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Economics Matters (Vol. 91)

Observe the world and you will get it

I have been accused of bias. Guilty as charged, I am biased. But take a few minutes to understand what my bias is and why. I am biased against stupidity and ideas that simply do not work. Not theoretically - demonstrably. I am biased toward sound reasoning and things that work. Systems that make life better - real world better, not just in theory. Let me elaborate. I have observed and studied socialism/communism over and over. Does it improve the lives of the public? No. It has failed to do that - not occasionally, but 100% of the time. It is based on an absolutely flawed notion about human behavior and will never work for the betterment of man. The rulers and their chosen henchmen do just fine, while their constituents suffer. When was the last time you saw someone escaping from the ‘confines’ of the U S to go live in Venezuela? Cuba? North Korea? Some time ago one of the past Presidents of Brazil was pushing for more free enterprise/market economic systems. One of his socialist cohorts asked why he would do that. The answer: I have to generate enough income to pay for all the socialist programs. Some of our politicians have toured communist countries and come back glowing about how great they work. The Soviet Union was so beneficial for the workers - until it collapsed. Yes, the wool was pulled over his eyes and he bought it - hook, line and sinker. Facts matter. A system without proper incentives does not work. And great free medical care in Cuba for all the people. Are you kidding me? How gullible can we be? Or you can even go to the U K - the government runs the National Health Service there - no charge, but get in line with the 7 million folks waiting for medical care. Government run anything sucks (by the way, I haven’t noticed any of them moving to these wonderful countries). So what about the Scandinavian countries, like Sweden. They have a lot of ‘free’ social benefits. You know there is no free lunch and Sweden isn't remotely a socialist economic system, it has more economic freedom than the U S. They do have a lot of ‘free’ social programs, for which they pay dearly in enormous taxes, compared to the U S. And it isn’t the rich paying - it is everyone. Income/pension taxes are 52% at 50 thousand dollars of income and a 57% max rate at 70 thousand dollars or more of income. That is much, much higher than what we pay at comparable incomes. They also pay a VAT tax (value added tax) on consumption of 25%, very high gasoline taxes, etc. And they still have government deficits to finance as a result of all the ‘free’ programs - even with the enormous taxes. The U.S. became the richest, most powerful country in the world when government was small, taxes were low and the economic system was much more free than it is today. And growth has slowed as we enlarge government, increase taxes, and pile up enormous deficits and debts. And the debt will eventually be our complete undoing if we keep on piling it on. BOTTOM LINE So, what is my bias? My observations are that countries with limited government and modest taxes, that are run on a sound economic basis, have the highest standard of living. That is the real world. Take a look at Switzerland, Singapore, Hong Kong (before the Communists took it over). What works and what doesn't. It is not magic. So, I am biased - toward less taxes, less debt, less government. I am not an anarchist, we need government, just less of it. You have heard of zero based budgeting in a company. Let’s start with a zero based government. Add the things the Federal government really needs to do, stop there. Then develop a fair tax system to pay for it (don’t get me started about our inane Federal Income Tax system). Sounds so easy. Wrong. And it will not happen unless we citizens demand it. So let your representatives know how you feel. If enough people do that, we can make an impact. Join the Main Street Lobby by going to our website and Contact Congress. It is easy just enter your name and address and Send. You can use our message or write your own. LEARN ECONOMICS, THEN VOTE SMART

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