From many years ago, a long time before the word term “welfare state” was conjured, society (if we can ask its non-believers to suppose its existence) must have been quite a tenuous concept. Our distant relations in the animal kingdom lead quite different lives and communities. Most don’t look out for each other and it’s this lack of collaboration that means they’re not us. We live on a spectrum, positioned somewhere between a dray of squirrels and an army of ants. Democracy has accelerated nation states into looking out for its weakest and most vulnerable. Over centuries, we have shown we have become more compassionate, even though short term electoral cycles may disguise this very strong longer term trend. However it is important to recognise that these changes have been accompanied by a massive improvement in prosperity and living standards.
The tax rate once upon a time was zero. Then powerful Kings and Queens sought tax for wealth and power and to build armies to stop foreign armies invading (or to invade somewhere else). Now the representation we accept in exchange for taxation is divided left to right.
We do know zero taxation would lead to a barren lawless land and we know that 100% taxation would lead to a seizing up of effective production and our functioning. The question for every democracy and dictatorship is how much to turn the taxation dial.
Perhaps the dominating sovereign debt headlines are no different to any other debt issue. Money, representing work done, has been borrowed by those that already have money (for work done) and lent it to those who borrow. Be it entrepreneur, gambler, business or state, the borrower must generate a return in order to repay the creditor. It therefore seems that some governments have not been able to generate the return from their society that was required. If we do find that nations collapse under their own debt then this should be recognized as a warning signal that our capital has been misallocated and our ideals have overburdened our pockets to tearing point. This very alarm is a signal that we need society to generate a better return on the tax paid by and to the nation.
Collaboration has changed from one of sharing meat and fruit to sharing stored capital in money. We could also suggest that money needed to be created once society reached a certain level of productivity – otherwise why work? One may expect that short term volatility would over the fullness of time exhibit a trend of convergence to some magic and universally accepted level of taxation. However it’s very difficult to know if our society is more collaborative today compared to 10,000 years ago. Certainly we have always built upon inter-generational advancements (very possibly the defining element of being human). However answering if our predisposition (or need) to collaborate has changed over the last 10,000 years makes me want to go for a long walk in the countryside.