Monday, May 10, 2010

Fiscal republicanism?

This article by Paul Krugman in the New York Times is worth a look. I'm not sure if I'm qualified enough to agree with Krugman's conclusions about the likelihood of Greece dropping out of the Euro and devaluing, but the notion of contagion is an interesting one.

His comments on California - a gross example of poor governance, thanks to Direct Democracy - in comparision to Greece bear some thinking about.

How long will countries accept an unorthodox or idiosyncratic approach to fiscal management from their neighbours? Tax avoidance is, after all, not just a trait of the rich and the right-wing as it is in the UK. It is also a marker of long-standing distrust of government (Spain, Portugal and Greece all have huge levels of tax-avoidance, and are all countries where democracy is relatively young and government in the public interest is a fairly new concept).

Or, taking this one step further, does this make the case for a more republican approach to taxation in general? By republican (I've got my own definition of this word - it means that you set your policies by a rational process rather than honouring the compounded errors of history).

I mean ideas such as the replacement of Council Tax with Land Value Tax - a Lib-Dem policy, as it happens.

As far as I can see, it makes the case for more purposeful government - one that can't be batted aside by single-issue pressure groups and wealthy media interests. They're the ones that are indulged too much when they hiss.

No comments: