The problem of income and wealth inequality has been present throughout history in many societies. The only difference is that in the modern age, inequality has taken a slightly different guise. Whereas, before it tended to be the rulers and nobles hoarding all the wealth and power, these days there exists private individuals with net worths greater than GDPs of entire nations. Although this is indeed a problem, it may not be in the way that it is initially assumed to be.
Figure 1 above shows the inequality between two nations. Although Country A has the larger inequality, the poorest are still richer than the richest of Country B. Despite its simplicity, the purpose of this example is to highlight a key component to this debate that is often overlooked. Inequality is a secondary issue to that of poverty. If everyone in a nation is getting richer, then in theory, it should matter less that some have made more money than others. The primary concern should be how they have made their money, not how much.
In the real world, there are many different measures for calculating economic inequality, one of the more popular being the Gini coefficient¹. This measures the proportion of wealth held by a number of individuals in a nation. A Gini coefficient of one means that one person earned all the income (perfect inequality), where zero would represent every person earning the exact same income. To highlight the concept of the above example using OECD data, the values for both Luxembourg and Spain are similar (0.327 and 0.333 respectively), yet when looking at GDP per capita, they differ greatly ($112,188 and $39,580)².
Inequality is not static either, just because someone is poorer now doesn’t mean they will always be. Economic maneuverability is another important metric that must be considered here. In a research paper examining the likelihood of experiencing relative poverty in the US, Rank and Hirschl report on the periods of time in which people enter and remain in the bottom 10% and 20%. Their findings show that although 61.8% of people may enter the bottom 20%, after one year this rate drops to 38.2%. This then continues to fall, whereby only 5.6% remain in this percentile for 10 or more consecutive years³. For the bottom 10%, 42.1% enter this level for at least a year, which further reduces by roughly half to 20.5% after one year. Only about 1.5% stay at this level for 10 or more years consecutively. However, again this is relative poverty not absolute, which is an important distinction. Where absolute poverty is measured in terms of a set threshold level, relative looks at the bottom percentiles in relation to the average level of income of the population. This means that the poorest of a relatively high average income nation may have higher standards of living than the poorest of a lower average income nation⁴.
The upper stratas also show similar levels of mobility too. 56% of Americans expect to reach the top 10% in their lifetimes, and 73% getting into the top 20%⁵. Of the top 1%, 11.1% of people are expected to reach this stage, however, this plummets to 4.5% after one year and only about 0.6% will remain here consecutively after 10 years⁶. There are a variety of factors that lead to these changes over the course of people’s life: marriage, selling homes, losing or obtaining new jobs and much more. Despite this, it is common to hear the solutions of inequality follow more along the lines of forcible redistribution of wealth from the “1%” as if this was a fixed group of people “hoarding” all the wealth. However it is crucial to understand that this is not a zero-sum game.
One of the most prevalent economic myths is the ‘fixed-pie’ fallacy. This is the assumption that there is a fixed amount of wealth in this world, and so, if one person becomes wealthier it is because they have taken more from someone else. The same way a pie is fixed in size and must be sliced up and divided between recipients. If one person cuts a bigger slice for themselves, it naturally will leave everyone else with less. The problem is, however, wealth cannot be compared to a pie since wealth grows⁷. With every invention or innovation comes an increase in the amount or quality of goods and services available in society, often creating entire new industries in which people can enter and expand. Efficiency may also be increased as new ways of production are developed to better meet the demands of the people. As new areas of human potential are unlocked, previously unrealised opportunities become manifest. Jobs in less physically demanding areas become more accessible, and the fruits of this labour become increasingly rewarding. With better products and services available due to the societal increase in wealth, everyone benefits. It is often a mistake to judge wealth expansion solely in terms of money alone, since the range and quality of goods and services now available must also be considered. In wealthy nations, the poorest still have access to advanced technology such as smart phones, cars, fridges etc., all of which would have blown the minds of even the richest a hundred years ago. Increasing wealth for all as opposed to just a few is mutually beneficial for all parties involved. The fact that the market is structured in this way naturally creates an incentive to increase societal wealth as whole, since for companies especially this means more potential customers are available. As an entrepreneur, would you rather sell your product in an area of high wealth, or in a desert where nobody lives? By creating and sustaining positive feedback loops such as these the level of wealth increases.
Statements such as “the rich are getting richer, and poor and getting poorer” are simply untrue. Hans Gosling through his work with Gapminder, revealed many misconceptions people have regarding the current state of affairs in the world⁸. He showed that many often think things are worse, or are getting much worse than they actually are. Some of the most striking examples of this has been regarding global poverty levels. Participants of their surveys were asked to pick what level of the world’s population live in extreme poverty today considering that in 1980 it was 40%. 92% of respondents got this wrong, expecting a rise or less reduction than the actual level of 10%. Despite inequality increasing, the level of poverty has plummeted, alongside infant mortality rates, longer lifespans and general increase in quality of life⁹. A more reasonable conclusion based on the facts are that the rich are getting richer at a faster rate than the poor are getting richer - but we are all indeed getting richer¹⁰. Which makes sense. Those with more money, have more available to invest and grow. A 7% increase in £1 Million compared to £100,000, is far more in real money terms. Crucially, the rich are better able to capitalise from compounding interest especially, since they have more money compounding, or are even aware of the power of compounding¹¹ in the first place¹².
To see wealth as a zero-sum game is fundamentally flawed. Many have made this mistake, predicting that as the population increased, poverty would also as there would be less to go around¹³. The reality thankfully proved them wrong, as poverty has reduced drastically despite the boom in population growth over the last century. Human beings are not cattle or crops. We have the capacity to think and manipulate our environment in order to solve innumerable problems. Human ingenuity is the reason why you can read these words right now. Having more people means more opportunity to create wealth and innovate, thereby circumnavigating or at least reducing the magnitude of many great threats such as disease, natural disaster and war. Admittedly, innovation has brought its own problems as well such as climate change and superbugs, however this is just more reason to innovate further. To achieve this, a nation must nourish free thinking and give people greater opportunities to solve these problems by getting government out of their way.
Despite this, if the issue of overpopulation still seems concerning, solace can be taken in some of the other incredible work conducted by the Gapminder institute on this topic. Hans Gosling explains that the current predictions estimate that human population has begun to plateau and may peak at 11 Billion by 2100. In the past and amongst developing nations, the number of children per household averaged much higher than it is now. This was mainly due to the nature of work which required support from larger family units, and given the fact most children ended up dying before reaching adulthood, there was greater incentive to have more children in order to ensure that at least a few of them would survive. However, these justifications no longer hold as much weight as the world is developing. Thanks to advancements in medicine, hygiene and new work opportunities, more children are living longer and surviving. Increasingly, it is becoming more infeasible for the poorest to have so many children, since that is more mouths to feed. With education becoming more accessible, their children can attain better jobs away from hard labour, escape poverty and uplift their whole families. These reasons contribute to the diminished incentive to have so many children, and to give more focus to the ones people do have. Eventually the birth rate would likely reach an equilibrium with the death rate, and give the planet a constant population level of approximately 11 billion.
