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PAUL
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On this issue, I believe Prof. Becker is closer to the mark. If luck leads to the generation of higher incomes and the concentration of wealth for some, the appopriate policy response is to foster the application and functioning of genuinely competitive markets and the removal of barriers to entry and exit so as to maximise both consumer surplus and participation in this 'lottery' - and to minimise the size and incidence of the gains made by the lucky. Apart from expenditure on exported goods and services, citizens, as consumers and taxpayers, pay for every activity in the supply chains that produce and deliver goods and services. To the greatest extent possible, market mechanisms should be applied to induce efficiency in these supply chains. And this applies to the public provision of services even when there is some a priori evidence of market failure - drawing, for example, from the insights of our newly garlanded Nobel economic laureates. Taxation policy is an entirely different matter. Paying tax is an act of solidarity. It assumes the existence of a common bond which means that those with the wherewithal are willing to pay in to a common pot for the benefit of all. This common bond ideally chould be congruent with the extent of moral sentiment shared by all citizens. But this is rarely the case and the imposition of taxation must be enforced. The greed, selfishness and unwillingness to pay - particularly for benefits awarded to those deemed in some way 'undeserving' - of many of those with the wherewithal conflicts with the efforts of liberal or left-leaning progressives to enforce certain universal rights and entitlements. In most developed economies this conflict is fraying the common bond required to sustain tax-paying as an act of solidarity - and to minimise the need for draconian and often counter-productive enforcement. I would contend that that bond is more frayed and closer to the point of snapping in the U.S than it is in any other developed economy. `
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Oct 15, 2012