PS Consultants - ideas & solutions

No tax please, we’re cybernauts

When I started writing in .net about 8 months ago, some of the more expansive ideas proposed in these pages were being described politely with allusions to the fantasies of Jules Verne. In other news groups on the Internet, where the rednecks might have been expected to know better, the descriptions were somewhat less flattering. Yet in the time since .net has been going, more and more people who might once have been regarded as "establishment" have been catching on to the revolution that is taking place under their feet.

In fact, some of the most revolutionary thinking and ideas has been coming from some of the most unlikely, not say "reactionary" quarters. The liberal left who like to consider themselves the keepers of the keys to social progress and intellectual development have been found to be trapped in their sixties and seventies notions of what comprises a "social revolution" (mass marches to Westminster, banners, egg throwing etc.) while the real progressives are turning out to be the former reactionaries, who choose to throw their eggs in cyberspace, where the future already exists.

More and more features are appearing in national papers and generally "broader" media as various Damascene conversions take place in increasingly unlikely quarters. No less than William Rees-Mogg seems to have caught on to some of the fundamental facts of the cyber-age life in a recent article in the Times. This was titled with the usual pithiness we have come to expect of that august organ:

"Modern communications mean the rich will decline to pay for the old-style welfare state"

His Lordship went on to point out that in the USA, only 5% of the taxpayers paid 50% of the income tax, and 1% pay 25% of tax. The differentials are growing steadily as the technocracy of the Information Age pulls further away from the unskilled and information-challenged masses. The way in which this has started to happen at the end of the "greed is good" decade has left little time for a leisurely reappraisal of the social consequences of such a fundamental shift of influence.

Some ecumenists may try to point out that the top 5% have always owned 80% of the nation's capital. But did they also earn such a proportion of the taxable income? And, more crucially, they and their corporations tended to be quite inexorably attached to the very fixed locations of their capital, be they newspaper empires, oilfields or steel mills.

In the information age, however, the place of work has become cyberspace. And whilst the steel mills still exist, they are now located in Pacific Rim nations because the local welfare states of the West have made it utterly uneconomic to compete with the wages of the Far East.

"More than half the top 5% of the US taxpayers can earn their money in any part of the globe given access to a telephone, fax and the Internet"

George Soros and his chums the bond traders, brokers and financial fixits control unimaginably vast amounts of money without ever doing anything that the industrialist of old would regard as an "honest day's toil". The information engineers who facilitate this business likewise exist in a variety of forms that are as abstract as necessary to avoid establishing a taxable presence in an "unfriendly" jurisdiction.

And the idea that "your taxes" are supporting a welfare state that is perceived to prop up an unsavoury selection of ne'er do wells and general derelicts who make no contribution of their own is also bound to bring about a degree of resentment, and provide encouragement (if any were needed) to find every way imaginable to mitigate this imposition.

Bring back the poll tax
Where his Lordship and many others get into hot water is in their inability to make any creative suggestions as to how to tackle the perceived evil of not being able to tax anyone of substance in order to prop up the welfare state. The idea that the current tax rake-off of 40-50% of the Gross Domestic Product of most developed nations will slump to as little as 10% seems to be broadly accepted as inevitable, which endorses the efforts of recent UK government to move the burden of taxation onto indirect items, such as VAT, and flat-rate "unavoidable", such as the now defunct community charge.

However, if the world's tax and spend governments are no longer able to get their snouts in the troughs of the top earners, this money still exists anyway. It's just in someone else's piggy bank, not HM Treasury. And the chances are that it might be used less wastefully and more creatively, for even Bill Gates can only ride in so many limousines and east so much caviar.

Is the real issue that the "people" will no longer get to vote on the issue of how this money is spent? But was it ever theirs to spend in this vicarious manner in the first place? The answer is that is only 5% of the population paid 50% of it, then in all fairness, the answer must be "no".

The community charge tried to address the old notion of having all the citizens pay in order that they should then have some closer affinity with the manner of spending. This seemed like a perfectly reasonable notion, yet look how poorly that idea went down once the popular gave currency to the idea that this was somehow "unfair".

But if you feel that there is something wrong with a system that enables/allows 5% to earn 50% of the taxable income then I'm open to hearing your arguments. It has been brought about by the governments themselves through the encouragement of the creation of conveniently large administrative units. A few large corporations are easier to "manage" than a nation of small enterprises, and prior to systems like the Internet, there were some genuine economies in the communications structure of the bigger organisations. But like much else, those ideas are now history. The distributed economy is a real alternative.

So what are we to do about these fabulously wealthy people who make even the much pilloried privatised bosses seem modest in their demands? Do we have to do anything? Can we accept that their use of their money is likely to be just as creative as any government? After all, look what misues so many government have for the money they usurp.

They will use this money to develop new businesses, expand existing businesses and generally churn the world economy in a very market-lead fashion. And I would also wager that like most normal people, even Bill Gates and Geroge Soros would not choose to buy Trident submarines and missiles with the money that isn't going to Uncle Sam. Does it really bother you that no one voted for them with a ballot paper, but a dollar bill instead?

So it looks like the editor of this noble tome now needs to find room for the recently converted Lord Ress-Mogg. He is well on the way to understanding just why the Internet and the revolution that it spearheads is such a fundamental process for change in society.

"The Internet, with other electronic systems, will become the main marketplace of the world, on which the absolute majority of the larger business transactions may well be done".

I hope this features comes as suitable relief to wimpy@cix, who sent me the following communication when I failed to appear in a previous issue of .net:

"When on the bog I like to read .net, and look forward to your page. But this time I was not in luck, no good rant at the system, no insight to what goes on. What happened?"

Well, the simple answer was that I missed the deadline due to "pressure of commitments", and I was also curious to see if anyone noticed. I am touched. Deeply. :-)

I hope that this latest offering will prove to be as effective as syrup of figs?