for the US to right itself. See my related February 03, 2002
"This ain't pretty" post at:
http://www.bananagold.com/cgi-bin/columns.cgi?all
David L. Littmann is chief economist of Comerica Bank. He sounds to me
like he has become disgusted/sickened by what he is seeing. Despite
being part of a defacto nationalised industry. Anybody got a freeish
market type job for him? He might jump ship.
Bob
"Will Capitalism Prevail Over The Politics Of Dependency?
By David L. Littmann
from the June 19, 2002 IBD
Americans are increasingly reliant on government. For more than a
century before Sept. 11, dependence on goverment spending programs,
subsidies and trade protection - regardless of war or peace - has
captured growing proportions of our population.
This trend is still at work. A recent study by the Heritage Foundation
found that dependency grew 117% over the past 40 years, by 38% over the
past 20 years and by 9% just since George W. Bush took office.
An that accounts only for federal dependency. Heritage puts the number
of dependents at nearly 71 million today and notes that the growth rate
of federal dependency since 1962 has risen three times faster than the
US population.
Decade Of Growth
Strangely, this burgeoning dependency has occurred at a time when four
factors should have contributed mightily to greater self-reliance and
optimism. The end of the Cold War eased tensions and slashed defense
spending. The 1990s featured a superb decade of economic growth and
wealth accumulation. Reform after 1996 cut welfare rolls in half,
converting former tax-absorbers into dignified taxpayers.
And finally, the nation is blessed with an unusually large proportion of
Americans in the baby boomer portion of the life cycle (ages 38-56),
whose health and productivity should make them more economically
independent.
Yet, elected officials increasingly adopt policies that weaken
wealth-creating economic incentives. It is axiomatic that faster real
GDP growth contributes to larger government revenue collections, so one
might think this would be a shared political-economic objective in a
market economy.
Clearly it is not. Despite copious increases in revenue to government
coffers at all levels in the wake of three capital gains tax cuts since
1978, no further cuts are under consideration. Despite global evedence
of the income - and revenue - enhancing power of broad-based income tax
cuts (most recently in Ireland) these policies are off the table, too.
Bad Politics
Instead, governments are postponing scheduled tax cuts; raising taxes;
adding layers of costly new fees and regulatory burdens; implementing
price controls (especially in the pharmaceutical industry); and
accelerating subsidies and deficit spending for social programs.
Until recently, this dichotomy - where bad politics consistently
over-whelmed good economics - was glibly explained by election
imperatives. Said differently, populist class warfare and social justice
themes were successful vote-getters.
But, the economy decelerated, the stock market veered south and
un-employment rates rose. Budgets at every government level slid sharply
from suplus to deficit within 18 months and the outlook for GDP growth
in the US and our trading partners has deteriorated. Therefore ,
politicians should be interested in restoring economic poliies that
promote growth incentives.
After all, if the long-term political objective is greater tax revenues
for new government programs or to expand existing ones, then it would
seem both economically and politically illogical to maim the economy.
Yet higher taxes and more onerous regulations do just that. They harm
incentives to work harder, longer, smarter and more productively. US
competitiveness is reduced and our industries and house-holds are
rendered more vulnerable to economic shocks. And, as a result, we are
made more dependent on largess from the public sector.
Failure to cut tax rates and relieve the economy of counter productive
regulations thus seems quite illogical. So, is there another agenda?
There certainly is. The agenda and the tactics of its deployment come
most into focus when considering the time dimension. That dichotomy
between bad politics and good economics tends to be resolved once it is
understood that politicians typically have a time horizon of 18 to 24
months so that the benefits of their proposals become visible to
constituents by Election Day. This is why most observers ascribe to
politicians the shallower motivation of income redistribution and class
equalization.
But what's really at work, both in the short and long terms, is a much
deeper threat to our economic future. The only way elected officials can
contiue capturing larger proportions of the population in their webs of
dependency is by throwing more monkey wrenches into the gears of a
dynamic and competitive capitalism.
Politicians Vs. Capitalism
Sadly, it's no accident that politicians adopt policies antithetical to
markets. Their campaigns require a less successful economy. The more
vibrant and growth-oriented it becomes, the greater its ability to make
citizens healthier, wealthier and less dependent on handouts from fellow
taxpayers. In essence, politicians view capitalism as a rival in their
cycle of pandering.
Before it's too late, we must ask elected officials, directly, whether
their long-term policy goals for achieving office tenure represent a
conflict of interest with the greater public good of achieving financial
wealth and independence. Capitalism's natural process of empowering the
individual , his family and his progeny is simply too precious a flame
to sacrifice on any politician's altar. To see that flame diminish to a
spark is to extinguish the dreams, inspiration, and security of billions
of people on Earth."
--
http://www.constructiongigs.com/
ConstructionGigs.com's PGP public key is here:
http://www.constructiongigs.com/assets/DH-DSSkey.txt
Fingerprint:
3C4D A63F 3C8B 2D7B 7E1A FFE8 9A2E 4D78 CAD6 66B7
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