First the taxes, then the budget: how to fight the bureaucratorship?

Income tax cuts: it's the end of November and we still don't know what taxes we will actually pay in Czech Republic in about a month. Will the state radically reduce our income tax and leave money in our pockets? Is this the right way? And then how about the national debt?

In 2011, I explained the principles of governing a modern large state: principles of bureaucratorship:

What is bureaucracy? This is a government of unelected officials. I don't mean governments now and love "Fisher ", but the government of all those government officials, the recipients of taxes. A government of bureaucrats that no one knows. A government of bureaucrats who are not accountable to anyone.

Bureaucratorshipa,, 2011

I was about 19 at the time, so I was probably a little more radical. By no means is it a conspiracy and an "anon state" and the like. Bureaucratorship is simply a technical, natural consequence of the growth of the state: the application of information asymmetry and Parkinson's laws.

Why do bureaucrats rule?

We have Officer Joseph and MP Adam. Officer Joseph is an official at the Office of Agriculture and is in charge of regulating cultivation plums.

MP Adam is originally a lawyer.

Officer Joseph has been working in the public administration in his sector for the past 20 years. When he started, he was just a small wheeler in a small department of the ministry. But the official Joseph wanted to grow, and so did plums he released with vigor. He wrote "the first plum regulation". He was a professional guarantor in the "program for the regulation of domestic spirits". He sat on the commission for "supervision of plum gardening". He proposed a "plum law." He helped the CZSO with "plum reporting and statistics".

Joseph is not paid by any customers with any voluntary payment. Joseph is not awarded by profit, but budget. The more he gets from the state for himself, the more he rises in the social ladder, and so he is motivated to create another agenda for other officials. That's why in a while Joseph couldn't be alone for such an amount of work and a new Plum Department at the new Agricultural Office at the Ministry was created.

Joseph became the director of the plum department, because who other than Joseph should it be?! Nobody else does understand the whole think about plum law better than him!

MP Adam is in the member of Chamber of Deputies for his first term, about 3 years. During that time, he passed hundreds to thousands of different regulations and laws.

A draft of amendment to the Plum Act will land on his desk, more precisely a draft of change of paragraph 3 of paragraph 5 of the Act, where the word “or” changes to “and”. The proposal comes from the ministry and was written by Joseph.

Will Adam be interested in any plum? Will he even pay attention to what the change means? What will be the real impact?

Probably not at all. Adam is responsible for his vote, but it is Pepa who rules in plums. As a result, it is much more likely that it will be <strong>Pepa</strong> in the next parliamentary term , who will be in the service of the state, unlike Adam. It is much more likely that Pepa will end his career as Minister of Agriculture. Because he is an expert - and who but an expert should be a minister?

And because this is how the system of motivation for all civil servants is set up, that is why - dear reader -we are ruled by bureaucrats and we live in bureaucratorship: it is about information asymmetry - the official has more information than the politician and thus has an information advantage over him. 

This is a typical problem of large corporations (delegating manager vs specialist - who actually decides?), Which is solved in corporations by a system of profits and losses. However, the state does not have such a system, so it continues to thrive.

Tax cut is the only way

Let us create an incentive for politicians to have to deal with the budget problem, and let us hope that they may - perhaps - even abolish some state agenda. The whole, not just its limitations.

If we want the state not to hinder us, for the state to become more efficient, to do less, we must by force disrupt the budgets of all these Joseph's We must first reduce taxes and undercut state revenues. Permanently, without the possibility of a simple "rollback".

Only then will spending begin to be addressed. If we do the opposite - that is, first we start looking for savings on the expenditure side, then we will reduce taxes, we may get rid of one Joseph on plums, but we will give the opportunity to John from the Ministry of Finance, who will do so gradually Director of the Office for Reducing the State Agenda. We will replace bureaucrats with bureaucrats, we will just change the mechanism of resource distribution within the state. It will be about reducing taxes, reducing the state and reducing bureaucracy talk constantly. There will be no event.

And that is exactly what we have lived to this day. Perhaps every government promised to cut red tape and streamline the state apparatus, but which did it? Not even that Kalousek, who is to blame for everything, did not do it right.

Let's cut taxes. Let's take the state 100+ billion. Let us make as many people as possible feel about their wages when it comes back to them, so that this step cannot be easily reversed. Let us create a follow-up incentive for politicians to have to deal with the budget problem, and let us hope that they may - perhaps - even abolish a state agenda. The whole, not just its limitations.

Only then will we defy - at least for a time - Parkinson's laws and reduce the state Bureaucracy.

The state harms twice

The state harms not only up to the amount of its budget: the state harms up to the amount of the sum of expenses, income and indirect costs incurred from its activities in the private sector.

That the state will go into debt? Yes, system of profits and losses, this is its "compensation" in the public sector.

State money is harmful. They damage the pricing mechanism, they are taken out of your pocket, involuntary transactions are created, which lead to involuntary allocation of resources, which leads to inefficiency. It is like a state subsidy from rich countries to third world countries: the poorest citizens of the rich world subsidize the richest citizens of the world of the poor.

The state is harmful not only up to the amount of its budget: every involuntary, violent transaction is a loss, an inefficiency. Such a transaction is both the collection of taxes (income) and their expenditure (state spending). The state is hurting up the sum of expenses, revenues and indirect costs incurred from its activities in the private sector.

If the budget is balanced in the amount of 1 trillion crowns, damage is 2 trillion. Any reduction - whether on the revenue side or on the expenditure side - is correct. The revenue side is just more politically transparent and likely.

Let's always start with income. Let's create a problem that needs to be solved. Let's create a real motivation for shrinking, streamlining the state.

The worst thing that can happen is that it will raise taxes again. In the meantime, you will have your money in your pocket. The announced "collapse of the state" would only mean a somewhat more animalistic process of purification; let's take it as a cost to put money back in our pockets and increase efficiency, because any deregulation is also a state transaction, a "human design" process - and so it has its costs, it is always inefficient - it just doesn't work without it. And a little advice:

Do not rely on the state.

Then it won't touch you.

Let's cut taxes. Now. When, if not now? Who but us? No one else is here for that. There will never be a topic on the table like this.

PS: I recommend Professor Šíma's article on the same topic and thank you, Honza Mošovský from CZ Students for Liberty for an excellent discussion over the draft of this text!

PPS: Of course Joseph will be a big supporter of deregulation, but not really his area, it really doesn't go there. That's where it's important. After all, who would guarantee the safety of home spirits without the spirits regulation he does! His office can't be abolished, no!

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