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Letters to the editor | The Economist

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Mike Godwin’s law of Nazi analogies states that as an online discussion grows longer, the probability of a comparison involving Nazis or Hitler approaches one. A corollary adage might be that as an economic discussion grows longer, the probability of creating a new form of taxation approaches one. Your leader on the rise of e-money violated this proper economic discussion by creating no new tax (“The digital currencies that matter”, May 8th). In fact, tax got no mention at all.

You summed up well the positive aspects of central-bank digital currencies (CBDCs). Yet government-issued fiat currencies are deeply entwined with tax (fiat currencies are arguably just tax credits). CBDCs provide new tax-collection powers. Complex taxation algorithms can be applied to any CBDC transaction in real time. Once people realise the power of CBDC systems to support various taxation initiatives at low transaction costs, we should expect avalanches of proposals: town taxes, child-noise taxes, sugar taxes, alcohol-consumption taxes, foreign-visitor taxes, and so on.

In 2016 I gave an example of such a CBDC-based tax to the House of Lords. Given widespread sentiment that London is too overweening, imagine a populist redistribution tax whereby transaction taxes rise in wealthy districts. To bring about levelling up, politicians increase the taxation rate as you approach Trafalgar Square, up to 99.9% beside Nelson’s Column, or spend your money in the Outer Hebrides at 0.1% tax. Technology cuts two ways.

Executive chairman
Z/Yen Group

Some countries, such as Australia, have already digitalised their currency independently of their central bank. Since 2013 most Australians have opened cost-free myGov accounts that can be operated from their mobile phones. The government also issues cost-free debit cards linked to their myGov to make payments. As a result many people on welfare no longer need a bank account.

International Institute for Self-governance

How worrying to read your article on govcoins in the same week that an important oil pipeline was shut by a cyber-attack. One cannot even fathom the effect of such an attack on a digital currency issued by a central bank, an event that would immediately freeze all financial activity, from corporate transactions to buying groceries.

The Woodlands, Texas

Your special report on banking mentioned whaling “sloops” that sailed out of Nantucket (May 8th). A sloop is a vessel designed for speed. Whaling vessels of the 1800s, especially from Nantucket, were more likely to be brigs, brigantines, or ship-rigged with multiple masts and wide hulls to hold supplies and whale oil for a three- or four-year voyage. Only the Native American tribes of the Pacific north-west or Alaska would venture out in a narrow hull to go whaling, which those “coarse” sailors from New England would think to be foolhardy.

Grand Rapids, Michigan

Technology and China

You reported on the important role of the American government’s Bureau of Industry and Security in writing the rules on trade in technology with China (“Assuming the position”, May 8th). It is misguided, however, to suggest that the appointment of an “outsider” to lead the BIS would indicate a lack of a “real plan” on China. The agency is responsible for ensuring that sensitive technologies do not reach adversaries that would use them for harm. That is an increasingly challenging job, especially as China has blurred the line between the private sector, government and the army.

The Trump administration added some 330 Chinese government-aligned companies to the Entity List. The Biden administration has added another seven to that blacklist, signalling a continuation of the policy…

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