Nathan Bedford's first Maxim of American politics: all politics in America is not local but ultimately racial.
This entire article declines to discuss the elephant in the room.
Posted on 06/09/2012 10:03:17 AM PDT by SeekAndFind
The Left’s answer to the deficit: raise taxes to protect spending. The Left’s answer to the weak economy: raise taxes to enable new spending. The Left’s answer to the looming sovereign-debt crisis: raise taxes to pay off old spending. For the Left, every deficit is a revenue-side problem, not a spending-side problem, and the solution to every economic problem is more spending, necessitating more taxes. The problem with that way of looking at things is called Detroit, which looks to be running out of money in about one week. Detroit is what liberalism’s end-game looks like.
And Detroit does in fact have a revenue problem, as I argued in the May 14 National Review (“Let Detroit Fail”): “Revenues declined by more than $100 million between 2007 and 2011. Income-tax revenue dropped by 18 percent, utility-tax revenue by 17 percent, property-tax revenue by 2.3 percent. Seeking a quick fix to its revenue problems, Detroit chartered several casino-gambling operations, only to see taxes from them begin to decline (by 1.5 percent last year) after a period of early growth. Detroit, once the wealthiest city in the United States by per capita income, is today the second-poorest major U.S. city.”
Detroit is evidence for the fact that the economic limitations on tax increases sometimes kick in before the political limitations do. The relationship between tax rates, tax revenue, economic incentives, growth, and investment is complex, to say the least, and deeply dependent on the historical and economic facts of particular places at particular times. We have theories of growth, but no blueprint. But Detroit was not reduced to its present wretched circumstances by historical inevitabilities or the impersonal tides of economics. It did not have to end this way, but it did, and understanding why it did is essential if we are to avoid repeating Detroit’s municipal tragedy on a national scale.
One lesson to learn from Detroit is that investing unions with coercive powers does not ensure future private-sector employment or the preservation of private-sector wages, despite liberal fairy tales to the contrary, nor do protectionist measures strengthen the long-term prospects of domestic firms competing in highly integrated global markets. We cannot legislate away comparative advantage or other facts of life. But the problem of unions’ coercing distortions in the private sector is at this point a relatively small one, given the decline of unionization outside of government. Organized labor being a fundamentally predatory enterprise, its attention has turned to the public sector, where there are fatter and more stable rents to be collected.
The second important lesson to be learned from Detroit is that there are hard limits on real tax increases, a fact that will be of more immediate significance in the national debate as our deficit and debt problems reach crisis stage. Even those of us who are relatively open to tax increases as a component of a long-term debt-reduction strategy must keep in mind that our current spending trend is putting us on an unsustainable course in which our outlays will far outpace our ability to collect taxes to pay for them, no matter where we set our theoretical tax rates. The IMF calculates that to maintain present spending trend the United States will have to nearly double (88 percent increase) all federal taxes to maintain theoretical solvency. Those tax increases are sure to have real-world effects on everything from investing to immigration. At some point, the statutory tax increases will not increase actual revenue.
Even the best tax regimes are cannibalistic: Every tax is an incentive for the taxpayer to relocate to a more friendly jurisdiction. But tax rates are not the only incentive: Google is not going to set up shop in Somalia. Healthy governments create conditions that make it worth paying the taxes — which is to say, governments are a lot like participants in any other competitive market (with some obvious and important exceptions). The benefits of being in Detroit used to be worth the costs, but in recent decades millions of people and thousands of enterprises large and small have decided that is no longer the case. It is not as though one cannot profitably manufacture automobiles in the United States — Toyota does — you just can’t do it very well in Detroit. No one with eyes in his head could honestly think that the services provided by the city of Detroit and the state of Michigan are worth the costs.
The third lesson is moral. Detroit’s institutions have long been marked by corruption, venality, and self-serving. Healthy societies have high levels of trust. Who trusts Detroit? This is not angels-dancing-on-the-head-of-a-pin stuff. People do not invest in firms, industries, cities, or countries they do not trust. Corruption makes people poor.
