NEW TAXES FOR THE NEW WORLD.

(New York Times EDITORS' SELECTIONS. October 17, 2008 11:38 am.)

HOW TO REORIENT THE ECONOMY OF THE USA TOWARDS A BETTER BALANCE OF INFRASTRUCTURE AND CONSUMPTION. THE ADDED VALUE TAX.

All the economic policy of the USA has been to make bubbles, like a child in a bath. Maybe one should get out of the bath, and have an industrial policy instead.

One of the very reason for the U.S. slump is its increasing dearth of appropriate infrastructure. Obsolete infrastructure creates waste, diverting economic activity to entropy. A simple example are bad roads. Their potholes force people to drive trucks with huge wheels as if on a safari, and that in turn brings fuel waste, etc. Similarly people take planes to go anywhere in the USA, even on relatively short distance. In Europe, whenever the flight is less than 4 hours, (electric) trains win. They are much more efficient (the latest go at 360 kilometers per hour). Ibidem for housing, which is very thermally inefficient in the USA, resulting in energy spending that prevents home owners to have capital for better insulation.

Another reason for the U.S. slump is the relocalization of U.S. industry to China and similar places. That was encouraged because it allowed the reigning plutocracy to increase its profit margins. Because U.S. infrastructure will be presumably built in the USA and not in China, infrastructure should help to increase U.S. activity.

The population should be also encouraged to stop buying too much fluffy stuff built overseas, or plain wasteful stuff, without of course rising trade barriers. Another good thing would be to fight tax evasion. It would be of course great to fight deficits by rising revenue. There is one common solution to all this. The ADDED VALUE TAX. It makes tax invasion, and tax write-offs for the rich, impossible, per its very structure.

OK, The AVT was invented in France in 1954, but the USA is turning these days to the solutions that France used in her past crises. The AVT is imposed as part of European Union membership.

The AVT can be regulated according to economic needs: although colossal on luxury products in France, it's only around 5% on infrastructure work. And of course 0% on basic necessities. The AVT is the largest fiscal source in France. By the way, in case you did not notice, well regulated France is the least affected of the large economies by the financial crisis, although she took the fastest and deepest countermeasures.

It goes without saying that, to incite Joe the Plumber to not buy a Porsche with his $250,000 income, and buy his fuel from Arabia, one should augment energy taxes (in France, compensatory payments are made for low income people on overall energy spending, than more than compensate for the tax).

After trying to turn the U.S. economy to China, in the last decade, it may be wiser for the USA to remember its European roots, and get enlightened a bit.

Patrice Ayme

Patriceayme.wordpress.com
— Patrice Ayme, Hautes Alpes

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