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Taxing Families
Libertarians usually point to government as the source of high taxes. But in many developing countries it's the family that is most taxing. In his amusing account of a "year in Casablanca," The Caliph's House, Tahir Shah recounts what happens when his workers lost their homes and moved into his palatial estate.
I began to witness firsthand the ancient employment system of the East. It's sometimes known as "living off Abdul's job." As soon as someone gets work, everyone else gives up their jobs and leeches off the employed member of the family. The longer you are employed, the more money you need, merely to support the hangers-on. Anyone with a nice home and full-time job has a vast cast of characters living off them.
Before there were governments there were families that taxed (see Schoeck's classic Envy: A Theory of Social Behavior for "taxation" in primitive societies). Creating a market economy is about much more than eliminating regulation.
Addendum: Michael Greenspan has another nice illustration from Rhodesia.
Posted by Alex Tabarrok on March 28, 2006 at 07:15 AM in Economics | Permalink
Comments
Sort of like noncelebrity versions of rappers or NBA players with their "entourages."
Posted by: Peter at Mar 28, 2006 10:17:19 AM
Another example is the Cambodian prostitute whom Nicolas Kristof purchased, freed, and set up as a shopkeeper in her home village. The end result was that her relatives cleaned our her inventory; no one believed she should be able to keep food on the shelves while her relatives went hungry.
Of course, the family's initial decision to sell the girl into sex slavery can be seen as familial "taxation."
Posted by: DK at Mar 28, 2006 10:32:35 AM
This is freaky. People are stealing this guy's examples.
http://groups.yahoo.com/group/leo-strauss/message/32324
Posted by: smallee.com at Mar 28, 2006 12:04:51 PM
Is the suggestion that families create a larger tax then the govt? or is this a literary segue to the real topic?
Forgive me I'm new to the blog. Haven't figured out the tone yet.
Posted by: docmartn at Mar 28, 2006 12:51:59 PM
In Cameroon, if a family member asked for money, you absolutely could not say no. Solution - as soon as you got money buy something with it. Here's where it gets really interesting. Everyone bought the same thing - cinder blocks. Then they would trade them like currency. For some reason you're brother had to give you cash if he had it, but he didn't have to give you his cinder blocks which spent like cash.
Posted by: vc at Mar 28, 2006 2:30:06 PM
Spot On, VC.
I believe this is because the cinderblocks were already considered part of the "house." On some of the smaller Caribbean Islands (like Anguilla) the effect exists and is called "jollification" The blocks where much more clearly considered "personal" property, while cash income was inherently more communal. For example, if one was known to have cash, one was expected to pay for the beer.
This also explains capital flight. If one does have cash, best to not let anyone know. That makes using a local bank impossible: even if the teller and manager kept their mouth shut (unlikely), people would still see you entering and leaving and ask awkward questions. No, the rational cash holder will move that money offshore, and the fewere people who know, the better.
This is why I think that Africe needs something like paypal: a way to make small payments in a way that fellow villagers have no idea how big your balance is.
I have two friends who did peace corps work in Cameroon I can ask for more concrete examples.
Posted by: tylerh at Mar 28, 2006 4:16:40 PM
I used to be taxed by my ex wife. After an experience like that, one starts to like the IRS.
Posted by: PK at Mar 29, 2006 4:09:37 AM
I'm not a big fan of most Libertarians, precisely because they seem unwilling to appreciate the social fabric which has to exist to hold up their utopias. But the focus on governmental taxation comes from it being the acceptable method of theft in the West. From what I can tell, Libertarians often seem to be so opposed to theft that they have trouble imagining that people would even desire to steal. If familial theft were to ever approach parity with governmental theft in a society with Libertarians, I'm sure that they would start criticising that institution as well.
Posted by: Nathan Zook at Mar 29, 2006 9:47:56 AM
"More concrete example". Sheesh.
Seriously, however. I almost never see economists talk about transitioning a backwards economy. What policies can and should government enact to encourage the development of a free market economy in Cameroon?
Libertarians should consider how they would transition an entire world with such an economy.
Posted by: Nathan Zook at Mar 29, 2006 9:52:27 AM
This is why I think that Africa needs something like paypal: a way to make small payments in a way that fellow villagers have no idea how big your balance is.
It exists and is growing fast: transferable prepaid airtime on GSM mobile phones. The vouchers are sold for cash by street vendors, but once activated the stored value can be transferred to any other subscriber by sending an SMS message. This means that it is in practice exchangeable for goods, services or indeed cash. It has the advantage of being secure, confidential and instant.
All it needs is crossnetwork interoperability to become the world's first stateless currency..
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