With our present taxation, you and I control less than 50 percent of what we
earn, while a mere majority of our local, state and federal representatives
about 360 people control more than 50 percent of our earnings. With our present
taxation, you and I control less than 50 percent of what we earn, while a mere
majority of our local, state and federal representatives about 360 people
control more than 50 percent of our earnings. We are quantifiably less
than 50 percent economically free. Even serfs cut better economic deals with
their masters.If our local, state and federal governments cut spending and
lowered only your taxes, would that make you wealthier? Yes. Would it also make
me wealthier? Yes, though not to the same extent. When governments cut spending
and lower only your taxes, this still benefits the rest of us. I learned this in
high school when we studied The Wealth of Nations by Adam Smith, a book
published in 1776. Smith correctly theorized that the cumulative effect of
individuals seeking their own self-interest works like an invisible hand to
allocate economic resources, stimulate innovation and create national wealth.
This is the opposite view held by proponents of controlled economies, who say
that resources and wealth are best allocated centrally, by the few, from the top
down. Such proponents believe that you can benefit most when government extracts
more from me. Followers of Smith, including modern-day libertarians, believe
that we all benefit when government extracts less from you or me, but preferably
both.The dismal history of controlled economies validates Smiths theories and
the value of free markets. Nations where a relatively few people make decisions
for others comprise most of the worlds poorest nations. The former Soviet Union,
Cuba, mainland China, Eastern Europe, Burma and North Korea are perfect
examples. Because of our nations accumulated wealth, relatively poor people here
enjoy higher standards of living than relatively richer people in controlled
economies. Our nations poor enjoy higher quality products, at lower prices, and
more choices in everything from televisions to toothpaste than the richest man
in Romania. Americas poor breathe better air, drink better water, have better
sanitation, and have more heat, food and health care available than most of the
billions of people in the world all because of our countrys relative wealth.But
here are two caveats about national wealth. First, all nations, including ours,
become relatively poorer when their leaders make economic decisions for others.
And second, declines in national wealth always hurt that nations poor first and
worst. Economic policies that promote wealth ironically are the most effective
ways to help the poor.Raising Indianas sales tax by 20 percent last year and my
property taxes by 50 percent this year did little to help poor Hoosiers, you or
me. Most poor people do not gain with anyones higher taxes. The poor pay a
higher percentage of their income in sales tax than wealthier people. The poor
pay higher property taxes when their rents rise. Thanks to the way we vote, we
work longer and longer each year to pay for others to spend our hard-earned
money inefficiently and unwisely. This goes against the best economic wisdom.
Smith told us that wed be much wealthier as a nation, and our poor would be
better off, if we took economic decisions away from our relatively few leaders
and returned it to the individuals who earned the money, even if selfishness
drives their spending. Individuals spend their own money more wisely than
government bureaucrats spend the money for them. Individuals spend their dollars
to buy better goods and services. They get more results for each dollar they
give to private charity than government welfare programs. Money in the
competitive private sector is almost always more wisely and effectively used
than giving it to a government. But worse, government jobs come at the expense
of others productivity and are economically unproductive. Government jobs
produce no wealth, which is created only by selling products and services that
people want to buy. This means that governments beyond their essential
judicial, electoral and record keeping rolls are pure dead weight on the
productivity and wealth of nations.Politicians should take heed of Adam Smiths
moral and economic ideas. Smaller governments and fewer decisions by the chosen
few are essential for more job creation, greater prosperity, better use of
money and more community wealth. Wealth is best assured not by a new government
program but by more economic freedom from government. ABOUT THE AUTHOR
Attorney, aspiring screenwriter, and Libertarian Party activist in
Indianapolis, Indiana. See also the Libertarian Writers' Bureau at
http://www.writersbureau.org.
You may view the latest post at
http://www.richproject.co.cc/?p=3904
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