When government plays Robin Hood

One of those days when the routine complaining about how boring and stupid life is leads to some sort of trivial revelation.

I don't quite know much about how US economy works, so I take caution in making a general observation of the West, although I assume that Canadian economy is some where between the EU (extensive) and the US (limited) based on their respective government control over business.

Today, auntie walked down to get some chicken from the freezer in the store room and she rants about how difficult it is for her to make the ends meet.
"Intha naatula oru veettilla moondru peyar earn pannalum athu seri varaathu... inga kaasu save panna yelathu"
Vimal: "That's so true auntie... naan kooda pona summer co op kedaichchathilaa, appo kaasu save paanaumnu nenachchen anaa athukkapparam Car breakdown aayiduchchu, antha garage kaaran, vantha kaasa appadye pudingittaan"
Me: "Puriyala, neraya earn panna, intha oorla nalla irukkalaamnu nenachchen"
Vimal: "No, I mean you can't SAVE. Like about 50% of your whole goddamn income goes into taxes man. Imagine you pay 15% income tax and then 15% on everything that you purchase- thats easily half your income. You try to invest with the money you tried to save and there are taxes on that too. Better enjoy your life rather than saving... athuthaan inga irukkira vellayargal pannuvaargal."
Auntie: "Om... neraya peru rendu veedu vechchirpinam... anaa yenna pirayosanam... innoru veettulirunthu varura rentu income aayidum, athukku marubadiyum tax. So, oru veedu kaanum enraal athu mattumthaan vechchirkanum. Yevvalavu varumaanamo, avvalavu selavu adichcha, atha kaatti taxa kuraikkalaam"
Vimal: "Yeah, the more you spend on say 'official tours', the more tax deductible your income becomes. I know many people who go on a vacation just for that"
Me: "But where does this all end... I mean, every one spends all that he/she gets... this must end some where- infinite regress- who gains in the end."
Vimal: "Government. They all finally pay taxes to government for all that we get and all that we spend isn't it?"
Me: "But doesn't that mean the government should grow exponentially rich? I mean, the population is growing and more people work and hence more people pay taxes..."
Vimal: "They spend money too... see all this snow ploughing and stuff and not to forget the elephant in the room- the unemployed. Once you claim you have no income, government pays for you and your dependants".
Auntie: "Om... sila peru yenna solluvinam, income a RRSP la invest seithuvittal athulla tax kuraiva varum enru solluvinam. Anaa athulla yenna nedakkum enraal loan edukkumbothellam athulla interest pay pannonum. Apparam retire aana piragu RRSP kaasu tharum, appo government athu oru incomenu sollivittu retirement benefits tharaathu. So kadaisila yaaru santhoshama irukkinamnu sonnaal, yevan velaye illama irukkiraano, avanthaan" (laughs)

... made me wonder at the weird kind of equilibrium a free market economy (coupled with a welfare state) reaches. I mean many features that characterize a well-established developed economy are definitely found in Canada- a low inflation rate for example. Yet, I'm sure many people in India have more to spend at a time of need than Canadians (Seriously, who in Canada would be capable and/or willing to pay dowry for his daughter's marriage!). Of course culture definitely matters. I haven't spoken to any Indian family here which has come here to find a better living unlike the Sri Lankans who come as refugees and over time, become woven into the social fabric here. But I guess Indians who come to work here do save a lot, like their counter parts in the US.

Another lesson for the day- economy of a country is not what we read in books or online sources; at a more grass root level, you get to know how exactly a country functions by looking at what the people, preferably those from the subcontinent, do to survive there.