Transferring wealth from the State to the Citizen

July 16, 2008 10:12 AM

Nigel Holder, ex-RAF fighter pilot, election candidate, management consultant and TPA Supporter gives his views here as to how government can return power and wealth to the British taxpayer.


Nigel_holder Taxation is a necessary evil – but it should be minimised at all costs.  Why? – because taxation involves the sequestration of wealth from the citizen by the politician so that the bureaucrat may then exercise choices, notionally on behalf of the citizenry, in how that wealth is to be disbursed.  In practice, the public sector is parasitic on the public purse, as it will always feed itself before it feeds the citizen.  Furthermore, in taking choice away from the citizen and exercising it by proxy, the public sector regularly commits monopsony – the denial of free and fair competition through the exercise of monopoly purchasing power within a rigged marketplace.  And this amounts to an assault on the most fundamental conservative value – freedom of the individual.


Freedom is only evidenced when the individual can exercise choices in what they do and how they do it.  It is true that we have much freedom in many aspects of our lives – travel, speech, diet and association to name but a few areas.  But, even in those areas where the State exercises fairly loose constraints - through sensible regulation – true choices are only available to those who possess what economists call effective demand or discretionary spending power.  When the State sequestrates wealth through excessive taxation it shrinks the discretionary spending power of the citizen to such an extent that the taxation itself amounts to an assault on basic freedoms.  Further, when the state arrogates unto itself the right to administer the delivery of essential services, then the assault on freedom of choice is even clearer.


The has been much talk of late about the role of the State a commissioner of services, with competition being provided through a multiplicity of providers, some of whom may be in the private sector.  It is important to recognise that true competition only exists when an individual citizen freely can make a value for money distinction between providers that are vying for trade in a free market place.  As anyone who has seen the public sector tendering process at work will attest, bureaucrat choice is a very poor substitute for the judgement of individual citizens about those choices which are in their own parochial and immediate best interests.


Socialism has always sought to transfer wealth from rich to poor.  The principle mechanism devised to achieve this has been to tax the rich and to give benefits to the poor.  However, an additional mechanism, the arrogation by the State of power over the delivery of essential services, has somehow become enshrined as an essential component of wealth redistribution policies.  Both of these socialist nostrums should be challenged.


First, taxing the rich and giving benefits to the poor is a “Revenue” rather than a “Capital” solution.  State benefits will never enrich the poor; they just institutionalise the poverty trap. The sale of council houses to their tenants was a classical example of compassionate capitalism and we should urgently search for new ways of wealth creation for the poorest in society.


Second, if we believe that true freedom is only achieved when individuals have the wealth to exercise free choices about all the goods and services that they might wish to purchase, then the purchasing decision must be transferred from the bureaucrat to the citizen in every feasible circumstance.


Third, if we believe that capitalism is the preferred method for the delivery of goods and services – because the profit motive moderated by competition is the best mechanism for delivering quality at the lowest cost – then taxpayers have an obligation to ensure that, in every practical circumstance, public services should be delivered by profit seeking private enterprises operating freely within a competitive marketplace.


These ideas can be unified under a single policy strap-line – “Transferring Wealth from the State to the Citizen”.  We should set out a programme to transfer ownership to our citizenry, of the all those state enterprises which cannot be defended as “Natural Monopolies”.  Every hospital and every school should be incorporated as a limited company with share capital distributed to all in the relevant catchment area.  It would be important to transfer the shares to citizens rather than sell them – millions of citizens would become capitalists at a stroke, able to trade their shares or to retain them as profitable investments.


Equitable education funding would be achieved by distributing vouchers to parents each year for the purchase of the national curriculum from any school of their choosing. By moving every school to the private sector, the damaging class-divide between the state sector and the independent sector would be removed – all schools including those in what is now called the independent sector would take these vouchers. A continuum of provision from independent schools would emerge, with some charging nothing, some charging for extra curricular activities and some charging significant top-up fees.


Healthcare, free at the point of need, would be preserved for all emergency and acute conditions, and in a highly subsidised form for all treatment of chronic conditions, by the introduction of a hypothecated tax that funded insurance payments to all patients.  Citizens could choose their insurer from within a competitive marketplace.   Emergency and acute care would be paid for directly by the insurer according to locally agreed schedules of rates for specified healthcare interventions. These rates would be negotiated between insurers and hospital companies within a free market.  Chronic care would be subject to citizen choice of provider and basic care would be reimbursed by their insurer with “Optional Extras” paid for out of advance voluntary contributions or ad-hoc top-up fees.  Thus the principle of free healthcare at the point of need would be retained for all accident and acute care, whilst a regime of differential insurance premiums would disincentivise the adverse lifestyle choices that require greater reliance on the healthcare system.


In summary, we privatise all healthcare and education, eliminate the sclerosis of state control, introduce competition into those marketplaces and thereby significantly reduce the costs of service delivery and simultaneously increase the quality of the services provided; empower the citizen with real choice rather than bureaucrat mediated choice, and give every citizen – even the very poorest in society – a first step on the capitalism ladder.  Together, these policies would reduce the tax burden and more fairly distribute the benefits of taxation throughout society.  Who would dare to oppose such policies?  Or should I ask –who would dare to advocate them?


