Friday, May 11, 2012

Taxing Success and Subsidising Failure

Sometimes the difference between a struggling national economy and one that is prospering, is how easy governments make it to start a business, or to enter an occupation.

If governments make it too expensive or difficult to work, start a business, or perform a service for money, the amount of economic activity in that society is bound to suffer.
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When an activity is over-taxed or over-regulated, you will see far less of that activity. When an activity is subsidised, you will see more of the activity.

Strangely, many governments overtax and overregulate business and job formation, while subsidising freeloading and dishonest claims.

If you understand how such societies are shooting themselves in the foot (or even the head), you may want to hope for the best -- but prepare for the worst!

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