"Revenues," Hamburgers And The Costs Of Corrupted Liberty

Democrats, deluded media and leftist academicians and other “experts,” are as usual, much on about the urgency to add “revenue” measures to a debt-reduction program. By this, of course, they mean tax increases, and certainly at least to begin with, on “the wealthy.” My last post about Republican Ben Stein’s enlistment in this chorus, discussed how “the rich” are really not the ones who are injured by such taxes. In case anyone hasn’t noticed, the days of Republicans as “tax-collectors for the welfare state,” are long past, a rather adamant nail having been pounded into that coffin in the 2010 election. A great public movement put Republicans in control of The House of Representatives with a card on that package: You shall cut spending and not raise taxes, else consider your election entirely provisional: you’ll be primaried out of even a shot at the next general election. The pro-tax-increase forces must know that it isn’t going to happen, so all of the histrionics must be in hopes of convincing the public to punish supposedly rich-loving and deficit protecting Republicans. But aside from the fact that tax changes would change behavior and not produce the calculated revenue, liberals literally don’t seem to understand where revenue comes from, despite the relentless lessons of history. Even when in the 90s, revenues increased after the Clinton administration raised the tax rate, the increased revenue came not from an increased rate on the same income, but from an increase in income from confidence in response to other policies and the spending restraint of a new Republican Congress, which ultimately balanced the budget.

I recently heard one Democrat critic of Paul Ryan’s plan which was all budget-cutting with “no revenue increase.” Here the Democrat’ misuse of language was in sharp focus. In Ryan’s plan, there was no new tax mechanism or tax rate increase. But in fact, Ryan’s plan depends on, not neglects revenue enhancement. His calculations depend on increased revenue from cutting both spending and tax rates. Increased revenue from economic growth is something liberals cannot acknowledge, much as most everyone benefits from economic expansion. Why? Because it runs counter to their political appeal of punishing the rich to supposedly help the poor. But as we have said, the poor are not helped and the rich not hurt by their policies. And they handle this fact mostly by denying it. I was just telling someone this weekend about a conversation I once had with a liberal mutual friend of ours. And note that this liberal friend was a very decent and literate writer who became a history teacher. I told him of how Reagan had dramatically reduced tax rates and it had produced a doubling of revenue. And he said, “I don’t know that that’s true.” It couldn’t be true because it didn’t fit the his beliefs; as if one was told about a purple cow. And I’m certain that it was little discussed in the materials that he regularly reads. It becomes ever more plain, how futile it is to argue with an ideological dogmatic. And I ask myself what distinctly American values we share and why we carry on this raucous bad marriage?

But the incoherence is not only about taxation but all federal government intervention. To paint a picture, I want to consider a market that most Americans have some familiarity with: hamburgers. The important thing to understand about the hamburger market example, is that it is only an easily understood instance of how government corrupts markets, increases prices, and diminishes quality. Everybody buys hamburgers. The nation’s biggest hamburger marketer is of course, McDonalds. They are the mega-rich corporation, so they are the ones to take a hit in order to help the less-fortunate, right? But taxes and regulations help McDonalds and hurt potential competitors while raising hamburger prices for consumers. Taxes? Great! We can afford it and our non-established potential competition can’t. Minimum-wages? Safety regulations? Paperwork, licenses and registrations? Same thing.

And government regulation for the handicapped such as the Americans with Disabilities Act is a good example for me because I am an individual with a disability. Yes, ramps and handles and elevators are very convenient for me; sometimes essential. But companies can decide if they want to cater to those particular needs, and disabled people and others who care can decide if they will patronize them, just as we decide if we like the location, parking or product selection. If a company is protested or boycotted because it lacks provision for the disabled, I have no problem. But when the federal government legally imposes providing such provisions on the entire nation, now there is a problem; not for me but for the efficiency of society. As far as established companies are concerned, companies, bring the regulations on: those start-ups will be crushed. McDonalds can happily pay all of the costs of taxes, fees and regulations, for ever more market-share. As it happens, here in Texas we have a relatively statewide burger franchise operation, with somewhat superior food. And a few local ones with a handful of branches in Houston have better food still. But increased government intervention only raise already higher costs and progressively moves business to McDonald’s and other national franchises. Regulation mitigates against the smaller operation and the quality they may bring. Better burgers are ever harder to pay for or even find.

Remember again that hamburgers are just an example of what happens in every market. And the object is not really to punish ostensibly greedy big corporations, but to consolidate their business and milk them for revenue. We already know in the case of burgers that McDonalds was one of the first to earn a waiver on Obamacare. Smaller guys won’t be so lucky. McDonalds can pay the cost after the competition has been crushed and they have gathered even more of the business. And Obamacare itself, if not cut off, will eventually make the awful insurance companies that liberals talk about, essentially publicly augmented and controlled utilities. Same with the bailed out and regulated banks and financial institutions. Community banks will continue to fade and the business continually squeezed to a small number of mega-banks. Remember how Goldman-Sachs was showily pulled before Congress and scolded? No one in the financial business has profited more than Goldman-Sachs. General Electric has staked its stock value on becoming the favored energy vendor of “green” government energy manipulation. The scorning of BP after the oil spill was ironic because they have been for many decades in Britain, precisely what liberals want to make of corporations here. Like GE, BP is all on board with the green energy/climate change program. They will be the one to gain. BP and the British government are as in synch as Siamese twins. And the privileged class BP CEO will always have a comfortable seat at the yacht races, just like industry and communist party leaders did in the old Soviet Union…until the system collapsed of its own weight.

Everyone who wants to defend Obama points to increased “stock market profit,” because every other economic indicator is bad. Yes: the Dow-Jones industrials are the largest corporations in the country. The worse things get for smaller and potential competition, the better it is for them. The crusade against the “big”, rich greedy corporations is a ruse. Socialist (or whatever euphemism you want to use) societies are always an alliance of big industry with government. Innovation and productivity fade and stagnation slowly sets in. If America doesn’t maneuver a sharp turn out of this, I don’t believe it will survive as we have known it. Some people and maybe even some states will not submit to the control, the economic stagnation, and the decline.

But it all begins when the legal hand restrains the magic of liberty; in our case in violation of a Constitution designed to respect and protect it. Read The Declaration of Independence, which discusses how people are inclined to endure abuse from their government rather than go to the trouble of forcing a change. And that is certainly the case for Americans indulged with the product of over two centuries of unprecedented freedom. It took us that long to get here, but we now sit with globally unprecedented debt and imbalance, which was the predictable consequence of a selfish society that abandoned the most important responsibilities of human history. Responsibility to parents was passed to Social Security and Medicare. Responsibility to spouses was abandoned to promiscuity and easy divorce. And sexual accountability and responsibility to our own offspring were abandoned to the practice of abortion. The real question is, to what extent are we worthy of the liberty for which American Founders pledged their lives, their fortunes and their sacred honor?