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IMF Puppet

EFFICIENT PRICING OUR COLLECTIVE DERRIER!

Then we have the issue of "efficient pricing". This is yet another insult to your intelligence and, more importantly, to your pocket. Let's take a look in further detail.

Efficient pricing

It is defined by the IMF as:

  • Cost of supplying the product to the consumer
  • A "corrective" tax reflecting environmental costs
  • A consumption tax

And the question is why?

The cost of supplying the product to the consumer already contains a universe of taxes that producers and members of the supply chain already pay to the government. Said taxes are passed on to consumers through pricing, thus, the cost of supplying the product to the consumer is not efficient because it contains hidden costs that produce no benefits to the consumer.

The concept that the polluter must pay is actually rooted in common sense and in agreement with Austro-Libertarian principles (see Evil Externalities). However, please note that we said polluter, not consumer. In this case, the IMF advocates for a consumer environmental tax, not a producer (i.e. polluter) environmental tax. The Hood-Robin effect? You got it. But it gets worse. The concept that a tax is necessary is ridiculous. In this case a consumer is paying tax to the government (a third party with no saying in the issue) who will take the money and do as it pleases with it, most of the time not addressing pollution issues. And what about people actually affected by pollution? F… you very much! As if this would not be bad enough, consider that the tax paid by consumers very seldom reflects the actual damage caused by the pollution.

And lastly we get to the consumption tax. And why is that we need a consumption tax? Why would we, the people, represented by our government, tax ourselves on what we, the people consume? Why would we, the people, artificially raise the prices we pay for goods and services? A consumption tax is as ludicrous as any other tax, but even more laughable. Consumption taxes are simply there because they apply to soft-targets. How many people do you know that sues the government because of so-called Added-Value taxes, for example? Not many. Actually, not one (to our knowledge). On the other hand, how many corporations sue governments due to tax issues? It happens all the time. Basically, the consumption tax exists because it can be applied with ease to suckers (that would be you)!

And so according to the IMF, an "efficient" price would contain taxes that producers pay, taxes that consumers pay because of pollution produced by producers and taxes that consumers pay for…well…consuming! And where does all this money goes? To the government. And what does the government do with all this money? Your guess is as good as ours.

This is yet another window to the mind of politically-owned apparatchiks. For them taxing a product three times and even extracting taxation from the recipients of collateral damage instead of the originators makes sense. Does this make any sense to you? At all? Thought so.

In summary

Therefore and according to the IMF, in order for energetics to be "efficiently priced" they must be taxed at three levels, most of the tax coming from your pocket! But not to worry, because at the end of this process you will have less energetics for a much, much higher price with minimum environmental benefits. Which leads to the question "Qui Bono?" Who benefits? The government. Clearly.

THE REAL SOLUTION

And so, what is the real solution? Let's begin by saying that whichever solution we may propose will be painful. This will be so because governments have been tampering with free markets for so long that very (ultra) large inefficiencies and downright stupidity has been built into the fabric of producers.

And so, what is our solution?

Simple. Remove all subsidies and taxes. Now. At once. All of them. And then to make sure there will be no going back, shut all governments down.

Is this a realistic solution? Most definitively no because people have not yet evolved to this point. However, we can extrapolate and deduce.

What would happen if all subsidies and taxes are suddenly removed? Chaos… for a brief period of time… followed by pain. Yes, there would be pain, and this pain would not be short lived. Why? Because energetics have been subsidized "for the good of the people" for so long that energetics companies are now addicted to government subsidies. Remove those subsidies and there will be plenty of pain to go around. When companies stop receiving subsidies, their costs will go up, but at the same time when people stop paying taxes, their disposable income will also go up. Which means that they will afford to pay higher prices for energetics, which will partially offset higher producing costs.

The reason for this is because energy producing is a very infrastructure-intensive process. In Austrian Economic terms, the "structure of the market" has been altered. Large investments are necessary to create and operate all the machinery that makes the production of energetics possible. Think exploration costs, drilling, petroleum distilleries, natural gas liquefaction plants, oleoducts, gasoducts, and so on. These facilities are massive and very expensive, taking years to complete. All that equipment and know-how has been polluted by government actions for decades (actually 100+ years). All these errors and mistakes won't be cleaned-up overnight. And so yes, there will be pain until things go back to normal.

But there is worse. Due to all those structural deformities, companies have not been able to forecast energetic pricing long term, which means that they have not been able to understand the future needs of the people. As such, there is very little to no mainstream research of new and revolutionary means of capturing or producing energy and this is the largest problem by far. If you take a look at history you will notice that new and revolutionary ideas came into fruition just as certain technological problems became unbearable. Governments have effectively destroyed this process and with it they have ensured that our pain will continue well above and beyond the normal time. This is so because government meddling in free markets made entrepreneurs waste time. Instead of researching they were busy managing their business to ensure maximum subsidies and maximum pricing. Let's be clear. The time that was wasted can never be recovered and we will pay the price of this stupidity. It is only after the world has returned to normalcy that free market processes can take over and deliver increasingly higher standards of living at constantly decreasing prices.

But…but…what about pollution and environmental damage? Again, if governments are gone, an Austro-Libertarian society will emerge from the ashes. How do we know this? Because it has happened before in recent history (see for example Somalia - The Great Austro-Libertarian Failure). And what has this to do with anything? In an Austro-Libertarian system the person who damages our property (originator), pays. Not the consumer, not the producers, the originator regardless of who this person or company may be. Presto! Instantaneous incentive for producers to minimize ecological damage. Furthermore, real people, the real people who suffered the damages will be compensated. Without the need for fake third parties (such as governments) or fake "disincentivization " schemes such as taxes.

And so the only rational way of acting now is to stop all this stupidity at once. Cut our losses and go back on track as soon as possible.

THE REVENUE BENEFIT

And yet, there are always pundits out there that will be quick to point out that all those extra tax revenues will be used "for the better good". Right. In the same manner as they were used up to this point in history for the last 200+ years. Sure. Would you like your government service to go or will you consume it right here? Give us a break!

Taxes are taxes and at the end of the day they destroy capital and in so doing they ensure lower standards of living. See for example How Taxes Destroy Capital And Why This Is Bad and Taxes - The Force Multipliers (or if you have the stomach, check our Government Theft - Taxes section for full, unadulterated pain).

CONCLUSION

The IMF created yet another document worthy of their apparatchik thinking, which is to say, worthless. Or, to be precise, less than worthless (if such a thing is even possible). What they propose is yet another process which will have little to no benefits for people while extracting wealth from them and shifting it to governments and producers. Free money!... just not for you!

But perhaps we are in error. Perhaps we should fully embrace being taxed more for our own good, because… you know… it is obvious… because… because… because? Little help here? Please?

Note: please see the Glossary if you are unfamiliar with certain words.

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