Random Thoughts on Government as Business

One way to look at the place of government in an economy is to view it is as just another business. This is because:
  1. It produces goods and services
  2. It has customers
  3. It has shareholders
Of course there is a limit to which government can be identified as a business:
  1. It cannot go bankrupt (debt can be defaulted)
  2. Monopoly: It has little to no competition in an economy
  3. If it is a national government, It can declare war against foreign national governments
  4. It writes and enforces law to govern both society and itself
  5. It has the means of creating money and enforcing its use

The way I always look at government is that it is a mutualized monopoly - while it has no competitors (and is thus a monopoly), its customers are its shareholders. At least in a Democratic country, the government's customers are the people, who are equal shareholders in the national government.

Tax, therefore, should be seen as the price the customers pay for the goods and services that the government provides. The fact that a "user pays" system is not set up does not mean that the system is flawed, since "user pays" itself can be a flawed way of pricing, depending upon the goods or services produced (selling food over the counter is a good user pays system, having toll booths every few kilometres to pay for road building and maintenance is not a good user pays system).

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