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How powerful institutions try to crush entrepreneurship

Sunday, February 07, 2016

In a recent news alert we discussed the rise of self-employment in the UK and Canada that is making up most of the new jobs in those countries. We discussed how China is discovering that the self-employed are the ‘happiest’ workers. This is part of the pattern of the ‘gig’ economy: Uber, Airbnb and many others creating a new economy. We call it ‘capitalism of the individual’; self-employment.  

This should be a welcome and exciting progression of human economic development. But, around the world, hugely powerful institutions are in the ‘suppression’ game. These institutions are government-funded and pursue their own agendas in a ‘Yes, Minister’ style of control over the political process.

Australia

Take the Australian Taxation Office. In 2014, we detailed our case studies about how the ATO is incompetent in handling small business tax issues.  In 2015, the Inspector-General of Taxation (IGT) reported on the issue. The IGT effectively showed the ATO’s processes to be inconsistent and lacking logic or clarity. Here’s a short video of a panel of small business people talking about their situations.

The Inspector-General of Taxation is conducting another review. ICA has made a submission. (Yes, we are persistent!) We maintain that the ATO, on critical small business issues (ABN, PSI, etc.) is applying its own version of the law in ways that distort the intent of the law. The Inspector-General of Taxation will report on his findings at a national small business conference in Melbourne on August 10-12.

USA

Late last year we reported on the admissions by the US Internal Revenue (tax) Service that they targeted Tea Party members for tax audits. The IRS actions amounted to a corrupt intrusion into the political process.

Now the US Department of Labor (DOL) has decided to create and declare a status of ‘joint employer’. No change of law, just a new interpretation of the law by them. This makes, for example, franchisors the joint employer of franchisees’ employees. This is a direct attack not only against the gig economy, as explained here, but against commercial contract law as the basic structure of free market economies as well. The DOL is trashing contract principles. This is serious stuff.

It seems that if entrepreneurship through capitalism of the individual is to flourish, it will happen despite government, not because of it.

 

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