaring you in the face. On balance, a decision to drop someone out of suspicions of corruption is a less costly choice than weakening incentives to pay taxes for public services.

If the public do not pay taxes, there is no choice but to cut down public services. Don’t be fooled with the paniya that self-appointed kapuva, driven by evil kali yakkhini, offer us. If you want more universities, pay for them. If you want to get to Mahanuvara faster, pay for the highway. Drive away garbage monsters. Their progeny, as you can see already, will have grown manifold by the time your five-year-olds can vote. You cannot expect your children to pay for these. If anyone is honestly interested in the benefit of the next generation, build a better education for them, construct roads and harbours and establish research labs and pay for them. Let them complete and add to them. Don’t talk of benefitting them, whilst at the same time, with cunning subtlety, you rob them of a part of their future income. We, the people in this generation, must pay more taxes.