Although poverty has indeed dropped, it has not done so equally across all nations. When reading the above, your mind may have instinctively visualised families in some African nation or Bangladesh etc. This isn’t racism. The fact is that the so-called “west” and other developed nations have seen unprecedented rates of wealth creation, and as a result their populations suffer far less from poverty. We can cry about this, complain and give all manner of excuses. Or we can learn from it and explore the real reasons as to why this disparity exists. If we really want to understand how to build a successful nation in which poverty is minute (if it exists at all) and the people are able to prosper and live free, we must understand the reality of the situation by putting aside emotion and adopting reason. It may be easy to stick all the blame for this on the colonial powers of the past few centuries, namely Britain in particular. However, something was unique about these invaders compared to the past. Many empires have risen and fallen, and many kings were able to amass great hordes of wealth through conquest and plunder. But these modern nations were able to keep hold of their riches in a far different way. By granting some level of economic freedom, wealth was more successfully disseminated amongst a greater proportion of the population outside the elites. This is not a defence of the British empire in the slightest, and in fact colonisation as a whole is strictly antithetical to Azadist principles¹⁴. The East India Company was a state-backed monopoly, granted exclusive trade rights in India by their monarch, which, as was discussed in the previous section, is completely opposite to what Azadism advocates. Alongside this, Azadists take a strong position that the British Empire (alongside many others) have ultimately caused vastly more harm than good. In fact any “good” that did come out of it was attached to costs so high it is ridiculous to suggest that any of it was “for the best”. The sheer number of lives lost, families destroyed, cultures dismantled, religions distorted, and spirits crushed can have no compensation. The devastating effects, socially, economically, philosophically are inarguable for these invaded nations. Instead, what this analysis focuses on is what happened to that accumulated wealth in the invader's home countries. It is not so simple to say they just stole from other nations and this is why they became so rich, since in these cases it was not just the ruling classes that kept the wealth. It was used in a way that maintained that wealth and expanded upon it.
Many theories have been suggested as to why some nations are richer than others, as outlined in the opening chapters of Acemoglu and Robinson’s book: ‘Why Nations Fail: The Origins of Power, Prosperity and Poverty’. Race, culture and climate have all been used in the past to explain these differences, however geography in particular has been a particularly prevalent theory, and for good reason.
In Adam Smith’s “The Wealth of Nations”, chapter 3 goes through the limiting factors associated with the division of labour, in which he highlights the importance of transport in opening up trade and getting access to the world markets. He uses the example of ships revolutionising the transport of goods and services by allowing for more to be shipped, using less labour, over greater distances, and in less time than traditional horse and carriage. These factors allowed for the economies of the port cities to flourish far greater than remote in-land settlements, due to the greater access to other markets and a more efficient method of trade. Looking into the history of empires and nation-states, those that were situated on coastlines or had access to ports and the sea, tended to progress far greater than those that had not. Even today some of the world’s most wealthy nations are city states such as Hong Kong, Singapore and Taiwan which have extensive ports and sea networks linked to them. Even Maharaja Ranjit Singh had ambitions to reach the ocean before the kingdom collapsed¹⁵. Alternatively, isolation has been repeatedly shown to prove disastrous in promoting prosperity. Thomas Sowell expressed the failure of isolationism as an economic policy by pointing out how historically, those societies that kept to themselves and avoided interactions with foreigners led to much diminished levels of success in comparison. Smith also eluded to this in his own time using examples of settlements and cities that were located further inland and comparing them to port towns, or cities located on shorelines or the banks of great rivers. These factors made trade far easier and thus wealth was better able to be transferred and grow, for the mutual benefit of all involved.
However, the geography hypothesis can only be taken so far, and although it may help understand the difference between cities and regions, it can fall short when scaling up to the level of nations. Acemoglu and Robinson instead reject this in favour of a new perspective, suggesting that it is the ease of access to institutions that is the most important factor. By pointing out a series of examples around the world of nations with similar geographies but with huge disparities in wealth, they put the idea that “some places are just better suited than others” under scrutiny. North and South Korea (despite their once vast similarities in race, culture and geography) could not be more different in their trajectories after their split. Why is this? The US and Mexico is another relevant example, with the town of Nogales being one of the case studies used in their book. This town is divided by a border, half in Mexico and the other half in the US. However, on the US side the residents earn three times more, have lower crime rates and live longer lives. The reason for this lies in the formation and subsequent development of these two nations. Mexico’s land and resources was far superior to North America’s, and its people were quickly enslaved. The Europeans landing further north though faced far more resistance, harder terrain and poorer land quality. Whereas the Spaniards to the south established institutions to exploit the native inhabitants and created a system in which to keep them merely on a subsistence level (and therefore reliant on their invaders). If not outright enslaved, they would be forced to work for low wages, pay high taxes and inflated prices for goods and services. This time-tested model expanded the wealth of the royal families and conquistadors, but at the expense of the economic prosperity of the nation as a whole.
The resource and labour rich southern regions being thoroughly exploited, the English arriving late were left with the inferior northern territories. Initially failing to replicate the Spaniard’s policies, they instead were forced to grow their own food and trade. Their initial plan to kidnap the natives’ king and hold him ransom was not viable, rather they had to negotiate and work with them (for now at least). Their intentions then turned towards exploiting their fellow colonists instead and so they set up a large corporation (the Virginia Company) who owned all the land and new settlers from Europe were then forced to work under grueling conditions in pre-defined roles and oversaw by company agents. Naturally people began to run away into the frontier and in response the company imposed death penalties for anyone caught deserting. Inevitably this system collapsed as people from Europe became aware of the situation, thus avoiding the lure. With the population dwindling, the Virginia Company had to change its tactics. Realising that the typical colonial strategy was not feasible for their circumstances, they instead granted land to their workers to cultivate on their own as well as rights to have their voices heard in determining laws via general assemblies. By giving the people (at least some of them) a stake in their own success, the system now geared towards an incentive based one rather than solely exploitation based.
Other colonies also began to spring up after being granted land by the English crown. The lords of these colonies were given freedom to experiment with different types of government structures, and after failing to implement the feudal systems that had existed in England, they too conformed to the principles on which the Virigina Company began to trend towards. The feudal system they failed to replicate was similar to the Mughal system in which lords were given ultimate authority over areas, and under them came tenants (or zamindars in India), which further delegated land and labour in order to raise taxes for the lords and state monarchs in return for wages¹⁶. Similarly to India, a pseudo-caste system developed with the lower classes being known as “leet men”, and their children also inheriting their status. However, this again acted as a perverse incentive, and this system too collapsed in the US since there were more attractive alternatives in escaping to the frontier or staying in Europe. Eventually the colonies became proto-republics in a sense that each was governed by an assembly of all land owners within a district. These were far off the “democracies”, or more accurately the republic, that came later on as they refused rights to Blacks, women and the poor¹⁷. However, it still was revolutionary for their time in terms of the broadness of political representation. Although rudimentary at this stage, it nonetheless marked the beginnings of a system in which individuals began to equalise wealth and power away from just the monarchs. This crucial restructuring enabled the North American colonisers to gradually pursue greater freedoms both economically and politically¹⁸.
