You know, many people (Libertarians and reactionaries mostly) think that a laissez-faire economy accomplishes just that.
It was a buzzword for W when he repeated the word “consequences” so often. Consequences means that we should know what is ahead of us, make good decisions, and are rewarded or suffer accordingly. Start a business? Succeed; get ALL the profit, untaxed. Fail? Too bad. Commit a crime? Go to jail. Hang ‘em high.
It’s all a nice concept. Adam Smith might have been proud, though he wrote a great deal about morals and about the need for appropriate regulations too.
The more middle of the road people generally like consequences too. Conservatives tend to favor those that protect those who “made good decisions in the first place.” Liberals tend to favor consequences that even out opportunity, and encourage certain behaviors.
The down sides of an only consequential society are:
- Not everyone can see that far forward. That is why we have education. That is why we seek equality of opportunity (which is different from equality of reward, and different from equality of risk). Life in a ghetto does not often open the door to entrepreneurship (with the exception of drugs, guns, and prostitution I will write about these issues soon!);
- Preventive measures often lead to #1, and are often cheaper than consequential ones. Rehab is cheaper than jail. Clinical check-ups are better than Emergency Room care. Employed people commit fewer crimes;
- Lack of regulation allows for corruption. Madison said, if all men were angels, there would be no need for government. Laws protect everyone. Laws are meant to codify right behavior. They are generated by representatives, who are supposed to be both wise and responsive to the public sense. They are written measures anticipating problems, and seeking to prevent them. Laws should PREVENT bad behavior more than they punish the violators, or they are ineffective. Enforcement is critical.
Business knows this stuff. The margin of profit for expensive items is way higher than the margin for staples. “Loss leaders” in stores are usually for high demand, everyday items. That’s due to the ferocity of competition. It also ends up being fairer for those with less money. A sales tax is regressive. Most licensing is as bad as a “true flat tax.”
Taxes have two purposes:
- Generate revenue to pay for needed services; and
- Use money for the public good.
If the ONLY purpose of taxation was to pay for needed services, then a true flat tax would be appropriate. A flat tax might be a certain percent, same for everyone, or how about this (mentioned to make a point, I don’t advocate it): Take the amount of money needed for services, and divide it equally by the number of users. Everyone pays the same amount, rich or poor.
If your reaction that kind of tax is, “Oh man,” Then you agree, taxes should come from those able or obliged to pay them. As long as there are lucky people, they should pay more. As long as there are stupid behaviors, they should pay more.
Cigarettes should be taxed through the roof. This is a preventative measure, allowing those likely to need lung care to pay in advance for it. It also discourages bad behavior. Similarly, wasteful behavior should be discouraged through taxes. Luxury, oversized cars – tax them. First class tickets, yachts, bling? Tax it. Idling your car a long time? Tax it. Trash? Tax it over recycling.
Until the wealthy truly deserve what they have, it should be expensive to be rich!