Saturday, August 3, 2013

Run-away-capitalism or run-away government?

Where do you draw the line, if there is any limit at all, on what you think taxes should be used for?

Where do you draw the line on what you think other taxpayers should be required to pay for your "quality of life" and that of your dog, if any?

Where do you draw the line on what you think you should be required to pay for my selfish "quality of life" or to pay for my mistakes or laziness?

Where is the limit, if any, on government providing non-essential services (essential services being protection of public health, life and limb, liberty, property) that are only used by a minority of the people and which should be involuntarily paid for by everyone?

At what point does a tax expenditure per individual benefited for non-essential services become unreasonable?

Where is the limit, if any, on government in general?

A neighbor answered, "The line with government spending should always be drawn within the budget."

Spending based on whatever the budget will allow is a horrible idea. But, that is what most politicians want to do! Unless we voters elect politicians with some powerful self-control (and we rarely do that), government budgets always expand to consume all the revenue plus a bit more. When budgets are based on revenue, setting spending priorities by whatever the budget allows invariably means spending on things we don't need.

When budgets are based on revenue, politicians persistently seek new forms of revenue (RAP tax, asset forfeiture abuse, RDA tax, hotel tax, restaurant tax, etc.) so they can spend even more. Why do the politicians want to spend more money? Because too many voters demand too many things that are not a proper role of government and/or that are better provided by private businesses, charity, neighborhood groups, families, and individuals themselves.

Instead of basing the budget primarily on revenue and spending as much as the budget allows, what we need to do is demand that politicians:
1 - identify what services the community (or state or nation) really needs,
2 - confirm that those needs are a proper role of government,
3 - set priorities on those needs,
4 - identify the cost,
5 - justify the cost to the voters, and only then,
6 - collect the revenue, and finally,
7 - complete the project.

Basing spending on whatever the budget allows does all of that backwards! For example, the RAP tax collects hundreds of thousands of dollars each year with a vague purpose: Recreation, Arts, and Recreation. Then, special-interest groups (which almost never represent a significant portion of the taxpayers or voters) bid for that money. The result is hundreds of thousands of dollars spent on projects and activities that most people would never approve if asked for an informed vote.

My neighbor asked me whether I use "government"-funded facilities and services.

Yes, I do use taxpayer-funded (they are not "government"-funded) facilities. Why? Because the injection of government into inappropriate areas pushes out charity and private enterprise so there are no alternatives to taxpayer-funded facilities.

For example, I use the aquatics center with maintenance and operating costs more than $9 per swimmer above what the swimmer pays to get in. I use the library with building, maintenance, and operating costs that likely amount to several dollars per book lent (I can't get an answer on that question from the library). I think that private enterprise could have filled both of those functions better at less expense. But, how can private enterprise compete with the deep pockets of a city with the power to tax?

I believe that many other local taxpayer-funded and subsidized functions would be better left to private enterprise including the golf course, Heritage Theater, Shakespeare Festival, skateboard park, and yes, a dog park.

Marx and Engels must surely be very proud of how dependent and demanding on government we have become.

I admit that I'm probably in a minority on the issue of limited government. I admit that none of the current candidates for municipal office agree with me. My stand on limited government and maximum individual liberty comes from years of studying the works of John Maynard Keynes, Karl Marx, and Friedrich Engels (they don't seem to agree with me, but with popular modern opinion and with our current municipal candidates) and Alexis de Tocqueville, Frédéric Bastiat, John Locke, Adam Smith, Thomas Jefferson, Ezra Taft Benson, (with whom I do agree), profoundly expensive and wasteful public works projects, and my overall tax liability.

My neighbor claimed that run-away capitalism is a more serious problem that run-away government. He thinks that there is a limited amount of wealth available and the greedy have hoarded all of it, leaving little for the rest of us.
History suggests that capitalism is a necessary condition for political freedom. Clearly it is not a sufficient condition - Milton Friedman
I explained that wealth is constantly being created. Adam Smith, in The Wealth of Nations, described wealth as "the annual produce of the land and labour of the society". When anyone procues a product or service that another person needs or wants, he is creating wealth.

Unlike my neighbor, I don't see that capitalism per se is "monstrous". The greatest philanthropists were and are extremely successful capitalists. For example, the library I grew up using in Brigham City (and the books in it) was funded by that evil mega-capitalist Andrew Carnegie -- not taxpayer money. Carnegie funded libraries all over the nation. He did well, and he did good.