Mexico on the other hand drafted a constitution that preserved power amongst their elite classes. Although there was an effort to establish a proposal for popular representation in politics, it unfortunately failed to gather traction. Consequently, their society was structured towards catering for the top classes as a priority. Instead of empowering the common people, it geared towards consolidating monopolies and exploiting the native populace. It was only the wealthy who were able to access essential institutions and services such as acquiring loans, making it very difficult for ordinary people to start their own businesses and expand wealth. Combined with long lasting political instability, and therefore reduced capacity to protect private property rights, the economy of Mexico as a whole lagged behind. Alternatively, the US operated in a far more decentralised manner in terms of power, through senates and wider representation of the common man into politics. Albeit at a limited level, but still far greater than Mexico was at the time. This also enabled them to capitalise on the opportunities presented at the advent of the industrial revolution. One example of this is the broadening of who could acquire a patent as well as access to financial institutions¹⁹. Since patents were relatively inexpensive to acquire, it was easier for a poor person to have the opportunity to invent something new and bring it to market. The banking sector was monumental in facilitating this as it allowed access to finances. Since this sector was left largely unrestricted, competition flourished leading to banks being able to offer low interest rates on loans essentially making it cheaper to borrow money²⁰. In the US there were 338 banks in 1818, growing rapidly to 27,864 by 1914. Mexico on the other hand had only 42 by 1910, two of which controlled 60% of the total banking assets. Due to the lack of competition, interest rates were much higher, effectively shutting off the path of entrepreneurship for Mexico’s poorest. Therefore, only the already wealthy could feasibly access these services and they used it to consolidate their wealth and expand their influence to monopolise existing industries.
In the US, if someone had an idea, they were far more likely to get funding and freedom to try it, thereby enabling a greater proportion of the people to start their own enterprises. Naturally this then led to increased levels of competition amongst the private sector, leading to innovation and wealth expansion for all. Fundamentally, it is economic freedom that best maximises the chances for prosperity and the reduction of poverty. The Index of Economic Freedom developed by the Heritage Foundation, is a annual ranking that measures economic freedom in nations across the world. It takes into account the following 12 factors²¹:
When looking at nations around the world today, those that tend towards economic freedom show the least amount of poverty and the highest rates of prosperity. Some of the highest scoring nations on the index include: Singapore, Hong Kong, New Zealand, South Korea, Ireland and Switzerland. Although not perfect (as each has many issues of their own) these nations nonetheless currently best encapsulate Azadist principles and can be seen as real world implementations of many of the ideas presented in this manifesto. Combing low tax rates, reduced barriers to entry for businesses, strong enforcement of property rights, minimised corruption in government alongside other policies have led these nations to become some of the most prosperous regions in history - many of which started as insignificant fishing villages. Wherever freedom has been promoted, those societies improve, and freedom in the economic sense is a necessary part of freedom as a whole. The reason why these correlate is due to the increased wealth enabling far better access to resources and ways of working that give people many options in how to live their own lives. It is upon this, Azadism wishes to export prosperity to any region on the globe by providing similar formulas for success. However much a nation has trended towards freedom, it has equally seen a greater quality of life, healthier and longer lives as well as generally wealthier. By any metric we can measure, we have seen a rise in prosperity overall as the world has trended towards greater freedoms economically. It is imperative, therefore, that to eliminate poverty the trend towards freedom continues to rise. Even if inequality may rise as a by-product, the fact is that all are better off if wealth is grown under Azadist conditions as opposed to the system in which the colonial powers of the past employed.
This is not to say that inequality is not a problem, but instead, the major problem with inequality is its perception, and as a result social stability. It seems as though many people are accustomed to seeing the situation around them for what it is now, rather than the progress that has led to this point. It is reasonable to feel compassion for those going through difficult times and resentment for those that are in the complete opposite position. The fact that these are mostly temporary positions (on both sides) and have been getting better over time is often ignored. What this creates is a sort of social tension between the rich and the poor, which is not to be taken lightly according to Jordan Peterson²². This inevitably leads to a situation in which tribalism manifests, and groups compete to gain the government's favour to debilitate the other. In the process, the entire nation suffers. In fact, Karl Marx based much of his ideas off of this dichotomy, promoting the idea of a class struggle between the bourgeoisie and proletariat²³. These notions went on to materialise as the horrors of the USSR in which groups such as the Kulaks were sent to Gulags and killed en-masse. Hitler then took these ideas further by applying his own racial tint by demonizing the Jews, using wealth as a key component of his arguments against them. So what is the best way to tackle it? Azadism suggests that a nation must increase mobility for the poorest in society to reach higher levels of income by removing barriers and maximising opportunity. The previous section delved into the specifics of the harms associated with artificial barriers to entry and restricting competition, whereas this section will now focus on how to best safeguard and promote those who are currently in poor financial positions. The more important focus is to alleviate poverty through maximising human potential, rather than to punish success²⁴.
There's no doubt that inequality destabilizes societies. I think the social science evidence on that front is crystal clear.
― Jordan Peterson
To conclude this opening section to part 4 of this manifesto, contemplate this example from Ithiaas. On visiting their Gursikh, Bhai Lalo, Guru Nanak and Bhai Mardana were offered food prepared by the poor carpenter. The government appointed custodian of the village, Malik Bhago was made aware Maharaj’s arrival and invited him to abandon the peasants hospitality and to partake in his feast instead. After initially declining, he brought with him a roti from Bhai Lalo’s house. In one hand he held Bhai Lalo’s and in the other Bhago’s. When squeezed the former secreted milk, and the later oozed with blood. A powerful metaphor, highlighting the corruption of Bhago and the cruelty in which he treated his workers. Whereas milk symbolised the purity of Bhai Lalo’s nature and hard work. The Guru saw Bhago’s exploitation clearly and recognised his hubris and greed. The problem here was not his wealth, it was the means in which he obtained it. The later manifestations of the Guru controlled vast amounts of wealth relative to the average population of the time. Were they also immoral for being so rich? Wealth is only a tool, same way weapons or wagons are. The nature of those who use them should be the primary concern. Azadists should be concerned less with how much someone has, only how they obtained it²⁵. If it was through breaching the NAP then it is illegitimate and only then it is deemed immoral. If it is through providing a good or service that people have willingly paid for, then no issue should be raised at a state level. It is not automatically true that someone who owns a lot of wealth is by default consumed by greed and attachment. When Raja Janak was told that his kingdom was engulfed in flames along with all his worldly possessions, he remained unmoved, preferring to listen to the sermons of his guru. Instead, it was the brahmins who owned nothing but their janeau and two sets of clothes (one set of which was currently in the burning palace), who ran to save their belongings.
