Tuesday 18 December 2012

The Laffer limit of life - an exemplification of sin


Knowing what the Laffer limit is for a specific time and place is a tricky matter - but clearly there is a point at which taxation reduces incentives to work so much that further taxes reduce production; and taxation becomes parasitic upon the economy - killing the economy.

That is, when a government takes so much in tax that people do less productive work in total, then the government 'needs' to take a larger and larger slice of a smaller and smaller cake even just for the tax take to remain the same size, such that even without further tax increases the economically destructive effect of taxation increases progressively and without limit until there is collapse.

The Laffer phenomenon was framed in a context of many decades of economic growth (growth in per capita income, due to growth in average productivity)  - and taxation above the limit would first reduce growth, then pull it down to zero.

Short terms tactics such as inflation, borrowing, coercion, incentives... kick the can down the road - but none of these affect (but rather amplify in the long term) the magnitude of damage - so long as the too-high taxation remains in place.


However, throughout most of human history, this would not be apparent through effects on growth, because most historical economies have not grown per capita (or rather, they grow so slowly compared with zero growth, that it is imperceptible on a human timescale and makes no qualitative economic difference, but only enables gradually denser population - as happened most obviously in pre-modern Japan and China).

Thus historically, taxation above the Laffer limit would start with an equilibrium zero growth economy; and begin to reduce its production.

At any rate, whatever the Laffer limit might be for the modern West, we are a long way above it, and taxation is very obviously, perceptibly, swiftly, destroying the economies of the world - made far worse by systematic, mandatory and propagandized lying about the reality of the phenomenon, such that there is no possibility of arresting and reversing the state of affairs.


Taxation above the Laffer limit happens because it is always to the short term benefit of the government to take more taxes than they are already taking - and such taxes can be used to pay themselves and their supporters, to reward what they want more of and to destroy what they don't like.

Yet there have been times and places where taxation was less than the limit at which negative feedback sets in; and where economies really did remain in equilibrium for several generations - or even grew.

It is trivially easy for most societies to take more in taxation than is good for the economy; yet it doesn't always happen: sometimes the government are long-termist.

For non-destructive taxation to happen, it must be the whole ruling class (including the actual government and also all potential, rival governments) are long-termist.

And for people to be long-termist about economics requires a mind-set that sees beyond the next few years; and is therefore prepared to forgo the very real advantages of looting the economy over the next few hours, days, weeks, months and even years.


But economics is not primary, it happens in a context set by what might nowadays be termed ideology, but used to be religion.

And the Laffer limit, or rather an analogous phenomenon, is general to all forms of power: it is always advantageous in the short-term to behave in a way that is parasitic and fatal if pursued overt the long-term.


This is not a deep, nor an obscure doctrine - but is clear to the meanest intelligence; qua human beings we know that this is one of the differences between good and evil; in particular we know that the pursuit of short term advantage is evil and leads always to greater evil.

Yet we have no only lost awareness of this intuitive fact; but actually go to great lengths to deny it, and to invert it. And this is the basis of current mainstream economic practice.


So, in a world in which we have exceeded the Laffer limit not just in the economy, but (very obviously) in the interlinked, cross-social-system ruling bureaucracy and in the mass media - such that the bureaucracy-mass media complex is now the primary reality for modern life - what are we up against?

The answer comes down to one word, and that word is 'evil'.


Evil is not, as the mass-media-bureaucracy tells us, essentially a matter of doing particular things we ought not to do and not-doing things we should: evil is a basic stance.

Evil is the stance of being turned away from God and from transcendental reality as the structuring principle of life; and instead turned towards our-selves and our satisfactions (pleasures, self-esteem, desires, lusts, diversion etc) as the structuring principle of life.

And once we have turned inwards and begun to structure life around satisfactions, there is no end to the short-termism and selfishness; since even long-termism and altruism reduce to the satisfaction that these views give us - and we begin to perceive the highest ideals and the deepest insights as being validated by our own positive feelings about them.


So, living above the Laffer limit is a mark of sin - it is a mark not just of dishonesty and imprudence; not just destructive of all virtue and of all beauty; but it is a general phenomenon which is cumulatively destructive of the unity and coherence of life.

It exemplifies a world in which each specific unit of life (the economy, law, government, the media, education, the military, health service etc), and each sub-unit of each of these social units, and each person within the sub-units - is engaged in short terms expediency - in selfish immediate maximization.

These multiple short-terms selfishnesses do not cancel-out nor equilibrate; rather they mutually reinforce - by combining and subverting any attempts at living by long-termist transcendental values.


The only solution to the war of each against all in an accelerating race to the bottom, is to restore a single, unified, over-arching transcendental reality - that goes beyond the expedient, and regulates (guides, encourages, suppresses) all systems, sub-systems and individuals.

The socio-geographical extent of a single, unified, over-arching transcendental reality defines the extent of a viable nation.

And if, as seems likely, we cannot re-establish a single, unified, over-arching transcendental reality to cover nations of their current size and population diversity; then these currently-existing nations will inevitably and unstoppably break-down and fragment; until such a point that we reach sizes and natures where a single, unified, over-arching transcendental reality can be established.

These will be the nations of the future.


We must therefore believe and live-by a transcendant reality; that is a reality which transcends the pleasure-pain axis of expediency.

A unified transcendance is non-optional for a non-self-destroying society - and indeed it is spontaneous to innocent and ignorant humans that this is recognized (whether or not the ideal can actually be lived-by, the ideal is recognized even by children).


The fact, and it is a fact, is that modern, secular, Western society utterly lacks the resources of will to acknowledge, leave aside tackle, the fact of living above Laffer limits: and without that transcendental perspective which potentially enables such will, we are utterly helpless to do anything but watch the hideous process unfold behind the hourly smokescreen of lies and distractions which our evil serving leaders in the mass media and linked bureaucracies continue to billow forth.



stephens said...

This blog reminds me very much of the final paragraph of C S Lewis' "We have no 'Right to Happiness'" from "God in the Dock.":-

"Secondly, though the "right to happiness" is chiefly claimed for the sexual impulse, it seems to me impossible that the matter should stay there. The fatal principle, once allowed in that department, must sooner or later seep through our whole lives. We thus advance toward a state of society in which not only each man but every impulse in each man claims carte blanche. And then, though our technological skill may help us survive a little longer, our civilization will have died at heart, and will—one dare not even add "unfortunately"—be swept away."

I remember the essay well as it seemed a great warning, highly appropriate to our times.

dearieme said...

There is no need to pay to Caesar even a penny that isn't his.

Bruce Charlton said...

@dearime - I can just imagine you thundering this from the pulpit - like John Knox! Good on you!

dearieme said...

Lord Clyde put it well.
"No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores. The Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the Taxing Statutes for the purposes of depleting the taxpayer's pocket. And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue"