Tax

Maybe I was not very clear yesterday and you may wonder why planning a financial budget by income (in the presence of a surplus) should turn a society into communism.

It goes like this: If the government sees a huge income and decides to take up more social responsibility (that is, spend more money), the system – and I remind you, that’s the most inefficient system of all – would continue to grow. Since it is very difficult for a government to give up a social responsibility that it has already taken up (just think again what Margaret Thatcher did), in the bad years it would run into deficit and inevitably has to explore additional income.

A few years later, when the tide changes, the extra income turns into surplus, and the government needs to explore other social responsibility to take up in order to spend the money – the vicious cycle would continue forever.

And, the end result is a gigantic governmental structure that most of the citizens have to depend on. (The very example at hand is: Almost everyone in our city depends on the public health care system.) Everyone receives a equal treatment (except, of course, a few more equal ones) – exactly the road to serfdom as pointed out by Friedrich von Hayek.

(To be continued.)