The two primary functions of tax are:
The first function is largely defunct in an Azadist economy, since most industries are eventually privatised and handed over to the market. Most tax revenue would initially be used to uphold the government’s main security and justice functions. However, even this should be eventually phased out over time to be replaced by a Dasvandh based approach. This subsection will largely focus on the second function on taxes.
Traditionally, to combat inequality in a society, it is common to hear that higher taxes should be imposed on the rich in order to give more to the poor. However the real-world implications of these sorts of “robin-hood” tactics have significant drawbacks²⁶. Firstly, imagine raising corporate tax on the largest, most successful firms to force them to “give back”. By excessively taxing these firms it becomes increasingly unprofitable for them to continue in that region and so they become more inclined to move their operations elsewhere. This negatively impacts the economy as they take with them the many benefits they provided in terms of employment, further investment and potential access to goods and services. So instead of having the intended outcome of increasing government tax revenue from that particular company, the state now takes nothing.
For example, if country A had a corporate tax rate of 50%, but B had a rate of 10% then logically, a corporation would want to operate in country B, since the cost to them to do business is far lower. Obviously, just like a real market, there would be many other variables that factor into these decisions such as political stability, geography, access to labour, etc. But taxes would indeed form a major part of this decision, as we have seen with many large firms moving headquarters to Ireland in particular²⁷. Simply increasing taxes without providing any other benefits or incentives for business to remain is a shallow solution and is more likely to be counter-productive. The same way a trader can’t justify excessively high prices for a product that can be bought cheaper elsewhere, a government cannot simply increase the “price” to do business in the nation without offering a fair deal in return. Furthermore, the loss of opportunity for employment as well as a reduction in competition and goods and services offered, would further harm the very people that this policy aimed to help. By creating a disincentive for business, naturally, the number of businesses would decrease. The same applies to not just the corporations, but the individuals themselves. As alluded to throughout this manifesto, the power of incentives is not to be understated. It is important to highlight that imposing a higher cost on financial success would lead to people understanding they have less to gain by achieving those levels of success. Why would you work to achieve something where then an increasingly larger portion of it gets taken away in taxes? It would make more sense to someone achieving high levels of financial gain to move elsewhere in order to preserve or further expand their wealth in other places²⁸. Taking with them the entrepreneurial skills that would otherwise have benefited the population of their domestic nation²⁹.
Alongside the retention of wealth argument, another factor to consider is the loss of domestic investment. By increasing taxes on the rich and large businesses, they are now left with less money to invest in capital. Money which would otherwise have been used to obtain better equipment, expand operations or hire more workers has now gone to the government to redistribute according to their own opinion on how best it would be spent. In other words, the money that would have been re-invested in the economy, has now been seized by the state to reallocate as they see fit. This revenue is now vastly dependent on whether the authorities are competent enough to adequately determine where this money should go rather than the market. Instead of this money being reinvested in a way that a more efficient organisation would benefit from, and in turn benefit others (more employment, better goods and services, etc.), it is likely to go into inefficient state programs that operate outside of traditional market forces. Neither adequately observing price signalling nor adapting to consumer demand. Alternatively, it may go towards funding wars that no one agrees with or be thrown at failing public organisations in the hope that more funding will solve all its problems. Instead of letting the market decide where to allocate resources based on demand and supply, the government decides where these should be used. All the while, chunks of this revenue is pocketed by politicians and bureaucrats in the process. The private firm being taxed, who initially made the profits, already proved its ability to allocate resources in such a way that meets the demands of the people. How does it then make sense to let the government gamble these earnings in non-market, uncompetitive enterprises that do not adhere to the laws of demand and supply? In a market environment, if a firm is allocating these resources inefficiently, then it itself will suffer the consequences and potentially fail, thus freeing up those resources for other more efficient businesses to manage. Whereas in a state redistribution system, it is the taxpayer who pays for the inefficiency of government enterprise. Although the intent may have been to help by redistributing to those in need, the actual outcomes may end up worse than intended. The market mechanism is what best redistributes wealth when government gets out of the way and makes it easier for competition to increase affordability and options for the people.
We should also consider that in reality, many of the high-income earners actually use tax avoidance schemes and spend money on “creative accounting” to get around paying these high rates. Other methods include them placing their money into tax protected bonds and other securities which would have otherwise been used in the economy. With convoluted tax systems, it is far easier for accountants hired by the richest in society to get around having to pay these rates by finding and exploiting both legal and illegal loopholes. This is not available to the poorer in society, since they cannot afford the fees to hire professionals specialising in this practice. On top of this, the experiment in excessively taxing the rich has already been tried. In 1921 the tax rate for earners of over $100,000 in the US was 73%. During this time, $700 million in tax revenue was raised, but only 30% of this class of earners paid taxes. But when this rate was steadily decreased to 24% by 1929, 65% paid and over $1 billion was collected in tax revenues³⁰. Paradoxically, not only was more revenue raised with the lower tax rate, the coverage was also greater. Sowell explains that this was no mystery but was actually due to high-income earners being freer to use their earnings to reinvest into the economy rather than tax-exempt securities or other creative accounting methods. This reinvestment promoted greater output, employment and wages which in turn further raised the coverage since more income was available to be taxed despite the lower rate. What may have initially seemed obvious - that simply increase the tax rate will increase the tax revenue - the reality is that the relationship is actual an inverse one for the most part. Despite this, the tax burden still does not fall onto the lower classes of earners either within the US at least. Despite the progressive tax system and higher tax rates on the rich, it is still high-income earners who end up contributing the most to the overall tax revenue. This is because of the actual effective tax rate which takes into account the amount paid in taxes minus the amount given back in federal transfers. When looking at this, on average only the top 40% actually pay taxes more than they receive back from the government (if they receive anything at all)³¹.
Under Azadism, a lower tax rate and simpler system overall would be employed initially. Since the role of state is far diminished, there would be less need for such a high tax revenue in the first place. Secondly, this would help retain wealthy individuals and businesses due to lowering costs on their success, making the nation more competitive in attracting wealth rather than to discourage it. By setting corporate taxes to zero, it would also help remove barriers to entry, as the cost of setting up and maintaining businesses is reduced. This all returns a net positive in terms of stimulation of the economy in forms such as: increasing employment, availability of goods and services, and promoting competition and innovation. As well as this, providing a simpler tax system by removing unnecessary taxes and progressive rates will help to remove the incentive to exploit loopholes and even increase the difficulty in finding them in the first place. If before you were being taxed 70% of your income, and by hiring an accountant (which would charge their own high fees) to, in theory, cut the cost you pay by half; why then would they do this if the tax rate is far below the 35% in the first place? Again, incentives must be considered in any tax policy suggested. Instead of the multi-tier tax brackets and vast variety of tax types, a flat tax on something like income would be implemented initially³². This tax rate would apply to all eligible equally. As discussed above, there is little concern about raising enough revenue with a lower rate, even though coverage is likely to increase anyway (and therefore also revenues). This simpler tax system makes it far more difficult to find loopholes and counteracts the incentive for the wealthy to use loopholes to begin with. For instance, the economist Milton Friedman calculated that under a flat tax system, the USA in 1962 could have raised the same amount of revenue with only a flat 23.5% tax rate³³. At that time, the highest brackets went up to a mind-boggling 91%! Combine this with the small size of government and with most industries privatised, it is more likely for a national debt to transition into surpluses. These surpluses would then be used to further tweak the tax rate to let people keep their wealth rather than have the government squander it. Any excess should be handed straight back in full. This simpler and lower tax rate on the wealthy will also aid in attracting foreign investment, bringing with it increased opportunities for all in the nation.
