On Free-Riders and Tax Cheats

A recent article in the NYTimes introduces the free-rider problem as follows:

“You can watch PBS without making a donation; you can enjoy clean air even if you drive a car that pollutes. Such goods, however, give rise to the so-called free-rider problem: acting selfishly makes sense for each individual (why sacrifice if you don’t have to?) but as more and more people choose to act selfishly, the good disappears and everyone loses.”

The article struck a chord with me because I had just met an accountant who stated proudly that he knew how rich people could manage their money in ways that allowed their heirs never to pay any taxes. I was taken aback and remarked, “But will they use the roads built with other people’s taxes?”, to which he answered, gleefully, “Well, the roads will not be built with their taxes!” And when I pointed out that we were currently watching a whole country, Greece, going down the tubes because, among other things, cheating on taxes is endemic there, he replied that everything he would suggest would be legal.

In other words, I had encountered a form of the free-rider problem before I even knew that it had a name. Now, I find it perfectly legitimate to try not to pay more taxes than necessary, and that’s why we employ our own tax planner. But I do consider attempts to avoid paying any taxes while fully using the goods and services created by the taxes paid by others (roads, police protection, food safety supervision, to name a few) a form of sociopathology.

I knew that “cheating the government” was an attitude prevalent in the underground economy of tradespeople, which I deal with frequently. My conversation with the accountant showed me, however, that the attitude goes all the way up to people with the highest income. This is very different in the country I come from, where people are willing to pay taxes as long as they see them used in beneficial ways. In fact, conversations with friends and what I read in online magazines suggest to me that plans of the current German government for tax relief are meeting a less than enthusiastic response. People know that as a result, the public debt would have to increase or some social services be cut, and that’s considered worse by many than having 200 Euros or so more in their pockets.

Euro 2012 (no, not that Euro!)

Today was the drawing to determine the initial 4 groups of four teams to start competition in next year's European Championship tournament in Poland and the Ukraine. These are the groups that were drawn:

A: Poland, Greece, Russia, Czech Republic (31.5)
B: Netherlands, Denmark, Germany, Portugal (5.75)
C: Spain, Italy, Ireland, Croatia (9.75)
D: Ukraine, Sweden, France, England. (23.25)

The numbers in brackets indicate the average team ranking for each group according to the current FIFA rankings (overall, not restricted to Europe, which exaggerates the differences somewhat). The extraordinary spread results from the fact that Poland and the Ukraine, the two lowest-ranked teams in the competition, qualified as host nations and were seated ahead of powerhouses such as Germany and England. Result: We have the mother of all groups of death in group B, where the lowest-ranked team is ranked higher than the highest-ranked team in group A.

Some implications in my comment...

Word of the Month: Kadavergehorsam

Word of the Month: Index

A Kadaver is a cadaver or corpse, and Gehorsam means "obedience." Kadavergehorsam refers to an unquestioning, blind obedience or a total abandonment of one's free will to a higher authority. The term entered German via the constitution of the Jesuit order as written by its founder, St. Ignace of Loyola. It demands from every member that he obey his superiors "as if he were a cadaver that lets itself be carried anywhere and treated in any which way." The term was used in Germany in the 19th century first as an anti-Jesuit catchphrase and later also in polemics against the Prussian military. It serves nowadays as a general reference to a blind obedience that's no longer desired, not in the army, not in civilian life, not anywhere. [My source]

According to the Wikipedia article I referenced, the comparison that St. Ignace uses goes back to a formulation by St. Francis of Assissi, who wrote several centuries earlier and, in turn, relied on an even earlier scholastic tradition. But it's the Germans who distilled the underlying image into the compound noun that's our current Word of the Month. This illustrates again how easy it is in German to succinctly express shaded meanings by hitching seemingly unrelated words together. I must also confess that until I did research for this month's word, I thought Kadavergehorsam simply meant obedience till you're dead. The history of the term that I discovered, though, shows that it has a much more interesting pedigree.