What do small practitioners think?

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There's some fascinating comments on the performance of HM Revenue & Customs over at Accountingweb.

Take this one:

HMRC's attitude and approach has been planned and approved at the highest level, it will continue until the Accounting/Tax bodies get off their backside and organise a response which will force HMRC to collapse or get its act together. This could be done in two months.

The author of that claims to have typical small practitioner attitudes. And you never knew accountants wanted to force the mechanisms of the State into collapse, did you?

Or take this:

If this country is to survive we need to take an axe and not a bacon slicer to the whole of government - starting with the complexity of law / compliance / nanny state generated by those at the very, very top! and then those self-perpetuating / generating bureaucrats where they add little value.

I'm sure it is heartfelt - but it really makes very little sense.

Both opinions however do appear to be in accord with the views of Alvin Rabushka, the inventor of flat tax. When I interviewed him earlier this year he said:

I think we should be facing the issue of the optimal size of government. Government is too big. I think we should debate the minimum size of government, not the optimal size of government.

I think we should go back to first principles and causes and ask what government should be doing and the answer is “not a whole lot”. It certainly does way too much and we could certainly get rid of a lot of it. We shouldn't give people free money. You know, we should get rid of welfare programmes, we need to have purely private pensions and get rid of state sponsored pensions. We need private schools and private hospitals and private roads and private mail delivery and private transportation and private everything else. You know government shouldn't be doing any of that stuff. And if it didn't do any of that stuff it wouldn't need all of that tax money so that’s the fundamental position and as long as you're going to have government do all that stuff you're going to have all those high taxes.

Well I find this sort of thing fascinating, and I'd really like to know some answers from those who think this way (as those on Accountingweb who write this stuff say most small practitioners do). Answers to questions like these:

  1. Who does own and build roads?
  2. How are the tolls collected?
  3. How is health paid for?
  4. What does happen to those who cannot afford insurance?
  5. What do the sick, the elderly, the dying, those who are redundant through no fault of their own and have not the resources to move, and so on who make up the vast majority of those whom the state supports supposed to do to raise an income? Where is the demand in the market economy for their labour if it does not exist now?
  6. How will education be paid for? What will we do for those who receive little or none as a result of inability to pay?
  7. Where is the capacity in the economy to absorb the savings required to pay all those private pensions? As it is precious little productive use is made of pension money, most of which is used for gambling on the value of second hand pieces of paper called shares;
  8. What will happen to all those companies that are now entirely dependent for their well being on state contracts, such as drug companies, many building contractors, no small part of the service industry, all the health suppliers, and so on when their market collapses in the turmoil that would follow the withdrawal of state support for these activities?
  9. How would we collect refuse?
  10. Who would ensure that property rights are enforced?

I could go on ad infinitum. I won't, but I bet no coherent answers will arrive either. There aren't any; that's why. The modern state is complex. Much of what it does is to provide services in a more efficient way then the market ever could. It has to do that for one simple reason. Markets are only efficient when they can create excess capacity so that competition can take place. But you can't create excess capacity in roads, pensions, health care, welfare systems, the law, education of in a thousand of the other services supplied by the state. To do so would be prohibitively expensive, as rail privatisation has so convincingly proved. In which case to slash the state is to create inefficiency or ensure demand is not met - either of which are much less optimal than what we have now.

The state is not a perfect supplier. But then nor is the market. But for much of what it does it is the best supplier we could have. In which case it's time to stop this absurd rhetoric that only the private sector creates wealth,. to which even Labour subscribes. The state sector creates 40% of GDP in this country. It created most of what I value most - my education, the rule of law, a democracy that has protected my freedom, a health care system that ensured the safe delivery of both my sons into this world and ensured the survival of one when his life was in danger, and more. Nothing I have ever bought matches these in value.

And I doubt I could ever have afforded them without the state being available to supply them - even from the privileged position I know I have as an accountant able to command an above average income in our economy.

So I suggest small practitioners think hard, stop opening themselves to ridicule, and instead engage in meaningful debate if they really want someone to listen to them. I wonder if they will?

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