With many of the inefficient and costly programmes the government provides removed, the private sector will take on most of these functions instead. By having lower costs to do business, it makes it easier for the people themselves to provide these solutions and compete with each other to create the best possible product or service, at the best possible price. The minimal tax rate, applied equally to everyone will fund the remaining state functions. However, Azadism being a dynamic philosophy, even this is temporary…
The reader may recall the beginning of part three: the topic of Langar, Dasvandh and Choice. In there, it was made clear the immoral implications of a tax funded enterprise compared to a Dasvandh based one. For the reasons outlined there, an Azadist economy would eventually seek to phase out taxes all together in favour of voluntary donations. The responsibility is increasingly placed on the people themselves to fund the systems in place to protect them, even if there are "free-riders"³⁴. Equally, if the government wants to continue to exist, then it must provide something of value to the people. This also maintains the balance of power between government and the people, as it gives the latter a greater ability to restrict the income of the government. On 15th February 2003, one of the largest protests in recorded history were held against the invasion of Iraq³⁵. At the time it was clear to see public sentiment regarding this, however the politicians had the final say and went ahead anyway.
By having a donation based system, the government is in a much more reliant position. If these nations were operating under Azadism, then the people could have withheld the funding necessary to engage in that war³⁶. The government would be financially handicapped to sustain any sort of campaign in that region. Whereas, with a tax-based approach, the people are extorted for their money regardless of whether they support the cause or not. By the very nature of taxes, each individual in a society is in part funding the indiscriminate drone strikes that murder both insurgents and children alike. Your earnings maintain the government monopolies on ineffective industries that would have otherwise innovated to find cures to dangerous diseases, or educated a population of innovators. You fund so-called wars on drugs, terror and poverty, that in reality tend to exacerbate these crucial issues further. If you refuse to participate, you yourself are labelled an enemy of the state and are kidnapped and thrown into a cage. Tax is fundamentally plunder. It is the acquisition of the people’s property or hard work and labour in the form of money through force or the threat of force. Governments use the guise of “protection” in order to justify it, but how is this different to a Mafia? From murder to trafficking, if this manifesto listed the extent of the crimes of which government commits in the name of “protecting its citizens”, this publication would become too voluminous. To recognise this reality is crucial.
Despite this, Azadism is not so radical in its approach that it is delusional about consequences. Doing away with all taxes overnight is likely to be devastating. Large changes such as these require time to phase out in stages. Many current systems of support provided by the state, however inefficient, could lead to disaster if removed too quickly for those that currently rely on them. Alternatives need time to arise and replace the state. Therefore, the tax reform process could follow this general order, in order to give time for the private sector to develop:
Ultimately the goal would be a taxless society, where even the state’s functions could be replaced by competing private entities. Private courts and security services could replace the final state functions. However, this is a very long-term vision that may or may not be realised depending on the progress of the previous stages, and ultimately the will of the people. It is more reasonable to suggest that this be experimented with on smaller scales to begin with and then have the successful models exported to other localities if they wish to adopt it. Otherwise, if all residents of a particular area agree to pay into a fund pool voluntarily, acting as a “pseudo-tax” of sorts, then this is also acceptable³⁸. And this already exists to some extent around the world with communes and other small communities. Since it is all voluntary participation, this is perfectly acceptable under an Azadist system.
This is not a foreign concept to Sikhi either. On giving the description of the ideal city, Begumpura (albeit, likely metaphorical), Bhagat Ravidas gives one of the qualities of the city to be free from taxes on goods.
Alongside this, other qualities prescribed relate to social equality in terms of status and wealth and prosperity. The reader is encouraged to read the whole Shabad on Srigranth.org and explore the meaning of each word. Searching up the term “tax” on Gurbani search engines outputs a fairly clear perception of tax collectors too, often associated with Yama/Azrael, the messenger of death³⁹. It is a shame how amongst the Sikh Sangat of today especially, attitudes towards taxes can often be supportive and treated as a preferential government activity. It just highlights the level of docility amongst the Panth today and the distilling of our Guru’s teachings. Today we are happy being taxed and having the money we work for taken from us to fund the most unethical causes. Rare is it to hear any sort of outrage against this constant theft, from the Khalsa in particular. Instead the opposite is encouraged when seeing support for political parties that raise taxes and further increase the size of government. However, here is the response our Guru gave to the Hill Raje when they demanded taxes off him⁴⁰:
However, again, Azadism recognises this as an ideal and not something immediately practical in this time. Instead this should be viewed as a direction to head towards or an attitude towards taxes that should be (re-)adopted, rather than something that needs to be removed overnight. Therefore, keeping in mind this compromise, the rest of this section will now focus on how the minimal taxes left could be used to help the disadvantaged as well as other methods to directly help the poor.
Inevitably, with competition there are winners and losers. Although, this manifesto has argued that this approach will lead to greater levels of innovation and prosperity as a whole, this does not discount the fact that this process is a gradual one. Along the way there is likely to be many who fail and enter periods of hardship. Those that inherently cannot take on the same opportunities due to a disability or whatever other reason are also at risk of falling through the cracks. How then does a state with a small government, which is largely restricted to only acting where the NAP is broken, provide the crucial safety nets for the disadvantaged or unlucky? The following will focus on the alternatives to extensive government intervention where freedom is not sacrificed in order to "help" the poor.
Although there are many different ideas on how to specifically implement this, in essence, UBI is paying every citizen of a country an income regardless of their current income or employment status. The primary advantage of this idea is that it provides a financial safety net for all citizens to fall back on. Whether someone has lost their job, business has failed or suffered an unexpected health condition, this will provide an income to maintain their basic human needs. As well as this, it may encourage people to take on the risk to opening their own businesses or pursue employment in occupations more in tune with their own personal interests.
What differentiates this from more common benefit systems is that with UBI you do not lose it when you are offered employment. Current welfare systems suffer from a huge flaw known as the “welfare trap”. If a person receives a job offer that’s only just above the benefits they already get, in their mind, why would they abandon the free income that they already receive for no work, to go and work in a job they might not enjoy for minimal financial gain? In fact they may even consider themselves worse off if they take into account other non-monetary factors that raise their subjective cost of working. Increasing the amount of benefits will only worsen this situation further, as working will seem increasingly unattractive compared to staying on welfare. And we can’t blame them. These mental calculations being made are only logical, since people tend to do what’s best for them in their immediate situation. It is not because they are lazy or adverse to hard work, rather it is the way these welfare states are set up to increase the cost of working relative to staying on welfare. They are essentially trapped. UBI aims to mitigate this by maintaining their welfare income regardless of employment. Thereby, wages will be considered as an addition, on top of their income and not a replacement to it. In this way, they are always better off from working as the incentive to stay on benefits is diminished. If they decide to take on the risk, they could even establish their own enterprises, adding to the competition required for the functioning of a healthy free market. The fear of failing is also reduced, since they have the UBI to fall back on. For those who are simply unable to work, UBI again provides a necessary support system.
