Tax-and-spend Demagogues prey on Ignorance

National Post Comment June 2004 


I have two sets of friends. The first are old friends, artists, bohemians of some sort -- usually, given my age, successful ones. I love them dearly, but openly treat them as if they were slightly -- how do I put this politely? - - well, OK ... retarded. As if they are missing a critical element, rendering them somewhat child-like.

With warm hearts, and often stunning perceptual abilities, they know what I think: that there is a great chunk of the world that they simply do not get. "How come I don't know that?" is a question I hear more often than not, in the great loud flow of occasional argument.

The answer is, almost always: "because you haven't studied economics." These friends of mine are empaths, wanting everyone to do well, and be happy. As a result, they are prey to the demagoguery of the left.

The second set of friends has studied economics. They know that the demand curve is the most important graph invented by man. And if you don't understand price elasticity, the multiplier effect, and the fact that individuals will always, always maximize their own good -- as they define it - - you'll think it's possible to bully people into wanting things they don't want, like Canadian movies, the infantilization of reserve aboriginals and the gun registry.

What you get after decades of forcing people to pay for all this inefficient do-goodism is desperation. This explains why, for instance, realtors in Victoria make television ads saying things like: "Americans don't believe our prices, they're like kids in a candy store! If you want to sell your house, this is the time!" By holding back our economy for decades, the provincial NDP and labour unions have ensured that (a) our house prices are low; (b) people are desperate for money; and (c) much of the best real estate on the West Coast will soon be owned by Americans.

The greatest liberal fearmongering is sold under the rubric, "tax cuts for the rich," or just "tax cuts." But all over the world, and especially to the south of us, tax cuts have been shown to have long- term, stimulative effects on the economy. Thanks to Bush's tax cuts, the Americans are single-handedly hauling the rest of the world out of the doldrums into another boom. Their economy is growing at roughly 4.5%, ours at 2.2%, the tax-and-regulation-heavy European states at 1%. But the declinists, seeing U.S. success, cry foul. Tax cuts cut social programs! They cause deficits!

Sorry, but there is such a thing as history. And during the eight years of the Reagan administration, federal government revenue jumped from US$599-billion in 1981 to US$909-billion in 1988.

Gee whiz, how is this possible? Could it be that giving people's money back to them makes the economy grow faster than when bureaucrats create useless programs? And that a growing economy sends more money to the government than one throttled by big government?

I feel like I'm reinventing the wheel here. But somehow, this very obvious fact simply isn't being taught. Deficits increased during the Reagan term, this is true -- but receipts rose by nearly the same amount, proportionally speaking. And let's remind ourselves that the free-spending Democrats held both houses of Congress.

Tax cuts do not have to mean that social services are cut. More often, they mean that social service programs can continue to exist. Usually however, a government brave enough to cut taxes, will insist that social programs become efficient, so free-riders are shoved off the gravy train, and then complain loudly. The economics-deficient members of the press misreport these cases with glee.

In the last decade, there has been no greater illustration of the benefit of tax cuts than the cases of Ireland and Japan. Japan's government, once a feared competitor, took the Keynesian route, meddling in everything and causing the economy to stagnate. Ireland, on the other hand, slashed its tax rate. As a result, unemployment plummeted; and for the first time in its history, the country began to lure back significant numbers of expatriates. During the 1990s, after many years of low growth, Ireland grew from 6% to 10% a year.

We could do that. For decades, our freedom has been curtailed by champagne socialists who've convinced us that we need them to spend all our money or we'll turn into Americans. Well we don't, and we won't. Let's make them go away. For a long long time.