Everyone is now discussing the Yatsenyuk budget draft and the planned tax hikes and regulations. Warm words are heard on all sides for the prime minister and the authorities in general, and the same question comes up again and again: “Do they not understand what they are doing?” Strangely, there is an answer to this question—and it sounds rather rhetorical.
So, do “they” understand what they are doing or not? Here the situation resembles the saying “the eyes are afraid, but the hands do the work.” Talk to an individual bureaucrat, and he will reason quite sensibly, will tell you about chickens and golden eggs—but what he and his comrades will actually do is something completely different. Why is this so?
Let us start with the fact that the common notion of the state as a rigid system, an organization, or a set of organizations with defined powers is deeply erroneous. This approach separates the organization from the reasons for its existence and the goals it pursues. Nobody would think of considering a corporation—often organized more complexly than some states—exclusively as a set of departments and interconnections between them. Everyone knows that a corporation exists for profit, and its internal organization is merely a means of obtaining that profit. But for some reason, nobody thinks this way about states, although their nature from the very beginning and to this day is exactly the same: obtaining profit, only not through the production of useful goods, but through the compulsory taxation of some territory.
What is worse, unlike those corporations, states are not a single organization united by a common goal, but rather a conglomerate of competing structures of varying degrees of organization, formalization, and legality. In general, to not waste space and time, I will say one thing—mainstream theories of the state and law ignore the most important circumstance: bureaucrats are people. And since these people receive their income from taxation in the broad sense of the word, they will always strive to expand taxation, and—most importantly—this striving is as natural as breathing.
And here we arrive at the answer to the question “Do they understand what they are doing?” The answer is—they do. Like entrepreneurs who see where they can extract profit, bureaucrats see signals in the behavior of other people and go after profit there. They understand this not so much with their minds as with intuition, with their “gut feeling.”
Then the differences between entrepreneurship and the state begin, because the signals that entrepreneurs and bureaucrats perceive are different, of different nature. For an entrepreneur, these are primarily prices; for a bureaucrat, it is the willingness of people to hand over their money without extra questions—in economics this is called profit-seeking, and in modern theories of the state, rent-seeking.
To clarify, let me give a simple example. Right now, everyone is indignant about the mandatory declaration of property in the new version of the tax code and that if you still have money, you must put it in the bank. One indignant person writes: “No, bringing income out of the shadows is, of course, a good deed.” That is, he agrees that something like this needs to be done, just not in the way the government proposes. This is how the state operates—to create problems, most often false ones, to offer numerous and contradictory “solutions,” to arrange heated discussions about them, and in the process to expand powers and increase expenditures. What is extremely important is that all this is done by the future victims of taxation themselves, perfectly voluntarily. When smart people on the internet discuss how to “bring income out of the shadows,” a bureaucrat sees in this a clear signal that consent to taxation has been obtained, and, consequently, there is profit to be made here—so “we are coming for you.”
Anyone familiar with economics knows that to “bring income out of the shadows” can only be done by ceasing to punish it with taxes. No punishment—no shadow; there is punishment—there is shadow. As long as nobody speaks about canceling the real cause, under the pretext of “bringing out of the shadows,” the growth of the state and its expenditures will continue—and, accordingly, the reduction of our freedom and our incomes. And so it goes with every “problem” the state allegedly solves.
Once I came across an impressive list of various “fashionable tricks” by which the American state justified its activities at different times. Many of these tricks I remember, although I do not live in the USA. A Ukrainian can also without much difficulty recall state campaigns and projects that were supposed to finally make us happy—from the “innovation economy” and “support of strategic and knowledge-intensive industries” to the “fight against the shadow economy” and “the struggle for the legalization of the shadow economy.” The Lord is probably waiting for something special from the Ukrainians, because right now He is showing us the entire absurdity of this activity in the most vivid way: right here and right now, the next increase in budget expenditures (527 billion hryvnias in 2015 versus 450 billion in 2014) is taking the form of a campaign of their severe and even “unprecedented” reduction. “Well, Ukrainian! Come on, understand already!” the heavenly powers seem to be saying to us. But no—he does not see and does not understand.
A question arises: is it possible, and if so, how, to resist the constant growth of the state and its (that is, our) expenditures? I will say right away that wherever the state manages to invent such pretexts for expansion that the general public is ready to believe in until the very end, the state expands to that very end—to war, famine, and destruction, as in the regimes of Stalin, Hitler, or Mao.
The traditional path of resistance is active, organized resistance. For example, no matter how the American state tries to disarm Americans, they are still holding out (although they are retreating).
However, there are obvious circumstances that, in the medium and long term, make resistance useless. And the worst thing here is that the expansion of the state is a process that is unconscious and uncontrolled by the state itself. After all, it begins not so much at the level of nationwide projects for which money is allocated from the budget, as at the stage of small initiatives by small bureaucrats and their departments. These initiatives pass the test of time and public consent; many of them die without finding consent; many cannot withstand competition with other initiatives—and all this externally looks very much like business. People are capable of organized counteraction only when they clearly understand the threat posed by these initiatives, and this does not happen very often. Usually, the threat begins to be felt when it is already too late to act.
Furthermore, unlike business, unsuccessful initiators do not go bankrupt, and the state bears no costs at all. It has an infinite supply of patience and time; it is in no hurry. It is ready to retreat under public pressure today in order to return tomorrow when attention is distracted by something else. To directly counter the expansion of the state, it is necessary to oppose it with something equally relentless and ruthless, infinitely vigilant and immortal. As far as I know, nothing like that is observed on the horizon, and this means that at the end of the road, Stalin, Hitler, and Pol Pot are waiting for us, rubbing their hands with joy.
Well, and now a Christmas story. Let this be an unknown-to-science episode of Star Trek. On one planet, power was seized by a Supercomputer. Since everything there is mechanized, automated, and computerized, the Supercomputer easily enters every home, every coffee maker, and every program, substitutes itself for exe-files, and commits all sorts of mayhem. The natives call the Enterprise, since they cannot cope on their own and there are no forces left. Kirk and Spock learn from the old-timers that apparently the whole problem is that the Supercomputer, intended to bring super-benefit, burned out its Automatic Built-in Reformer, whose function was to whack the iron friend on its naughty little hands if something went wrong. Well, now the infernal machine does whatever it wants, has destroyed all stocks of Automatic Built-in Reformers in warehouses, watches everyone, and there is no controlling it—neither firewalls, nor antivirus programs, nor turning it off and on again help.
Kirk and Spock, at the cost of incredible effort, obtain the last copy of the Automatic Reformer and, in Santa Claus masks, infiltrate the Christmas party that the evil creature is holding in its machine room. Need I say that the Supercomputer long ago figured out the friends’ plans and is now plotting to destroy them along with the last copy of the salvation-providing board for the natives? Need I say that it has blocked communication, and now the friends are deprived of all hope for help, and the Enterprise has turned into a useless tub bobbing in orbit?
At the party, Kirk and Spock in Santa Claus masks are attacked by the Supercomputer’s minions; it blasts the heroes with electronics with all its might; and, generally, hell is breaking loose. Kirk, defending himself against superior forces, in the heat of battle breaks the last Automatic Reformer; the friends are surrounded; it seems that all is lost—and then Spock notices that the Supercomputer can simply be unplugged.