Rather long for an April Fool

BLOG, MARCH 28, 2008

What sort of columnist in the Financial Post uses the phrase "robber barons"? Diane Francis! She wants more regulation of banks and finances. More Sarbanes/Oxley. That has been around for six years and it didn’t stop the mess of the mortgage financing fiasco. It seems to me that more regulation and ever more regulation is not going to solve this. However, Barack Obama may have had a good idea by asking for the consolidation of regulation of finances in the US so that the 20 different agencies that do it now can be consolidated into one like England has. Except, caution Yankee, Britain had to take over a bank in their country as well, Blackrock, for the very same reason. It was overhyped mortgages and overhyped housing prices, despite the fact that they supposedly had a much better monitoring system than the Americans did.
When is there going to be a quid pro quo? When are we going to stop taxing the things that are the most productive in our ecomony, like capital, stocks, savings and investments? Why not say the trade-off for tougher regulations and standards around the world for this globalized capital finance market is that we’re going to lead a global effort to stop taxing these sorts of investments so that people will get the maximum return on then. Part of the ponzy scheme was not Wall Street or robber barons. It was governments who reaped revenues from these falsely hyped transactions. No one in government said it wouldn’t take the tax revenue from the stock or property sales because they weren’t really that valuable.
It’s time for the government to understand that in some respects it is a partner in what goes on here, not only as a regulator but as a taxer and it may be time for governments to acknowledge that regulation should be streamlined and effective as well as enforceable. There should be sanctions and penalties for the "pin-stripes", as Ms. Francis calls them, who made obscene money from these deals. But at the same time, maybe it’s also time to say we understand that the future of our economy rests on the stock markets, capital and finance. If we don’t have them, if we don’t encourage companies that need them, we’re not going to have a higher standard of living like we’ve had for the past 150 years.
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Here’s an idea for those who were worried about revenue neutrality for carbon taxes. I don’t know if it’s enforceable, I don’t know if it’s workable or practicable because I know very little about tax and revenue administration.
My idea would be that if it is found and the end of a government’s fiscal year that it recovered more in carbon taxes than taxes were reduced in any particular year, then a cheque would be sent to all taxpayers to represent the equivalent winfall for taxpayers. So, for every dollar in carbon taxes that was raised more than was projected, taxes for taxpayers would go down.
Theoretically, you could have carbon taxes going up so much that eventually income taxes and other forms of tax on capital and gain and interest and investment could be completely eliminated as they are replaced by carbon or consumption taxes.
One wonders how you could rate that according to different taxpayers. How could you figure out each taxpayer lost because of carbon taxes paid? I think the only fair way to go is to simply look back, see how much in carbon tax has been recovered and if that exceeded the taxes cut for people in that year, then a pro-rated rebate is then sent out to each taxpayer. This would almost certainly affect low and middle income families in the fairest possible way and the only group that would probably receive far less than they paid in carbon taxes as a rebate would be the wealthiest taxpayers because of the pro-rated or per capita system.
If it was truly pro-rated according to earning and tax burden, then even the wealthy would be equally affected or benefited and compensated. Certainly no one would be out any money and therefore the whole project would be truly revenue neutral.
A special watch dog or monitor could be set up in either the Auditor-General’s office or in the finance ministry to keep track of this along with a parliamentary committee to ensure that this was being followed up. But there is no reason why I could not be kept on this to make sure the spirit and the letter of revenue neutrality is respected (unlike in the case of the GST). I think that the time in right for this approach, especially since we are not in a deficit position.
In the GST’s case it was easier to honour revenue neutrality in the breach when it was, after all, eliminating the deficit. That’s something we Conservative should mention over and over again: the GST eliminated the deficit. It shows that tax on consumption is always the better way to go. It’s not the way we’re going lately, but we could make up for that by bringing in a comprehensive carbon tax or some other super-consumption tax if you don’t like the fact that it would feature mainly on carbon emissions and if you don’t buy into the carbon emissions theory.
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Lately I’ve had less cause to agree with Christopher Hitchens, the notorious conservative/liberal/atheist erudite journalist. He actually said of Mr. Obama: "You often hear it said of some politico or other opportunist that he would sell his own grandmother if it would suit his own interest. But you seldom, if ever, see this notorious transaction actually being performed which is why I’m slightly surprised that Obama got away with it so easily."
Why do I say I am surprise? Obama still gets away with absolutely everything. I have to agree with Hitchens. I am particularly disappointed that Obama would not have followed up this appropriating of a relative to defend himself from a connection with someone who after all isn’t even related to him, with an apology from Rev. Wright himself. Apparently he couldn’t or didn’t want to procure this. I thought it was arrogant and calculating and unworthy and frankly I’m ever more convinced that McCain should be president if the choice is between him and Obama. Certainly, Obama is still morally and ethically preferable to Mrs. Clinton.
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To say that English common law or Anglo/American capitalism have alternative theories or systems that can compete is sort of like saying that there should be an alternative theory or system to compete with Newton’s Law of Gravity. If you are a secularist, atheist or agnostic or scientific layman, perhaps there is an alternative to the theory of evolution that is acceptable scientifically.
I’m not saying that free enterprise, democracy, liberty and the rule of law are scientifically the best systems as a matter of a consistent, logical formula or deduction, but I do believe the empirical analysis overwhelmingly shows that they are the best system for the most people on the most occasions in history. The others can only meaningfully compete, though they still trail, when they adopt shades or layers of those systems for themselves. For instance, the social democratic Scandinavians have done this.
Certainly the other systems in their purest and absolutist form lag far behind Anglo/American capitalism and the English common law on the principle of individualism and individual rights. It far outstrips those systems in their capacity for destructiveness politically, socially, environmentally and, most importantly of all, on a human scale. Anglo-American capitalism, common law, liberty and the freedom of the individual cannot compete with socialism, nazism, fascism and various other forms of statism that have occurred through history for their sheer capacity to murder and destroy senselessly.