Although UBI is becoming an increasingly popular idea, an alternative popularised by the economist Milton Friedman, is the Negative Income Tax⁴¹. This aims to maintain the incentive to work whilst also providing the key social security benefit similar to that of an UBI. In this system, rather than a payment being given blindly to all citizens regardless of income, anyone earning below a certain threshold income will be subject to a negative tax rate. This means that rather than having to pay tax to the state, they receive a payment instead. The difference between their current income (including no income at all) and the national threshold income will be calculated and then, the NIT rate would be applied to this difference. Anyone earning over this threshold will be subject to regular positive tax rate.
The table below shows the current income and final income of three people. You can see here that someone earning nothing is still able to receive an income.
It is important to note that with both UBI and NIT these payouts should only be enough to live off and not necessarily thrive off. Otherwise, there may develop a disincentive to work and again be stuck in a welfare trap. If someone loses their job or are unable to work, then this should be just enough to live off. This includes paying for their basic necessities and any insurances they may need. But crucially, it is their choice how they spend it. However, for most people this is unlikely to satisfy their lifestyle choices and so may be more encouraged to work and earn extra. If someone chooses to work in this scenario, the total income after tax will always increase the more you earn, thereby maintaining the incentive to work. Unlike UBI, the pay-outs are solely for the poorer in society, which means money is distributed to those that need it rather than it being paid out to the super-wealthy to whom it may be inconsequential anyway.
Another key advantage shared with UBI, is that people from the lowest financial backgrounds have a secure base from which to experiment in starting their own businesses. For example, Person A who currently earns nothing, may have a desire to become self-employed and not have to work under others at all. The NIT system allows them to take on this risk, as they have something to fall back on in case it goes wrong. Alternatively, the initial capital required may exceed the welfare income they get, and so now they may be further encouraged to go work part-time at least, to earn some extra cash to help raise funds. What this has done is give them options as a means to engage in the market productively, as well as the safety in case they fail. Even if they fail, the lessons and experiences they get becomes invaluable. They are still free to try again, learning off their previous mistakes. If instead they wanted to detach entirely and devote themselves to do Tapasya, then they are in a perfectly comfortable position to do that also. This all falls in line with Azadist principles of freedom and options for people to live how they choose, provided the NAP is not broken.
Determining whether UBI or NIT is better is up for debate. Factors such as the costs of each method should be considered, as an NIT could be cheaper, however it could create perverse incentives for people to misreport their income. There are ways in which this can be mitigated, but for an Azadist economy, replacing current welfare states with a basic income based one initially seems a far better strategy to uplift the poor and protect the disadvantaged. Not only do these provide a basic safety net for people, but this may also revolutionise work-to-life balances in general. People may want to work less hours in shorter commitment contracts (part-time), and companies can offer more jobs to fill in the labour hours needed, thereby boosting employment in the economy. The current average of 30/40-hour work weeks may drop to 10/20-hour work weeks⁴². The mental health aspects also cannot be understated, as improvements related to stress were widely reported in previous UBI experiments⁴³.
However, a common argument against this is that this could take away the incentive for individuals to take on undesirable jobs that might be crucial for society to function. If you are paid regardless of whether you work or not, it is only reasonable that people, acting out in their own self-interest, avoid jobs they don't enjoy. In fact, it is also reasonable for people not to work at all and purely live off the basic income. Given a free market society, the laws of supply and demand may resolve this as it would mean a higher price must be paid for that work. Employers, seeing the shortage in the labour supply, would then have to increase the wages offered in order to create a greater incentive to take on those roles and compete for workers. What has essentially happened is that a new equilibrium price is reached for those roles, reflecting the new supply and demand in the labour market. The problem however may be that the return from the labour may not offset the cost of labour, meaning that some organisations will have to fail if consumers do not show enough demand for those goods or services. This is the market’s way of communicating that certain enterprises are not worth the effort. In turn, resources are then freed up to encourage other entrepreneurs to invest in different ways or ventures.
This could also be assessed from another angle. With the rise of Artificial Intelligence and automation, many of these menial labour roles may inevitably be taken over by machines. If employers realise technology could be more efficient and cost-effective than hiring workers, then a basic income may be crucial for those who are replaced by them. By having this safety net, they could retrain and apply their skill-sets elsewhere. This should not be seen as a bad thing either. The nervousness felt now about current technological innovations mimics the industrial revolution. At that time, the horse carriage drivers must have also felt under threat by the invention of the engine and cars. However, it is difficult to argue against the insane amounts of progress that resulted from the advancement in that technology. By almost any metric we can observe, the world became better off as supply chains were streamlined, transport of goods and services became quicker and easier. Trade boomed, life expectancies rose alongside quality of life. Poverty, child mortality, death during child birth plummeted, all as a result of the innovations in technology and human ingenuity. New industries and opportunities would arise as technological advancement progresses. How many taxi driver jobs were there before the engine? Obviously none, however this was one of many industries that arose from it. The car may have also seemed like a complicated machine to master, but now it has integrated into society so deep it is often taken for granted. Similarly, with the age of the internet, many people who would have previously worked in factories and farms now work in offices, hotels, airports, etc, avoiding all of that back breaking work. Even with the corona virus pandemic, many sectors have become more open to the idea of working from home and offering more flexible work styles. Admittedly, there were many who may have suffered at the time of the industrial revolution who would not have had access to as many safety nets, if at all. Recognising that we as species may again be on the precipice for another revolution in technology due to things such as artificial intelligence, blockchains, green technology etc. It is crucial that adequate measures are put in place now to help protect those who will inevitably be affected. Basic income may be one way of providing this.
Bringing this back into the roadmap for an Azadist state, the government would initially combine NIT with a flat tax rate in the beginning, in order to best attract wealth, prosperity and competition whilst providing necessary social security⁴⁴. Government programs would be entirely replaced by a NIT. For those nations who are transitioning to an Azadist model, they may do this by reallocating the budget dedicated to their current welfare systems to this one gradually. Eventually this would phase out all uncompetitive, state-owned monopolies in the welfare sector. Over time, the tax revenues collected by the rest of society will go towards funding this instead. A modification to the traditional NIT system would be that in an Azadist state, people born with disabilities would be offered a higher NIT rate to help offset the potential lack of equal opportunity due to their circumstances. There is likely going to be extra costs involved with their situation (medical insurance, equipment, lack of employment etc.), and so to help offset this, slightly more could be offered.
