Tuesday, 21 September, 2021; 6:07 pm
Can there be justification of illicit behaviour?
There’s a certain glory to tax cheating, money laundering, illicit export of capital, and even corruption. I know this isn’t a popular or fashionable view but it’s one with at least a grain of truth supporting it. For all of them place limits upon what the authorities, the government, may do to us. Further, the existence of such seeming problems is useful evidence that too much is being tried upon us.
This is not to say that all examples of those four are valid expressions of liberty and freedom — far from it. The drug dealer bribing so as to be able to launder their profits out of the country untaxed is not doing any of us any favours. And yet it is true that illicit behaviour can be of benefit.
Economists have grappled with the idea of corruption for some time now. The general view being that it isn’t always a bad thing. The act that is, is not necessarily going to have a bad outcome, even as the existence can be taken as a bad sign. Imagine, just pretend for a moment, that there’s a bureaucracy so stultifying that no one can ever get anything done. A little cash to grease the wheels so that activity can take place will be beneficial — things will be done.
In this case, the outcome of the corruption itself is beneficial while the existence of the necessity for is a signal that something is wrong in the society — too much bureaucracy. We can get rid of both, simply by relaxing the rules on who may do what, who needs what piece of paper to be able to do anything.
It’s possible to make a similar case for tax cheating. This of course comes in a spectrum, from tax avoidance — organizing ones’ affairs legally to reduce the tax bill — to tax evasion, doing so illegally. If the tax system were one that everyone were delighted to be paying into then there wouldn’t be any such cheating at all. Sure, human nature doesn’t work quite that way but if all spending were what is generally agreed upon and if all taxation were thought to be a just amount by those being asked to pay for it, then there would be no cheating.
The corollary to this being that when people do organize their affairs — however they do so — to reduce their tax bills, that then restrains the ability of the government to charge the rest of us. If businesses simply will not pay 90% of profits tax charge, just as an example, then governments cannot try to institute a 90% of business profits tax charge. Because they’d raise no revenue doing so.
What is called money laundering also exists across that range of activities. From, say, spending more than $300 on a credit card to shipping vast wagon-loads of cash out of the country. But again, that there are these illicit methods of moving money away from the current jurisdiction does stop the authorities from entirely controlling our ability to move our assets out of their reach. Thus there’s a limit to what the government will even try to do.
This is all most unfashionable for the general contention — that the government raises money, controls our assets, spends the taxation, righteously. Which is a difficult contention to support for any government when we drill down into the actual detail of everything that is done. The same is true of any organization of course.
I agree that we must have government and thus taxation to pay for it. But can all of us find at least one thing which the government does which we don’t think it should, one fiscal imposition upon us collectively which we think should not exist?
Even the people who do the governing agree with those two claims — for if they didn’t, they wouldn’t be continually changing what the government does nor how it raises the money to do so.
Underlying all of this is a more basic contention. We’re generally aware that monopolies are a bad idea. The management of them become sloppy, productivity falls, and output is restricted to increase profits and the consumer ends up getting a bad deal. The people who benefit are those running that monopoly and, to an extent, the workforce in it.
This is just the usual and standard analysis of a monopoly. Yet at the same time, every government claims an absolute monopoly over the affairs of the people within its jurisdiction. The central claim of public choice economics being that government isn’t so different — those running it have much the same motivations as everyone else.
We also know how to deal with monopolies — we introduce competition and the customers get a better deal. Sure, competition for governments will often be called illegal because it’s the government who gets to decide when competition is called that. But citizens, consumers of government, will often end up with a better deal because that competition exists.
Yes, it’s entirely possible to take this idea too far. But a little bit of economic illegality does indeed provide a limitation to what our rulers may do to us.
Tim Worstall is a Senior Fellow at the Adam Smith Institute in London.
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