Beating the Piñata
by Jeff Thomas: Germany
Latin-American culture, the beating of a piñata began as
a religious activity, but, today, it is more secular and generally
takes place at celebrations. The general idea is that someone (usually
a child) is blindfolded and given a stick, then spun around several
times to disorient him. He then begins swinging the stick in the
air, trying to locate the piñata, which is suspended overhead.
Once he finds it, he beats it until it breaks open, spilling out
goodies – sometimes candy, sometimes toys, coins, or food.
concept, this is much like taxation, with the rich being the piñata.
the world today, governments pay for their existence mostly by way
of taxation. On the surface of it, this isn't an especially unreasonable
concept. Candidates are elected to take charge of the government,
and they then need to be paid to do their jobs.
are also intended to pay for the programmes that government representatives
come up with. Unfortunately, a common trend in politics is that
once someone has been elected to office, he wants to remain there,
often for the remainder of his working life. Once someone has become
a career politician, it is a logical step for him to realise that
the more he can tax the population, the more goodies he can get
for himself. After all, he is in a position to be able to increase
his own salary and benefits. Additionally, he may be tempted to
siphon off a portion of funds intended for government programmes
as they pass through his control.
difficulty for politicians who increase taxes is that, if they increase
taxes on the majority of the people, the people may not vote them
back in. Consequently, politicians find that they are more likely
to be re-elected if they create or increase taxes that only apply
to a minority of the electorate.
the middle- to lower-income taxpayers outnumber the more wealthy
(which is, of course, most often the case), politicians tend to
propose higher taxes on "the rich." The reason this is a safe bet
is that the rich are in the minority and therefore do not have the
power (on their own) to vote such politicians out of office. Hence,
most developed countries not only tax the rich more heavily than
others, but also create and maintain a "tax the rich" mentality
amongst the electorate. Today, most every country that regards itself
as a democracy has a "tax the rich" consciousness, and those who
are not "rich" generally support the concept. As George Bernard
government that robs Peter to pay Paul can always depend upon the
support of Paul."
Excessive Taxation of the Rich is Not Necessarily Reasonable
why not tax the rich? After all, the rich have more, so why shouldn't
they give more? Well, there are two reasons why not. The first is
that the concept is inherently unjust. As Thomas Jefferson is said
to have argued,
democracy is nothing more than mob rule, where fifty-one percent
of the people may take away the rights of the other forty-nine."
second reason why the rich should not automatically pay more is
that they may possibly be taxed to the point that they choose to
opt out of the system. As Maggie Thatcher said,
trouble with socialism is that, eventually, you run out of other
course, who "the rich" are has never been accurately defined. Is
it the top 5% of earners? The top 10%? Politicians avoid such questions;
they prefer to keep it vague. After all, if they got specific, many
of them would qualify as being amongst "the rich."
of course, one of the best aspects of taxing the rich, from the
politician's point of view, is that they can't really do anything
about it. The rich are, by their very nature, generally speaking,
very responsible citizens. They are easily tracked down and will
generally prefer to pay a higher tax than to be imprisoned. Consequently,
there is much to gain and little to lose for a politician if he
proposes further taxes on the rich.
Rich Are Much Like a Piñata
rich are much like a piñata:
who are gathered around the piñata know that it contains
goodies and they would like to get some share of those goodies.
are unconcerned as to whether the piñata is destroyed,
as long as the goodies are forthcoming soon.
is elected, who beats the piñata repeatedly, knocking the
person wears a blindfold, so, although he knows what his objective
is, he cannot actually see the results of his actions.
more he beats the piñata, the more goodies fall out.
beyond this point, public opinion would diverge as to the comparison
of the piñata and the rich. Those who wish to be receivers
of the government largesse would argue that the process is endless,
as the rich will always have plenty of money. But those who are
more productive and choose to sustain themselves through their own
efforts will take a different view.
to Stop Being a Piñata Through Internationalisation
fact is, the rich do, in most cases, have an ability to opt out.
Historically, this does not take place through violent means, such
as revolution. Rather, it is by quiet means – by exiting the jurisdiction
if it becomes too oppressive.
is now a growing trend toward internationalisation. It has never
been easier to physically move one's self or one's possessions from
place to place. Through technology, it has also never been easier
to move wealth from place to place. In fact, the only exception
to this trend is governments themselves. Some governments are placing
ever-increasing restrictions on the ability to move one's self and
one's wealth from one jurisdiction to another.
this to be the case, many older people are quietly moving themselves
and their wealth away from those countries that are becoming increasingly
draconian in their laws. Additionally, many younger people are beginning
to see the handwriting on the wall. Whilst they may not yet have
amassed much in the way of wealth, many are assessing their futures
in jurisdictions that are becoming oppressive, and choosing to vote
with their feet now, rather than wait until it is no longer possible.
people are fond of their present jurisdiction but are watching the
door slowly closing. Those who take the next step – that of seeking
out other possible destinations – are finding that in some other
jurisdictions the doors to personal economic prosperity are opening
wider. However, should an exodus occur into these countries by frustrated
First-Worlders, there is the possibility that, in time, their immigration
laws may tighten up. Therefore, the time of greatest opportunity
may well be right now. Those who are older and have attained some
measure of wealth would do well to consider whether they are tiring
of being hit with a stick and worrying that, in the future, they
may well be hit a great deal harder. Those who are younger may feel
that, if they succeed in creating wealth for themselves, their reward
may well be to become a piñata.
you enjoyed this article, you might like our complimentary report, The
Best of Jeff Thomas. Pulling no punches, Jeff shares
his thoughts on the greatest threat to gold ownership, finding a
bolthole on a budget, as well as the coming hyperinflation. You
may download this free report immediately in our member's
area. Or, if you are not a
for free here.
Man with permission.
Thomas is British and resides in the Caribbean. The son of an economist
and historian, he learned early to be distrustful of governments
as a general principle. He began his study of economics around 1990,
learning initially from Sir John Templeton, then Harry Schulz and
Doug Casey and later others of an Austrian persuasion.
© 2012 International