In many cases, the pursuit of the competitiveness of a country’s economy seemed like an end in itself and a sacred goal. The idea that a country’s economic fortunes were determined by its level of success in world markets was almost gospel. But the Nobel laureate economist Paul Krugman had questioned this considered absolute truth quite early on. Of course, he had used arguments against the free market and globalization that we do not agree with. However, his general view has substantial foundations.
The obsession with competitiveness has led many countries to excessive public spending to create national economic champions, elsewhere it has caused the closing of trade borders and protectionism. While competitiveness is certainly important and at a time when geoeconomics tends to compete with or even replace geopolitics (conquering markets more important than conquering territories) the internal factors of an economy may be more important to its fortunes.
A good example is Japan. While it practically dominates international markets, its domestic economic situation based on an export-oriented system is not particularly healthy. So one can become strong in exports but continue to have serious domestic economic problems as long as its market continues to be driven and bound by domestic policies of high taxes, suffocating state bureaucracy and a hypertrophied public sector.
As a consequence, internal reforms in a country may be of equal or even greater importance than trying to focus on export effort and pursuing only high competitiveness. Therefore, without protectionist measures of the economy and with a substantial limitation of the public sector of the economy, a country can achieve significant economic achievements and at the same time find itself high in the rank of the strongest economies on earth.
The most important weapon for the development of an economy is the rational operation of the tax system. Taxation was invented as a mechanism to facilitate the operation of the state. From supporting defense, external pursuits and the smooth functioning of the means of serving the citizens, taxation gradually turned into a means of social engineering. Through it, governments tried to change the form of society and intra-societal relations. Without being asked, the citizens with their tax assumed the role of correcting every evil that existed in the state. Probably no one asked those who pay. Those who collected through their agents decided. Thus the tax became an instrument of social injustice – at the expense of those who work hard and earn money. They are punished for their success and deprived of their lives.
With a uniform system of taxation, which again results in all paying according to their means but without the excesses of progressive increase according to success, the foundations of justice are established and theft is practically abolished.
At the same time, economic possibilities are freed up, tax evasion is effectively abolished and the dynamism of citizens’ creativity takes the reins. A simple system that everyone understands and makes sense for everyone. In this way, the economy becomes competitive because it is freed from the shackles that keep it tied.