What is true of Detroit is true of the country. Our national public sector not only is bloated and parasitic, it is less effective, less responsible, and less honest than that of many other developed countries, including New Zealand, Canada, Australia, and Germany. I am not an unreserved admirer of Transparency International’s global corruption-perceptions index, but I believe that it is in broad outline accurate. Liberals are inclined to learn the wrong lessons from the relative success of countries such as Canada or New Zealand, concluding that what we need is a bigger welfare state, government-run health care, etc. (Conservatives, for our part, tend to overemphasize the role of comparatively low taxes and light regulation in the success of countries such as Singapore and Hong Kong. Those are important, but there are other equally important factors.) In reality, there is a great diversity of health-care arrangements and social-spending levels among the countries that have more effective institutions than ours, while many countries with the sorts of institutions liberals admire (take Italy, Spain, Greece, and Portugal for starters) are in crisis, in significant part because of plain corruption. What the more successful countries tend to have in common is a public sector that is less intent on looting the fisc.
Sure, Hong Kong and Singapore have lower levels of government spending (as a share of GDP) than does the United States. So do Switzerland and Australia. At 38.9 percent of GDP, our public-sector spending is indistinguishable from that of Canada (39.7 percent). It is not obvious that we have much to show for it.
The city fathers of Detroit inherited one of the richest and most productive cities in the world, and they ruined it in a generation. The gentlemen in Washington have been entrusted with the richest and most productive nation in the history of the world, and the trendline does not look good. Those of us seeking to radically reduce the footprint of government must remind ourselves from time to time that our case is as much ethical as economic, that the ethical and the economic are indeed closely intertwined.
Self ping for later reading
Nathan Bedford's first Maxim of American politics: all politics in America is not local but ultimately racial.
This entire article declines to discuss the elephant in the room.
He sure did a tap dance around the issue of the third-world mentality that accompanies the takeover of cities by tribals.
They run them just like Indian reservations. Corruption is merely a symptom of the tribal takeover, not a cause.
The article also didn’t address the problem, “When you have big corporations, you will have big unions.”
Too bad political correctness has paralyzed our society to the point we can not be honest in self evalulation. The rot that is happening in Detriot is playing out in every large city in this country, whether we want to accept that fact or not.
Unfortunately, it, most probably, never will...
Detroit has been smelling strongly of peanuts since 1967.
But'cha' can vote 'em out.
The Derbyshire episode was proof The National Review is either too PC or too chicken sh!t to discuss race openly. As a 25 year subscriber, I won't be sending that card back in again.
In fact during the early 60's and late 50's homes in detroit were expensive when compared to the new suburban subdivisions that went up. Bussing only went on in the city and your kids could walk to school....
>The article also didn’t address the problem, “When you have big corporations, you will have big unions.”
Probably because it wasn’t meant to be published on the DU or Huffington Post.
Two events seem to give a hint about what happened.
1. Clinton put a tax on yachts and the boat yards that make them. The rich just bought their yachts in Europe and the 3rd world. The American boat yards had to close—We got no new taxes and lots of Americans lost their jobs. Then, the Navy needed to build wooden hulled mine sweepers and there was no American Boatyards to build them! They were closed.
2. In the Middle Ages the church helped to promote the fear of witches. Many “strange” and non-conformist men and women were arrested and many put to death. One rumor was that witchs used cats to get messages from Satan. cats were collected and burned! They had big parties for these events and they saw this as fighting Satan. No cats, the rat population grew—then fleas from rats carried the Black death killing 1/4 of the population of Europe. The cats had their revenge! Actions have consequences you may not see—but that will come back to haunt you.
You hit the nail on the head and saved me some typing.
With all due respect, as a Clinton detractor, the yacht tax was passed by Congress and signed by Father Bush. I used to do deliveries in the boat building area of Costa Mesa (think Newport Beach). It was always a pain to find a place to park, until the tax passed. Within a year, there was plenty of parking, just no vehicles or commerce. Thank you.
The State of Michigan has been trying to appoint an Emergency Manager for the City of Detroit. They seemed sort of o.k. with it until they realized they would virtually lose control, so they whined and stomped their feet and filed a lawsuit.
Yesterday on the radio news break, the story was that Detroit will be out of money by June 15 unless the state steps in to help out with some cash.
The state responded by saying they wouldn’t give them anything as long as they were the target of the City’s lawsuit.
I hope our governor sticks to his guns on this. That would be sweet!
It’s not race, it’s the mentality that’s was fostered by liberalism and taught to the kids and families. I’ve seen this mentality in England with whites who do nothing more than suck off the government tit for a living.
That certainly figures into the story, but Atlanta hasn't collapsed for being a majority black city run for decades by blacks. Business still finds it an attractive place to locate and there's work.
Ultimately, it all comes down to the imperative that man must work to survive (or someone must work for him.) When government hinders our ability to make a living, only bad things can result.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.