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Small Government, Big Freedom
The Long View ^ | 2-26-2012 | John Reilly

Posted on 02/26/2012 1:53:35 PM PST by RightCenter

We have noted in this space before that government in the United States favors tax-farming solutions for activities that elsewhere in the developed world are usually public functions. Now that notorious RINO, David Brooks, expands on the point:

The U.S. does not have a significantly smaller welfare state than the European nations...We do it through the back door via tax breaks. For example, in Europe, governments offer health care directly. In the U.S., we give employers a gigantic tax exemption to do the same thing. European governments offer public childcare. In the U.S., we have child tax credits. In Europe, governments subsidize favored industries. We do the same thing by providing special tax deductions and exemptions for everybody from ethanol producers to Nascar track owners.

When someone points to the size of the tax-subsidy budget, the observation is met with outraged rejoinders to the effect that the idea of tax deductions as a subsidy assumes that the whole of the taxpayer's income is really the state's by right, and that the state has graciously allowed the taxpayer to keep some of it. The problem with the objection, of course, is that it supposes the taxpayer actually has been allowed to keep the money. Actually, by taking the deduction, the taxpayer has agreed to do with it something that the state wants done.

The blinding ubiquity of this lunacy has made the folly invisible.

There is something to be said for the principle that people know best what to do with their own money. The point too often neglected is that this competence extends only to their own affairs. People have no particular competence about the social utility of the social-welfare activities and economic investments that tax budgets promote. The tax-budget mechanism has made every Human Resources department in the country into a little department of Health, Education and Welfare, plus a sort of Ministry of Plenty. The efficiency of welfare and economic-management functions does not benefit by multiplying the functionaries. That is why Human Resources departments have become a running gag about stupidity and malice.

The perverse genius of tax subsidies is their ability to mobilize private actors in a way untainted by market discipline. The Ministry of Buggy Whips may manufacture useless products, but the portion of the national product it can waste is at least limited by the size of its budget. No such restriction impedes the tax budget: the portion of the national product that can be diverted to the deductible activity is limited only by the number of taxpayers who decide to take the deduction. That is how the US managed to jack-up the healthcare costs for a relatively young population to almost a fifth of GDP. It's also why the housing bubbles keep inflating.

One could argue that the activities the tax budget subsidies promote should not be objects of public policy at all. The argument is false, however.


TOPICS: Business/Economy; Government; Health/Medicine; Politics
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1 posted on 02/26/2012 1:53:38 PM PST by RightCenter
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To: RightCenter

Its a sliding scale — Freedom cannot get bigger w/o government getting smaller, and visa versa.


2 posted on 02/26/2012 2:35:42 PM PST by NakedRampage (Puttin' the "stud" in Bible study)
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