While the ranks of critics of modern capitalistic society increase, a new economic model based on shared goods and services is going viral across the globe. It makes supply more obtainable and affordable than any time before, while cutting taxes and downsizing the government`s role.
This year`s journey promoting free market ideas across Europe and the Caucasus checked into Sofia, Bulgaria on 4th April. For the second year in a row, the Friedrich Naumann Foundation for Freedom, together with Sofia University, participated in the travelling initiative of the Austrian Economic Center. Hosted by the Faculty of Economics and Business Administration of the University, this event involved a team of scholars, policy experts, and opinion leaders from Bulgaria and the Austrian Economic Center. With the purpose to provoke an open debate about the two major FMRS 2016 topics, “Death and Taxes’’ and ‘’Sharing economy, dying Capitalism’’ it focused on the challenges caused by state regulations and the bureaucracy in our modern economies.
Capitalism: What is next?
With companies such as Uber and Airbrb expanding rapidly all over the world, the “Shared Economy” (SE) is becoming a global phenomenon, which upsets, or even “stirs from the bottom” some well-established conservative market rules. This newly developed market approach makes goods and services more accessible and always guarantees competitive prices. It adds a value to the classic perception of Capitalism; expanding it, renewing it, and setting new, more effective consumer-service provider relationships. ‘’The Sharing Economy is basically the possibility to sell everything you have,’’ stated Nickolai Hubble, on behalf of the Austrian Economic Center. A key driving factor for the rapid establishment of SE is technology because through the increased use of social media and other virtual platforms, it is now possible to create a transnational market that creates a direct link between service providers and consumers. The results are high standards and services at lower prices. A great example can be found with Airbnb – a trans-national network that lets real-estate owners rent out their homes or rooms to visiting tourists across the world. This market model excludes the government and allows for a free and borderless entrepreneurship.
Low taxes guarantee higher tax collection
Since taxes are an inescapable reality, why don`t we try to optimise tax regulation and collection? This question was the basis for discussion during the second panel, where the panellists recognised the social value of taxes but also called for a change in government-led tax collection and distribution. We live in a time when people and companies tend to move easily around the world. Governments should embrace this fact and adapt their policies accordingly. Their taxation rules should be equal and based on the same principles. A social order that appeals to taxpayers needs to be established in order to keep them, otherwise they will move. ’Wherever people have to pay less taxes, you can be sure that they will go there’’ said Daniel Kaddik, Project Director of FNF Southeast Europe. Governments have faced this reality before and found other ways to collect taxes. For instance, through various fees and VAT charges – indirect taxes. Yet, there lies much of work ahead for governments to keep pace with globalisation. Attempts by governments to crackdown on new entrepreneurship forms such as the Shared Economy have been carried out in a number of countries already but shared services still tend to grow because they have proven to be cheaper. ‘’The fact that people want to use these types of services tells you a lot. They choose cheap and convenient services over the more expensive ones, even though those were licensed by the government,’’ remarked Michael Williams, founder of ATILUS Inc.
The State`s primary function: The creation of an optimal business climate
How to foster an entrepreneurial spirit and an innovation-focused business approach? To seek
answers to these questions, the participants were involved in an interactive open-space session, which dominated the last part of the event. Through discussions in three small groups, both panellists and event participants outlined fear of failure as the major factor that prevents people from materialising their goals. The conclusions were to promote: policies that create the optimal conditions or business start-ups and policies focused on fostering a good business climate and low taxes, while better consolidating the rule of law and good governance.
The next stop of the Free Market Roadshow 2016 is at the “Ss. Cyril and Methodius” University of Skoje on 5th April.