A drawback with this welfare system, however, is that it still involves taxes. It also requires at least some level of government bureaucracy to manage this distribution. Albeit far less than current social security programmes and welfare states, it is a risk nonetheless and so over time even this should be phased out in accordance with Azadism’s tendency to reduce government intervention as much as possible. Devolving this responsibility onto more local levels may help this at first, but innovations in blockchain technology especially may be leveraged to drastically change the approach to this entirely, thereby removing much of the bureaucracy. Eventually, as taxes are phased out, NIT must also. Instead, if people want to keep this, then it would rely on donations and become voluntary. This is to maintain the principles of freedom and thus moving away from any sort of "forced" philanthropy. Therefore further responsibility is placed on the people themselves to help each other through their own compassion and not coercion. However, this is all long term and an Azadist state should not completely phase out basic income until enough of the population passes an agreed level of prosperity.
“The problem of poverty is money…”
― Milton Friedman⁴⁵
Minimum wage laws are perhaps one of the most detrimental policies currently implemented that keeps the poor in poverty and removes their opportunity to progress. This statement may sound oxymoronic initially since you would assume that imposing a minimum amount that a company must pay its employees should increase the income of low earners. However, there are two angles to this that are often overlooked.
The first is from the business’s perspective. By enforcing this policy, what is essentially happening is that by law, the government is making it illegal to hire workers below this rate. This means that the government is artificially increasing the cost of labour as well as increasing the cost of doing business. Whilst larger or more developed companies (maybe with already higher paid staff) can easily cope, smaller businesses are the ones taking the hit. Using an example of a restaurant, if a dishwasher is only producing £5 per hour worth of output, but must be paid £10 per hour, then the business simply cannot afford to keep them, and certainly can’t afford to hire more. Now maybe the chef is forced to fulfil that role instead, which in turn may put more pressure on them, reducing their productivity and time spent doing the specialised role they were hired for. This all puts extra strain on the business. With higher minimum wage rates, it makes it even harder for people to expand or to set up their own businesses in the first place. Also, by increasing the price of labour, businesses are often left with no choice but to raise prices to compensate for these increased costs. Not only does this make small businesses more uncompetitive compared to large ones (who are able to afford the higher costs anyway), but it also further harms the poor by making goods and services more expensive and thereby reducing their already diminished purchasing power. Greater reliance is then placed on the larger corporations as their prices may not rise as much in comparison. From the business perspective, minimum wages protect the large corporations and reduces their competition by filtering out the small businesses from the market. If the desire is to increase reliance on large corporations, whilst simultaneously destroying opportunity for smaller competition and new entrepreneurs, then increasing minimum wages is the correct policy to do so.
The second perspective revolves around missed opportunity. If less businesses can afford to hire workers, then the amount of employment opportunity decreases⁴⁶. Low skilled labour especially now have fewer options. Without minimum wage restrictions, they could have at least worked for a low wage, learned valuable skills on the job and gained vital experience to progress further. But with high minimum wages, often that first step on the job ladder is missed entirely. Work experience is often critical for being able to progress, but instead under these laws they gain nothing; neither income nor experience. Often it is young people in these positions, and by pricing them out of the labour market early in life as well as encouraging them to take on massive university loans puts many in financially poor positions with reduced opportunity. For other demographics from impoverished backgrounds, these laws have taken away any opportunity for them to earn at all and so must rely on the state provided welfare systems. It is even harder to start your own business and grow it too due to the greater barriers to entry mentioned above. As well as this, the rise in automation will also need to be considered. By making human labour more expensive, alternatives become more attractive to firms seeking to minimise costs. Minimum wage laws remove much of the bargaining power for low-skilled workers and condemns them to welfare.
As mentioned earlier, the safety net should be from the NIT instead, which does not operate at the expense of the ease of doing business. This way, small companies are not forced to provide a living wage since the NIT should be able to cover that instead. This is not the entrepreneur’s responsibility, it is initially the states’ under an Azadist framework (and then later to the people themselves). Under Azadism, NIT would provide the liveable income, and so employers and employees are free to negotiate contracts that are mutually beneficial for both parties. This allows for a market price of labour to be developed tailored for each circumstance. With costs of setting up and doing business reduced, naturally it would correspond to a rise in the number of businesses being able to be set up, and therefore employment opportunities also increase. This translates to more competition for that labour. If one business offers a wage too low and working conditions too poor, then the potential worker has ample choice to find work elsewhere that’s more suitable for them. Now, both the employer and the employee are protected and left to flourish in a freer and fairer environment. On one side businesses compete to secure workers by offering suitable pay and standards to attract them as well as giving the poor and low skilled more opportunities to find work. On the other side, businesses are more able to reduce costs and offer wages more in line with the natural value of that labour. This in turn, allows for easier expansion of operations and the cost savings translate into better prices to consumers. This is a win-win situation.
Inevitably, there will always be some people who will suffer hard times and fall through the cracks. By removing barriers to entry, increasing competition and affordable options through free markets, a society that maximises prosperity would develop. However, even after all the efforts mentioned so far, for those who still fall into hardship, the final webbing in the social safety net of an Azadist society is private charities. All those who may need extra help can use these institutions and people can donate money to these charities through their own choice if they are passionate about the cause.
In addition, private charities would have a better incentive to solve problems rather than perpetuate them, since their income revenue is based on performance rather than taxes. If a charity were not solving a problem, then why would people continue to donate? The same goes for any service in a competitive market environment. If a charity was not performing well, then people would donate to a competing one instead. Whereas a state department solving the same issues has no competition nor has any incentive to be efficient since their costs are paid for by the taxpayer. Efficiency is important here especially since it saves more resources that can be used to help more people. So if the government programs are performing sub-optimally, then the rest are left with very few options depending on how restrictive the regime is. Instead, what tends to happen is that excuses such as “lack of funding” may be raised, where the state then simply throws more of the taxpayer’s money at the department, expecting that simply funding an ineffective venture would magically solve its problems.
Michael Tanner, senior fellow at the CATO institute exposes the fallacy of government "aid" further. When he appeared before the US Congress, he testified that only 30% of funds designated for the purposes of charity through entitlement programs in the US actually went to the intended recipients. The other 70% went into the pockets of administrators. Comparing this 30% with the 82% private charities manage to get to the ones in need, the ridiculousness of the situation becomes apparent. Imagine a charity that only passed on 30% of donations to the target recipient. Who in their right minds would donate to them if there were alternatives that reached over 80%? Especially considering that the government has no comparable fund-raising expenditure, since this is extorted through taxes anyway. Private charity on average spend 8% on raising funds, and the final 10% goes to pay administration costs (such as salaries)⁴⁷. That is the difference between government and private charity. It cannot be repeated enough - these are the reasons why Azadism is so against granting government monopolies over industries in an economy, especially in welfare.
Furthermore, the role of private charities falls under something called “Civil Society”. This refers to all non-state-owned institutions and organisations involved in making up a community. These are essentially private efforts but function primarily to satisfy social requirements rather than profit maximisation. These include institutions such as religious bodies, community centres and even family. The historical role of civil society must not be understated, as for much of history it was institutions like these that provided for those who suffered in society. When undergoing any sort of difficulty, the first port of call would be those around you. Family, friends, neighbours, and then maybe onto religious institutions, societies, associations, and charities. None of this requires government monopolies funded through forced taxation.
