By: Tad Winiecki

Tad Winiecki — Thu, 30 Aug 2007 00:49:42 +0000

There are two counteracting trends at work in Americans’ economic knowledge – government and nonprofit allocations of resources and the growth of the number of small businesses. For hundreds of years people learned economics on the job as farmers, who are small businesses. Then with the agricultural and industrial revolutions and the bigger role of government a smaller part of the population had on the job economic training. Lately too many people have been miseducated by advertising of credit and have to be educated in bankruptcy court.. Small businessmen learn economics or go out of business.
In government it seems not many politicians or bureaucrats know the difference between an expense and an investment. The difference between a user fee and a tax is sometimes a useful distinction but may just be an accounting tool. If government legislators decide that a function is needed and it is fair and cost-effective for government to provide the function instead of or in addition to individuals or other organizations, then what is important is that they set rules and incentives so that tunction is done cost-effectively. By cost-effectively I mean look at the ratio of all of the benefits to all of the costs.
Assume that some members of society pay little or no taxes because they have little or no income – children for example. Children need to be educated. They may need transport to school. They may need healthcare and protection from dangerous animals and evil people. To satisfy these needs our society has decided it is wise to divide this responsibility among children’s families, non-profit organizations (churches, private schools, Boy and Girl Scouts, etc.) and government organizations (public schools, police, transit agencies, etc.). Theoretically it would be possible to charge the children user fees for all of these functions. They could borrow the money and pay it back after they are educated and working. Instead of user fees we accomplish the same thing with taxes. While the children don’t pay for sidewalks and streets they walk or ride on to go to school and don’t pay for school, older people who have incomes pay taxes for these things. So the children do pay, but not until later when they are grown. Businesses which hire employes don’t pay for the previous education of their employes but most of them do pay taxes to help educate children and college students who may be their future employes.
God gave us this planet to manage. It is unfair for government to take valuable assets which belong to everyone and give them to some at very low cost while denying others their use because they can’t afford user fees. I am thinking of mineral extraction, grazing and logging on public land and park entrance fees in particular. Instead of subsidizing the function providers it may be better to subsidize the poor users – for example food stamps for consumers instead of price supports for farmers.

Comments on: Operating in the Black, Government-Style

By: Tad Winiecki