There will be Fire

We are only just getting into this economic crisis and already, there is no chill.

In France, there is a "controversial" (very obvious) plan to increase the minimum retirement age from 62 to 64 over the next seven years in a response to what is essentially the real economic crisis - an aging population. As in order to keep the pension train running a little longer, more money needs to be injected into the system, which isn't happening.

Scenes from the Walking Dead

Scenes from France

There are many reasons that money isn't coming, with one of them being less young people working compared to the past. But, that is only part of the story, because things like automation are also having an impact on employment and, the ability for higher salaries, as efficiencies are sought to drive profits and cut down on staff. On top of this, industries themselves are changing the way they operate, which heavily impacts tax revenue.

In the past, there was a deal between governments and corporations, that the governments would provide skilled labor to the corporations that could work, earn and be farmed for tax - and the corporations would employ them. This was a win-win situation, as not only didn't it mean that companies didn't have to do the training, they would also get various protections for their industries, as well as a lower tax percentage on their own earnings, leaving more going to the shareholders in the form of profits and dividends. The employees themselves would pay a higher tax and fund the education system to provide the next round of skilled labor to enter the market.

The deal has been off for a while.

Governments only have access to the tax money collected nationally, and because of the quest for efficiency for profit maximization, companies have been increasingly finding ways to circumvent the local system. This itself comes in many forms, from the creative accounting process for how tax is paid, to the leveraging of cheaper labor in off-shore countries to lower production costs. But whatever it is, ultimately, it means the governments have access to less income from the businesses, and there are less people working locally to pay more tax. This means that more tax has to be extracted per person.

Once upon a time, royalty would wage war in order to take more land, but the power wasn't through the land itself, it was through the "acquisition" of peasants (taxpayers) who would work that land and give a cut to the royals to keep them safe. Effectively, it was a protection racket, like a mafia would run, expanding their kingdom to take in larger volumes.

However, with an aging population driven by lower birthrates, the volume is decreasing, but the top end age brackets require care, as after all, they have paid their dues to the system and are "entitled" to it by law - even though laws change and there is no such thing as a guarantee. But, with a business and tax system that is extracting more than the value it is adding, it is a losing game for the pension systems that rely on those inputs.

There is also talk of bringing in more foreign labor to fill the gaps in the workplace, but that only covers a part of the problem, because even if those gaps are filled, they will largely be working in companies that are using them as a mechanism to generate value, but extract that value out through the conduits for profit maximization anyway. So, it just slows down the gap formation, but doesn't stop or reverse it.

The tax system is broken in many ways, because it has been designed to take advantage of some over others and to encourage passive earnings and increased earnings on wealth. This means the more you have, the less you pay and when that goes into corporate finance that has the ability to maximize through financial tools average people don't have access to, it encourages tax minimization, no matter the cost exacted locally. And, the corporations don't die, so they can keep storing wealth, never having to pay an inheritance.

While I won't argue for a healthy tax system, if there was for example, a flat rate tax applied at all earning points and transaction transparency, there would be an inability to hide earnings through creative accounting. For example, if earnings are made in Country A, the tax has to be paid in Country A, not moved to Country B that has a lower rate. And, like it has been discussed before, automation like robotics, should pay tax into pension funds to cover the people it replaces.

Ultimately though, the tax system as it stands is doomed, because it is not able to track the transactions of the corporations accurately enough across the globalized networks. This means that they will have to take their cut from those they can track, which are the people in the country who have no choice in what happens, other than taking to the streets in protest. Eventually, conditions become untenable and society will descend into chaos and violence.

And this is already starting.

I suspect at the moment however, that a lot of the protests are not quite what they seem, where while there might be a cause behind it, there is more of a hooliganism element to it, driven by mob mentality. It would be interesting to see for example a breakdown of the demographic information of protesters, seeing what kinds of backgrounds they have and whether they themselves are adding more to society than they are taking. If they were in a small community that provided for each other, would they be net contributing members, or net cost? This is not a judgement or stereotype of what is going on in France at the moment, but I am interested in these kinds of metrics, even though the information isn't available.

And perhaps it would be in a future where all business activity is tracked and the appropriate tax rates are paid locally, because that would also uncover other value metrics too, highlighting what individuals and groups of society are value-adding, and which are not. This sounds quite dystopian, doesn't it?

And perhaps that is my point with a lot of these kinds of discussions. It seems that no matter what happens, a society filled with authoritarian control or decentralized chaos, dystopia might be the only outcome. We can go to work each day, riot in the streets, or stay at home. But one way or another, there will be a tax on our activity , whether it be on our income, or in the degradation of our wellbeing. We are;

The Walking Dead.

Taraz
[ Gen1: Hive ]