Bureaucrats Grinding The Faces Of The Poor

By suggesting that poor countries should double their tax take, the OECD is implicitly assuming that poor country governments are better able to spend that money than poor country citizens. In theory and in practice, this is a travesty of sound economics. By definition, resources are deployed to the maximum of satisfaction if the people deploying the resources are the people gaining benefit from them. That principle is violated when an impersonal government inserts itself in the middle.

In practice, the idea of redeploying resources to Third World governments is much worse than the theory postulates. Most (but not all) such governments are thoroughly corrupt if they are democratic at all. Hence increasing their tax revenue merely gives them more resources to embezzle.

The OECD cannot seriously suggest, for example, that higher taxes in the Democratic Republic of Congo would have a positive effect. That extremely poor country has for 50 years been run by two of the greediest and most corrupt kleptocrats in history. Joseph Kabila (2001-19) has been a distinct improvement over Mobuto Sese Seko (1965-97) but when you have said that, you have exhausted the case for allowing him to seize more of his people’s resources. The Democratic Republic of Congo has immense mineral wealth, so its government has more opportunities to extract taxes than other comparably poor countries. However, history has shown no benefit whatever, in terms of economic development or the DRC people’s welfare, from its doing so.

This is a core problem with international institutions: their officials interact almost solely with governments, other international bureaucrats and left-leaning academics, so their prescriptions quickly become a mish-mash of re-warmed socialism. There is no input from either the market or a political process that would tend to correct their errors. (The successes of the Brexit referendum and Donald Trump show that the political process, in countries with sensible electoral systems, is not completely ineffectual, even if it is nowhere near as good as the market in weeding out leftist error.) A world government is thus not a dream but a nightmare; there would be no effective way of removing it, no effective elections for it, and so it would quickly become a monstrous monopoly, governed entirely by political correctness and lunatic economic experimentation.

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(The Bear's Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of "sell" recommendations put ...

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Gary Anderson 1 year ago Contributor's comment

Interesting but radical article. Perhaps the OECD understands that nations with higher productivity growth can benefit from higher taxes just like nations with low productivity growth should give tax breaks to lower and middle. But Trump really only did a little of that. He mostly gave tax breaks to the wealthy.