Removing the state as the only option for these people frees up the ability of the community to solve these issues themselves. The state can only provide any sort of support using taxpayer’s money anyway, which is acquired through force, and then spent by the state in the way of their choosing. How would a person stealing from someone else in order to give to another be reflected positively in any moral system? Especially when that person pockets a portion of this money, and then is unable to effectively translate what’s left into sustainable ways of helping others anyway. Under Azadism, it is considered better to remove the middle man that is the public sector and help directly. Or if we want to use an intermediary then a system in which we are free to choose who may best fulfil this function is the best course of action. By having a government in the way of this process, not only does one condemn their own personal freedom in how to help others, but they also hamper the ability to give effective support to the needy. Competing charities, who have an incentive to look for solutions are far better suited at this role than government is under Azadist thinking. This way gives options to the people in order to choose where they think their own money will be most useful, as well as give them the choice to actual go out and help themselves. Getting rid of taxation in this process, would also naturally leave them with more money to commit to these causes as well. The case for forced charity through state theft is weak in comparison.
***
This section has outlined the overall social security safety net for people in an Azadist society. For Azadists, a whole new mindset is adopted in the attitudes we hold towards government as a care giver. Instead of acting like children we break the paternal relationship we have granted government as a society. For the Khalsa, we already have our father as Dhan Sri Guru Gobind Singh, and our mother Aad Shakti Mata Sahib Devan. Why should we place governments on the same level? Whether it be in the form of civil society, private charities, or individuals themselves, the state needs not to provide any more safety net than already mentioned in terms of NIT initially. This helps mitigate the risk of the government becoming too relied upon and as a result grow in power and influence. As discussed in the previous section, a government too large, covering too many roles is a detriment to the quality of life in a nation. People should realise that the real power is with them as individual, private actors, separate from the state, and as a result should take responsibility themselves for the betterment of their own lives and those around them. An Azadist tax system is designed as a compromise between the coercive nature of tax and maintaining the right to choose how people spend their money, all whilst the state can provide some level of security in the beginning whilst the private sector (us the people) builds up to take over. Eventually in the long-term plan of an Azadist state, even the tax system should be phased out in favour of a voluntary donation for the remaining government services if required. This is the balance between prosperity and safety, whilst trending towards greater freedom and prosperity. It must be stressed that the phasing out of these services must be gradual and in the long term. The situation must be constantly monitored and assessed to ensure maximum safety by having necessary alternatives in place for those that currently rely on government services.
“Clearly we are doing something wrong. Throwing money at the problem has neither reduced poverty nor made the poor self-sufficient. It is time to reevaluate our approach to fighting poverty. We should focus less on making poverty more comfortable and more on creating the prosperity that will get people out of poverty”
― Michael Tanner
The emphasis on equal opportunity over equal outcomes forms a major part of Azadism. Promoting the former rather than the latter by getting government out of markets, removing its ability to create barriers to entry and establishing unfair competition by granting or becoming monopolies themselves, naturally leads to a situation where anyone is able to work to achieve their own goals. By allowing opportunity to be absent of barriers, leads to prosperity and would therefore mean that very few in a society would even need to be on welfare at all⁴⁸. When comparing the top 10 most charitable nations, we can see on average just over 50% of the populations of these nations give to charity⁴⁹. Following this trend, with lower taxes, and potentially more disposable income, people would have more funds available to spend on these causes if needed. Azadism requires a removal of the NIT system only when enough of the population's average income rises above the initial threshold level. This gives time for these charity organisations to grow, so as the nation transitions from a developing to a developed one, the necessary private institutions would already be in place and ready.
To conclude this section, a repeated emphasis must be put on the people themselves to take action. Look to our Gurus for supreme guidance here. The Gurus did not take money from the Sangat to give more taxes to the Mughals to provide charity. They instead set up Langars to feed the world themselves. Instead of coercing people, they encouraged all those to donate Dasvandh through their own choice. Instead of relying on the state to provide, they themselves took up the responsibility. Similarly, Azadism pushes people to take personal responsibility, do not rely on the state. It should be every Sikh's desire to conduct Seva using their own hands, why pass this on to a state monopoly with dubious morals and a track record of greed, corruption and lies? In modern times there are many who have embodied this and have applied the example of the Guru. Bhagat Puran Singh didn’t wait around for any government. He took the initiative himself and set up Pinagalwara alongside other like-minded people⁵⁰. Similarly, Ravi Singh from Khalsa Aid banded together those around him as a private individual to provide support in regions hit by war and natural disasters⁵¹. Greater freedom should be given to people like these, who are the true embodiment of Azadist principles in private charity. And perhaps, one the greatest inspirations comes from the Sakhi of Bhai Kanhaiya, who gave water to dying soldiers of both friendly and enemies forces equally. As a result, they were commended by Guru Gobind Singh themselves as understanding the true essence of Sikhi⁵².
As promised earlier at the end of the section on Langar, Dasvandh and Choice, please consider this final Sakhi to conclude this discussion. During the times of Guru Nanak, there existed a public worker for the Mughals named Ganggu Bhagu. Through extortion and dubious means, he raised funds to conduct a Śrāddha ritual aimed at venerating his dead ancestors. As part of this he also offered free food, paid for through the funds he stole. Maharaj was passing by at the time and was also invited to partake in the offerings, however Guru Ji refused after inquiring about the situation. The following Shabad was then revealed in response⁵³:
Just as Bhagu was taught this lesson by the Guru, we ourselves must also heed this message. No matter how pure the intent, and whatever charitable cause it is aimed at, the entire effort is invalidated when the funds used are produced through coercion of other people’s resources. Only that is considered acceptable where something is done out of your own earnings and labour. Forcible redistribution of wealth is immoral under these circumstances. Instead, Azadism looks at incentive-based solutions that encourage charity and personal responsibility in helping those in need. This attitude of stealing from certain groups in order to satisfy the needs of others is inherently flawed. The only exception to this is if those individuals we take from are themselves thieves and you are returning what is rightfully owned by another. Merely being wealthy does not automatically mean they achieved their wealth through exploitation. In a free-market society, where the roles of the public and private sectors are completely independent of one another, the only way someone can accumulate wealth and riches is by providing a product or service that others are freely willing to pay for. If government officials like Bhagu (and Bhago from earlier) are stealing and exploiting, then it is justified to put an end to this in order to maintain the NAP. A thief is one who takes what isn’t theirs. Just because it is politicians and the state doing the taking, it does not exempt them from moral judgement. If any other private actor did what the government does, they would be arrested and jailed. It is only under the threat of force, and the fact that the government is able to kill or kidnap you so easily, does this plundering through tax continue to exist (or was even set up in the first place). In return for protection, we are persuaded to give in and accept the status quo. However, we forget to consider that often the greatest threat to a citizenry is not other citizens, it is instead their own governments.