If you would like to discuss Nigel's thoughts, please leave a comment.  Similarly if you would like to write a piece for the website on tax and government related issues, please email them to me at tim.aker@taxpayersalliance.com

Nigel Holder, ex-RAF fighter pilot, election candidate, management consultant and TPA Supporter gives his views here as to how government can return power and wealth to the British taxpayer.


Nigel_holder Taxation is a necessary evil – but it should be minimised at all costs.  Why? – because taxation involves the sequestration of wealth from the citizen by the politician so that the bureaucrat may then exercise choices, notionally on behalf of the citizenry, in how that wealth is to be disbursed.  In practice, the public sector is parasitic on the public purse, as it will always feed itself before it feeds the citizen.  Furthermore, in taking choice away from the citizen and exercising it by proxy, the public sector regularly commits monopsony – the denial of free and fair competition through the exercise of monopoly purchasing power within a rigged marketplace.  And this amounts to an assault on the most fundamental conservative value – freedom of the individual.


Freedom is only evidenced when the individual can exercise choices in what they do and how they do it.  It is true that we have much freedom in many aspects of our lives – travel, speech, diet and association to name but a few areas.  But, even in those areas where the State exercises fairly loose constraints - through sensible regulation – true choices are only available to those who possess what economists call effective demand or discretionary spending power.  When the State sequestrates wealth through excessive taxation it shrinks the discretionary spending power of the citizen to such an extent that the taxation itself amounts to an assault on basic freedoms.  Further, when the state arrogates unto itself the right to administer the delivery of essential services, then the assault on freedom of choice is even clearer.


The has been much talk of late about the role of the State a commissioner of services, with competition being provided through a multiplicity of providers, some of whom may be in the private sector.  It is important to recognise that true competition only exists when an individual citizen freely can make a value for money distinction between providers that are vying for trade in a free market place.  As anyone who has seen the public sector tendering process at work will attest, bureaucrat choice is a very poor substitute for the judgement of individual citizens about those choices which are in their own parochial and immediate best interests.


Socialism has always sought to transfer wealth from rich to poor.  The principle mechanism devised to achieve this has been to tax the rich and to give benefits to the poor.  However, an additional mechanism, the arrogation by the State of power over the delivery of essential services, has somehow become enshrined as an essential component of wealth redistribution policies.  Both of these socialist nostrums should be challenged.


First, taxing the rich and giving benefits to the poor is a “Revenue” rather than a “Capital” solution.  State benefits will never enrich the poor; they just institutionalise the poverty trap. The sale of council houses to their tenants was a classical example of compassionate capitalism and we should urgently search for new ways of wealth creation for the poorest in society.


Second, if we believe that true freedom is only achieved when individuals have the wealth to exercise free choices about all the goods and services that they might wish to purchase, then the purchasing decision must be transferred from the bureaucrat to the citizen in every feasible circumstance.


Third, if we believe that capitalism is the preferred method for the delivery of goods and services – because the profit motive moderated by competition is the best mechanism for delivering quality at the lowest cost – then taxpayers have an obligation to ensure that, in every practical circumstance, public services should be delivered by profit seeking private enterprises operating freely within a competitive marketplace.


These ideas can be unified under a single policy strap-line – “Transferring Wealth from the State to the Citizen”.  We should set out a programme to transfer ownership to our citizenry, of the all those state enterprises which cannot be defended as “Natural Monopolies”.  Every hospital and every school should be incorporated as a limited company with share capital distributed to all in the relevant catchment area.  It would be important to transfer the shares to citizens rather than sell them – millions of citizens would become capitalists at a stroke, able to trade their shares or to retain them as profitable investments.


Equitable education funding would be achieved by distributing vouchers to parents each year for the purchase of the national curriculum from any school of their choosing. By moving every school to the private sector, the damaging class-divide between the state sector and the independent sector would be removed – all schools including those in what is now called the independent sector would take these vouchers. A continuum of provision from independent schools would emerge, with some charging nothing, some charging for extra curricular activities and some charging significant top-up fees.


Healthcare, free at the point of need, would be preserved for all emergency and acute conditions, and in a highly subsidised form for all treatment of chronic conditions, by the introduction of a hypothecated tax that funded insurance payments to all patients.  Citizens could choose their insurer from within a competitive marketplace.   Emergency and acute care would be paid for directly by the insurer according to locally agreed schedules of rates for specified healthcare interventions. These rates would be negotiated between insurers and hospital companies within a free market.  Chronic care would be subject to citizen choice of provider and basic care would be reimbursed by their insurer with “Optional Extras” paid for out of advance voluntary contributions or ad-hoc top-up fees.  Thus the principle of free healthcare at the point of need would be retained for all accident and acute care, whilst a regime of differential insurance premiums would disincentivise the adverse lifestyle choices that require greater reliance on the healthcare system.


In summary, we privatise all healthcare and education, eliminate the sclerosis of state control, introduce competition into those marketplaces and thereby significantly reduce the costs of service delivery and simultaneously increase the quality of the services provided; empower the citizen with real choice rather than bureaucrat mediated choice, and give every citizen – even the very poorest in society – a first step on the capitalism ladder.  Together, these policies would reduce the tax burden and more fairly distribute the benefits of taxation throughout society.  Who would dare to oppose such policies?  Or should I ask –who would dare to advocate them?


If you would like to discuss Nigel's thoughts, please leave a comment.  Similarly if you would like to write a piece for the website on tax and government related issues, please email them to me at tim.aker@taxpayersalliance.com

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