Digital Brigands and Tax Addiction

Just one more tax hike and I'll quit, I swear!

How do you wean an addict off a dangerous and deepening addiction? Some say a violent and sudden withdrawal is best, while others counsel a gradual disengagement from the addictive substance.

What if the addict is the government, and the addiction is tax revenue and market meddling? It is certainly an exhilarating combination. With the power to tax and spend comes the opportunity to engage in all sorts of fun projects at the public’s expense. And best of all, they have no choice but to pay up.

For example, Digital Britain is the catchy monicker for the Interferers’ new project to give everybody broadband access whether they like it or not. Naturally, it is financed by a new tax. Which means the government taxes money from people, and uses it to provide services they could have easily purchased themselves without incurring the cost of a middleman government bureaucracy.

Expectedly, this massive cross-subsidy is described as a philanthropic mission to rival the curing of cancer. Who could oppose the provision of Internet access to rustic paupers who wouldn’t have a clue what to do with it? Well, we could. It is unnecessary. If this were left to the market, the price and penetration of broadband service would reflect the value people place on it, and how much they can afford to pay for it.

Prices would converge at equilibrium, ensuring the maximum penetration consistent with demand. Competition would keep efficiency high and equilibrium prices low. In short, broadband would spread in the most efficient and effective way. Best of all, we wouldn’t have to pay yet another tax to the revenue addicts, now salivating eagerly at the chance to get their grubby claws on even more of our hard-earned cash.

This is not abstract economic theory we are spewing. In America, the Pew Research Centre’s 2009 report on home broadband penetration shows adoption growing healthily despite the recession(up 8% over 2008), and without government meddling and subsidy. Best of all, adoption is growing fastest among the elderly and the poor- the same people the UK’s pro-meddling apologists claim to be protecting.

The report also reports that prices are lowest in those US regions with the greatest competition amongst broadband prividers. Proof positive that the market works. It is a beautiful thing. It does the job swiftly, efficiently and cleanly. Which is why the revenue addicts in governments should be forced to go cold turkey.