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The Economic Significance of "NO"

June 25, 2001

Your pulse quickens when you walk through the door. There is that faint, but unmistakable, aroma of new car. The gleam of chrome, the luster of paint-even the pristine blackness of the tires. And don't think the salesman isn't aware of the impact these things. He is as much psychologist as businessman-as, perhaps, most businessmen are. He urges you to take a test-drive. He quietly, seductively, fills your mind with the attractive features of this car, and seeks to seal the deal by confiding that, business being what it is---or isn't---he'll sacrifice the car for a price you can't refuse.

But you do. Although tempted, you say "No." It's not a bargaining ploy, although the salesman is quick to knock a few hundred dollars off the price. No, you mean "No." It's not for you, at this time.

That's economically significant. The salesman sees his commission evaporate. The dealership sees a sale vanish. Of all the economic elements contemplated by economists, the customer's "No" is the most important factor in the marketplace. Just a small percentage of prospective buyers saying it can throw an industry into chaos. Think of all the "no's" that lead to the demise of Plymouth, DeSoto, Nash, Hudson, Studebaker, LaSalle, Pierce-Arrow, Packard, and now, Oldsmobile.

It seems inevitable that someone will realize that, to protect the economy, the "No" must be forbidden. OK, you don't want the gorgeous deluxe model the salesman was touting. But, for the sake of the economy, for the jobs of your neighbors, and the success of the neighborhood schools, not to mention other businesses related to the auto business (parts, for example), you WILL buy a car! It may be an ugly, stripped-down model with some features that you would never purchase if you had a choice, but you cannot be allowed the luxury of a "No." It's your duty to buy a car.

Or maybe it's a house. Now there's a purchase with real economic clout. You've been hoping to buy a home for years, but something puts you off. Is the economy really as robust as you're constantly being told it is? Funny that GM, the world's largest company, can't make a sufficient profit selling Oldsmobiles in such a strong economy! Maybe you'll postpone your house purchase. Never! Not allowed! Consider the hardship worked upon the carpenters, masons, plumbers, electricians, etc., if you are heartless enough to say "No" to a new house! Maybe you'll be allowed to skip the jacuzzi and pool, but you WILL buy a house. The economy demands it.

These scenarios aren't as far-fetched as they seem. A company even larger than GM does, in fact, offer you a product which you cannot refuse. It's not a product which has much appeal, and in fact, has so many drawbacks that its purchase can only be accomplished through coercion. Its name is government, and you're going to buy it whether you want to or not.

Indeed, it may be that the only reason you can be allowed to say "No" to the auto salesman, or real estate agent, is that you can't say "No" to Uncle Sam. If unemployed salespeople (unemployed because they're trying to sell what people don't want to buy) are going to be able to collect their benefits, you've got to pony up to buy Uncle's benefits package, warts and all. Why, what would happen if you could say "No" to Uncle? Good grief! We'd be free! That's a prospect to scary to contemplate!

If that seems an extreme or preposterous view, consider OECD. That's the Organization for Economic Cooperation and Development. It consists of twenty-nine nations, mainly in North America, Europe, and the Pacific rim. OECD has issued a report called "Towards Global Tax Cooperation" that merits serious consideration. The gist of the report is basically what we've said above about the necessity of buying cars or houses for the economic good of the community. What OECD says, in its report, is that nations with low tax rates are harmful to the world (!!) economy, and it cited thirty-five countries for "harmful tax competition." Why, people can shift their operations to those "low-tax" countries, or invest there, to take advantage of the lower taxes. It just isn't fair! And of OECD has its way, it won't be allowed.

You may be surprised, after laboring nearly half the year just to pay your various taxes, to learn that the United States is one of those "low-tax nations." That being the case, you might assume that the U.S. would be opposed to the OECD scheme, which is to establish a cartel of nations to conspire to eliminate "low-tax" rates in those countries which are insolent and unfeeling enough to allow such things. Not so. The damn fools in Washington think the OECD idea is terrific, and would like to see Americans taxed more. Treasury Secretary Summers, for example, thought highly of OECD's plan. He believed there was a "need to address globally the problem of harmful tax competition."

Do you think that you might actually be entitled to keep what you've earned-or at least the lion's share of it? Summers regarded that as the "dark side to international capital mobility." Of course, your own personal capital is as mobile as you want it to be, but that's not the point. It is "international" mobility that the one-worlders seek. If your investments are to be global, let OECD call the shots. Left to your own selfish whims, you might prefer to invest in one of those "low-tax" countries. The concern of OECD is that "globalization has, however, also had the negative effect of opening up new ways by which companies and individuals can minimize and avoid taxes. These actions induce potential distortions in the patterns of trade and investment, and reduce global welfare." Your own personal welfare, in other words, be damned: it's GLOBAL welfare that's important. One big global economy, and one group of ever-so-altruistic global-minded humanitarians to manage it for us. For our own good, of course.

So it's silly to be compelled to buy a car, even if you don't like the deal, just to benefit the local economy? Well, if OECD has its way, you'll buy a car for some foreigner somewhere, or maybe a home for some family of strangers in a part of the world you'll never visit, to benefit the GLOBAL economy. Don't fret the details, just give OECD the money and the authority.

Or maybe, but I'm not holding my breath, you'll just say "No." Isn't it about time?

The first use of gold as money occurred around 700 B.C., when Lydian merchants (western Turkey) produced the first coins
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