GIS Statement* by Prince Michael of Liechtenstein
Even before Covid-19 struck, many governments had dangerously high debt levels. Now that they have been given a new excuse to spend, the public sector is becoming even more bloated. Such a strategy will prove unsustainable in the long run, and inflation will inevitably appear. But meanwhile, states keep on expanding their influence, wielding more and more power over citizens.
A successful society should have a dedicated administration, a legal and auditing sector to ensure compliance, and functioning controlling systems. It should also provide an efficient social security system, but one that is still based on personal responsibility.
In several countries, welfare programs have become overly expensive and inefficient. A flood of laws and regulations have been issued under the pretext of reducing risk. This was yet another excuse to enlarge the public sector, which now accounts for an unhealthy proportion of the economy in many countries, sometimes close to 50 percent. As a result, the professional sector responsible for ensuring compliance, like lawyers, auditors and surveyors, has also grown excessively, harming the production and service industries to an extent.
High levels of public spending are creating unsustainable debts. Also, talent is disproportionately drawn to the public and controlling sector, leading to additional overheads for the real economy, businesses and employees. This gives states ill-advised possibilities to influence and control society and the economy, and it creates a wonderful playground for oversized government and bureaucracy.
All this is combined with byzantine, frequently contradictory and overly complicated tax rules. Because of their ambiguous nature, they allow authorities to make arbitrary decisions. These ineffective systems are extremely costly for both governments and taxpayers, especially businesses but also individuals.
Tax regulations, and all the disclosures they require, have become an instrument of control for governments, whose scope probably exceeds what some authoritarian systems used in the past. But taxation alone was not sufficient to justify these exaggerations.
When the sovereign debt crisis broke out a new remedy was found. Interest rates had already been low since the early 2000s, in order to eliminate the necessary downturns of the economic cycle and to relieve governments from rising interest costs. No one cared that these measures destroyed the savings of many, especially affecting pensioners. Central banks are now going even further and have started buying the bulk of government debts. Shockingly, even the International Monetary Fund has been encouraging countries to spend more …
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