A proper role of government, as I mentioned before, is protection of civil rights. If an evil capitalist abuses an employee or a customer, it is appropriate for,
1 - the market to snub that business,
2 - a trade organization to censure that business and/or
3 - government to take appropriate steps protect the rights of the employee/customer.

To further protect civil rights, it is sometimes appropriate for
1 - an industry-controlled professional standards organization such as SAE, UL, or SAAMI (first choice) or
government (as a backup for choice #1)

to set and enforce reasonable standards for certain businesses and occupations.

For example, a demonstration of a certain level of competency should be expected of an engineer, airline pilot, or medical doctor and a license would be evidence of that competency. A business producing food or drugs should demonstrate proper methods of protecting public health and safety. Otherwise, those businesses and occupations need and deserve opportunities to succeed. Without capitalistic success, there is no employment, no wealth created, or even taxes to pay for dog parks and other government programs.

Money is a poor way of keeping score, but it is a far better measure of success than letting politicians and bureaucrats keep score and better better than leveling the income between achievers and non-achievers just to make it fair. Otherwise, what is the incentive for achievement?

My neighbor condemns the apparent unfairness of youth who graduate with 4 year degrees into $40k-a-year jobs. My answer: We have a surplus of college education. If we really needed all those college grads, there'd be jobs waiting for them.

Far too many college degrees are in fields for which there is little or no need (eg women's studies and other pity-me studies). Perceived "free" money in the form of federal student loans has encouraged the glut of worthless and surplus degrees and has been instrumental in the soaring cost of college education. As is usual, government meddling has only made things worse.

Instead of more college degrees (I have two of 'em, which I've never really used in the workplace, but I think that paying attention in classes like economics, physics, political science, chemistry, philosophy, history, geography, theology, etc. make me a smarter voter and distrustful of too much government), what we really need is more good tradesmen such as auto repairmen, plumbers, welders, cobblers, and carpenters.

College degrees and even graduate degrees are so common that they cheapen the accomplishment. Businesses and government agencies can demand college degrees when none is really needed. But, they pay the college grad only an amount commensurate with the profitability they produce for the employer. A college grad who cooks burgers because all the college-level jobs were taken by those with degrees that are in demand deserves no more compensation than the high school dropout doing the same job.

For example, I am an airline pilot. To get hired, I needed appropriate pilot certifications and a college degree. Do I really need a degree to operate a big truck with wings? No. A high school dropout with average intelligence and the proper attitude can learn to do what I do -- and I've worked with some of 'em. The degree is only required nowadays because somebody in HR said so. My qualifications as a pilot have no correlation with my college degrees.

Expanding on the differences between the haves and the have-nots, my neighbor said, "Then, on the other hand, you have individuals who inherit billions of dollars from their parent's hard work (Waltons) that are each capable of buying their own country." My response: That's their money. They earned it or inherited it. Their wealth does not stop the rest us from following their path with appropriate levels of talent and luck. Indeed, some of our current billionaires started their businesses with an idea and some room in the garage. It seems to me that it would be appropriate for my neighbor to review Exodus 20:17 ("Thou shalt not covet."). Exodus 20:15 ("Thou shalt not steal.") also applies to my neighbor in that we shouldn't expect government to do it on our behalf.

Unlike my neighbor, I believe that all should be taxed equally. Our incomprehensible tax code is based on two things:
1 - the covetousness of those who fail (see Exodus 20:17) and
2 - the desire of politicians and bureaucrats to manipulate behavior by giving some people tax breaks and passing the burden of funding government on to the rest of us.

Ten percent is good enough for God; it's more than enough to fund a combination of local, state, and federal government that stays within it proper roles (protection of public health, life and limb, liberty, and property). If we had that level of taxation, everyone would be free and able to
1 - keep more of his own money to buy goods and services from worthy job-creating capitalists,
2 - for parents who want to to leave the work force and raise their own children instead of shuttling them off to taxpayer-subsidized day care, and
3 - to donate to things like hospitals, libraries, Shakespeare Festivals, and dog parks of their own free will instead of by force.

There is no rational or fair justification for extreme tax rates for the wealthy just because the rest of us are jealous.

Somehow, we've got to get away from the idea shared by politicians, bureaucrats, and government-dependent voters that only they know how to best spend the money of hard-working Americans. We've got to stop expecting government to do what we should do ourselves through business, charity, neighborhood groups, families, and individuals.

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