A lot of issues are a bit like living next to a mountain which is so lofty and all-dominating that you stop noticing the vast shadow it casts, fretting over which tree gives you shade instead.

Take this erudite and trenchant essay (h/t Samizdata) about the deep problems of the US economy and the Western ‘social model’ more generally:

All the social democracies are facing similar fiscal dilemmas at almost the same time. Pay-as-you go social insurance is just not sustainable over the long run, despite the higher tax rates in other welfare States.

Even though the United States initiated social insurance later than most of these other welfare States, it has caught up with them because of the Medicare subsidy. In other words, the social-democratic welfare State will come to end, just as the socialist State came to an end.

Socialism was doomed by the calculation problem identified by Ludwig Mises and Friedrich Hayek. Mises also argued that the mixed economy was unstable and that the dynamics of intervention would inevitably drive it towards socialism or laissez faire. But in this case, he was mistaken; a century of experience has taught us that the client-oriented, power-broker State is the gravity well toward which public choice drives both command and market economies.

What will ultimately kill the welfare State is that its centerpiece, government-provided social insurance, is simultaneously above reproach and beyond salvation…

In other words, we are like people in a canoe, bickering over who holds the paddle yet oblivious of the deeper current sending us towards the steep waterfall round the corner.

Or take the NHS. How many people need to die ‘needlessly’ in British hospitals before the public rise up in fury? Quite a few:

A list of hospitals that have sparked safety alerts after unusually high numbers of patients died has been published by the NHS regulator.

The Care Quality Commission (CQC) revealed details of all trusts where mortality rates were high enough to require a formal investigation in the past two years.

Overall, there were 85 alerts that required investigations among trusts in England, but of those only seven were required to produce action plans to improve their care.

These included Mid Staffordshire NHS Foundation Trust, where an official report published in March found that appalling emergency care had led to between 400 and 1,200 patients dying needlessly.

Hullo?!

That’s up to 1200 people dying ‘needlessly’ in one NHS Trust area? That number is getting up to Srebrenica, nay genocidal orders of magnitude.

Official reaction? Find an acronym no-one’s heard of (here CQC) to give the impression that something is happening, and if that fails whip out a general public anaesthetic in the form of the start of the football season and X-Factor.

But in a way even these examples pale into insignificance compared to the next one:

The European Commission is proposing legislation to combat cross-border VAT fraud with a new database, Laszlo Kovacs, the European commissioner for taxation, said in a statement published yesterday (18 August).

The new system, dubbed Eurofisc, would give tax authorities across the EU access to VAT-relevant data from all member states…
     
The proposal is expected to encounter opposition from some member states.  
    
Studies estimate the revenue loss through VAT fraud at €200-250 billion each year.   

Yes. You can read.

That’s a figure of €200 billion lost each year.

€200 billion!

Goodness knows where that figure comes from, although it is clear that ‘carousel fraud’ alone costs the UK taxpayer up to £2 billion per year:

Carousel fraud, also known as missing trader intra-community (MTIC) fraud, typically occurs when a company based in another EU country sells computer chips or mobile phones to a UK VAT-registered company.

VAT is not charged on the purchase but the fraud occurs when the buyer sells on the goods ­either in the UK or EU ­ and disapears before settling the VAT liability with HMRC. Goods can often go round many times in this way in just a few months.

I first came across this problem when HM Ambassador in Warsaw, hosting a visiting team of UK experts engaging with the Poles. They told me privately that the British government dared not reveal the true scale of the problem, since the numbers involved were so large.

The point in this sort of fraud is that the fraudsters do not hold back tax money from the government. They claim back VAT from the government via complex false invoicing – basically stealing money from honest taxpayers and directly diminishing the pot available for public spending.

Identifying such a racket and proving it to the point of being able to run a successful court case and bring down the gangsters responsible is hellishly difficult, the more so as the rackets mutate and the people involved cheerily hire top-end barristers to defend them.

In my darker moments (including when Mr and Mrs Crawf grapple with VAT paperwork, as we are VAT registered ourselves), I wonder whether the whole EU is now much more than a cover for VAT fraud. Right at its policy heart is VAT, a tax which generates bureaucracy and complexity and so opens the door to abuse and corruption (and ever-greater state control) on an ungraspable scale.

Yet so sprawling and unmanageable is the problem now, and so intertwined with the way the EU works, that it is impossible to do anything about it other than pile on more complexity. No national capital dares risk the row which would ensue if it called for VAT to be scrapped and replaced with a simple sales tax (which would of course not be problem-free either).

Where was I..?

Stop being horrid, it’s my turn with the paddle.

Ooo, isn’t the river flowing nice and fast now…