Written in a moment of irritation.
Let me start with a modern-day parable.
In the middle of a city – we will call it Idealism – there sits a large castle, surrounded by ivory walls. Inside that castle live the kings of the city, hidden behind walls so high they never have to see a merchant, peasants, soldier or slave in the city below. Those kings spend half their time trying ideas to reinvigorate Idealism, which has lost some of its lustre since the kings took control, and the rest of it inspecting their coffers and distributing largess to the masses. But there’s just one problem. The coffers are running out.
Surprised? Largess is expensive, you know.
So the kings sit down and have a think. Eventually, because they’re not really that bright, it occurs to them to raise taxes. Excellent, they think; we will get more money to fill our coffers, which will allow us to distribute more largess and everyone will love us! And so they raise taxes.
And it works, for a while. Until they do the accounting at the end of the year and discover that their revenues are falling off, sharply. Their ability to distribute largess is also falling, because they have less money. So, after a slightly shorter think, they issue new orders; once again, taxes are to be raised.
Next year, they have even less money.
And now the kings are panicking. They’ve agreed to keep distributing largess … and now they can’t, because they don’t have the money. But the people who were receiving that largess are looking riotous. All of a sudden, the kings look vulnerable … and so they make a desperate grab for the remaining wealth … and discover it’s gone.
And then the gates of the castle are stormed, by those who took the largess, and the kings are hung from the roof … and then everyone starves, because the kings have shut down or driven away anyone interested in producing food.
This isn’t exactly a happy ending, is it?
OK, if you haven’t already guessed it, the kings are the European Union’s unelected bureaucrats and the kingdom is the European Union. And I’m talking about the VAT increase on ebooks and other electronic products, which will be coming in January. It is about as short-sighted and stupid as killing the goose that laid the golden eggs.
Amazon’s solution to this is to basically decide to increase prices, matching them to VAT, starting in January. They don’t have much choice, unless they want to take a harder hit than they already will. But let us see what choices this leaves us kindle authors:
One – accept the price hike, lose sales, get less profit (and Amazon gets less profit too) and pay fewer taxes.
Two – lower our prices, get less profit (and Amazon gets less profit too) and pay fewer taxes.
Is anyone else seeing a problem here?
Less profits – fewer taxes. Fewer taxes – less government revenue. Less government revenue – fewer services (largess).
Amazon will probably survive this. But what about the smaller companies? Everyone selling something online will take a major hit from this piece of government-issue stupidity. And how many productive businesses will go under because of it?
There are times when I feel Atlas Shrugged should be compulsory reading. If you increase taxes and regulations, you drive businesses out of business, which causes unemployment levels to rise, which places a greater demand on social services … when the revenue stream needed to keep them running is starting to fade. And, in the end, you cut your own throats.
This, frankly, is what you get when you allow people with zero experience outside politics to actually run countries.
<Goes off to bang head on wall>