RationalEyes

'What happens with the establishment of a new status quo is that the oppressors don't find themselves freed. On the contrary: they'll feel as if they are being oppressed. That's because to them, who are experienced in being oppressors, everything that isn't their old right to oppress is seen as oppression... Any restriction to their exclusivity in the name of equal opportunity is seen as a direct attach on their rights as people.' (Paolo Freire, 1968)

Hungarian National Consultation 2012 in English vs Economy

What do you think?

Please fill out the questionnaire.

1. There are individuals who suggest that Hungarian companies operating with less than 20 workers shall be entitled to a flat rate in terms of their taxation, because the chances are higher that this way they can keep their workforce during the (financial) crisis. Others believe that there is no need to protect small companies this way. What do you think?

Option number 1: Small companies contribute to do the daily living of people; therefore the flat rate in terms of their taxation should be available in order for them to be able to operate during the (financial) crisis.

Option number 2: Help not meant to be given for small companies in the form of flat rate taxation, because in an economy equal opportunities/chances shall be given.

Option number 3: I cannot judge the question.

My personal comments unavoidably containing a large part of subjectivity but only focusing on Economics not politics.

There is an assumption in the above question that flat rate based taxation would help small companies within the crisis and the economy would benefit from higher employement. Let’s take the Credit Crunch as an example just for the time being. What happens in a financial crisis? What happened during the Credit Crunch? There was an overwhelming supply of properties exceeding demand. Key points are Supply and Demand. Assumptions made in the above question suggests that cutting taxes for small businesses will result in production and pre crisis level employment. In terms of production if there is no adequate demand available within a market economy, production is most likely to stop or just produce cash tied up in stocks; in terms of employment, having a company producing goods way above the actual demand will unavoidably have an adverse affect upon its employment, because producing cash tied up in stock won’t pay the salaries of the employees. Instead of focusing on flat rate taxation why one is not looking into the opportunities to increase demand. Many ways to increase demand in a market economy in ways of taxation, surely a 27% VAT is not the best option to achieve that. Let’s take a look at a German example to increase demand, the reader is most likely to be aware that Germany is heavily relying upon its industries and car production. Germany allowed citizens to pay less tax upon new cars, resulting a higher demand. These are the type of initiatives I am failing to see in Hungary at the moment. Obviously in the situation of Hungary we do not need cars but we definietly do not need a 27% VAT and questionnaires suggesting increased employment within the crisis by flat rate taxes for small companies whereas demand is all time low.     

Society and ‘Isms’ or the Hungarian Politics nowadays?

Alan Greenspan in his Age of Turbulence states (2007:18), ’It is indeed an age of turbulence, and it would be imprudent and immoral to minimise the human cost of its disruptions. In the face of the increasing integration of the global economy, the world’s citizens face a profound choice: to embrace the worldwide benefit of open markets and open societies that pull people out of poverty and up the ladder of skills to better, more meaningful lives, while bearing in mind fundamental issues of justice; or to reject that opportunity and embrace nativism, tribalism, populism, indeed all the isms into which communities retreat when their identities are under siege and they cannot perceive better option.’ In other worlds if societies reject the benefits of the global economy and reject its power to pull out people out of poverty, it will have major effects upon politics thus affecting the stability of the country and the level of wealth of individuals within that country. In the case of Hungary, current politics constantly rejects the benefits of global economies and intends to merely rely upon fictious ideas that rejects the opportunity of the above mentioned profound choice, hence the society has no other choice than to retreat indeed into all the 'isms'.

Just in Time production really comes from Toyota? Adam Smith wrote about it already in the 18^th century.

Adam Smith in his book The Invisible Hand states (2008:34), ‘The greater part of goods, besides, are more perishable than money, and he may frequently sustain a much greater loss by keeping them. When his goods are upon hand, too, he is more liable to such demands for money as he may not be able to answer than when he has got their price in his coffers. Over and above all this, his profit arises more directly from selling than from buying, and he is upon all these accounts generally much more anxious to exchange his goods for money than his money for goods. But though a particular merchant, with abundance of goods in his warehouse, may sometimes be ruined by not being able to sell them in time…’