Get PJ Media on your Apple

Belmont Club

It Works Like a Charm

February 24th, 2012 - 11:26 am

Alexandra Kassimi describes what it takes to start an online store in Greece. You know the place where people have no money, jobs or prospect of employment.

“Most stores begin operating after receiving only the approval regarding their brand name, as the bureaucracy involved takes such a long time to complete that it is simply impossible to keep up with the operational costs, such as paying rent on obligatory headquarters, without making any sales,” said Antonopoulos.

Antonopoulos and his partners spent hours collecting papers from tax offices, the Athens Chamber of Commerce and Industry, the municipal service where the company is based, the health inspector’s office, the fire department and banks. At the health department, they were told that all the shareholders of the company would have to provide chest X-rays, and, in the most surreal demand of all, stool samples.

Once they climbed the crazy mountain of Greek bureaucracy and reached the summit, they faced the quagmire of the bank, where the issue of how to confirm the credit card details of customers ended in the bank demanding that the entire website be in Greek only, including the names of the products.

Nothing in the story makes sense until you finally understand that the store is there — as is everything — to keep the bureaucrats involved. The health inspector, fire department, the regulated banker, the tech who literally analyzes the s**t. They are who the online store is supposed to support. They are what the economy is about.

The business model is for the bureaucracy to take their cut up front, in the processing of permits A, B, C, D … in case the business goes bankrupt. And if by any miracle it actually manages to make money, there is still the prospect of taxes or payments to avoid making taxes. Ultimately Greece will kill business. It already has.

But that’s because it doesn’t understand business. Unlike America, where the Associated Press carried a story on President Obama’s new industrial policy. It would tax some industries at a higher rate than others. “Economists note that Obama’s plan would upturn the very playing field the administration says it wants to level.” But, the President’s supporters counterargue, the tax breaks go the “right” businesses. Not that it hasn’t been that way for a long time.

The loophole-riddled U.S. tax code now benefits numerous industries over others. One tax break, for example, lets oil companies write off drilling costs immediately instead of over time, as most businesses must.

In the end, different industries can pay far different effective rates. The Treasury Department says U.S. utility companies pay an average effective tax rate of 14 percent. By contrast, retailers pay an average 31 percent.

The administration says the point of its tax plan is to make the system fairer and more efficient — not to squeeze more overall tax revenue from corporations.

All President Obama is doing is rearranging the deck chairs, never noticing that the ship supporting it is plunging beneath the waves. Ultimately the practice of picking “winners and losers” is what government industrial policy is all about. It turns the economy into a system that works based on not about what you know, but who you know. Jacob Sullum complains:

As long as we have leaders with this kind of overblown faith in their own knowledge, wisdom, and competence, we will have “a tax system that’s a complex, inefficient, and loophole-riddled mess.”

It is however, as good for lawyers and lobbyists as the Greek system is good for bureaucrats. It works very well. The only argument is over what “it” is.


How to Publish on Amazon’s Kindle for $2.99
The Three Conjectures at Amazon Kindle for $1.99
Storming the Castle at Amazon Kindle for $3.99
No Way In at Amazon Kindle $3.99, print $9.99

Tip Jar or Subscribe for $5

Click here to view the 21 legacy comments

Comments are closed.