The Gospel According to Paul (and Preston)
By Gord Gekko
web
posted November 1996
Arthur Schlesinger Jr., historian and hero to the sandal wearing leftists
of the world, propounds the theory that history and economies run in cycles,
roughly thirty years in length. The theory itself has been proven rather
flawed (except of course to Larry King), but it does have some general
applicability to actions in the world of politics, or more specifically
why a federal finance minister will repeat errors committed so many times
before and bury us deeper into problems of government creation.
I speak, of course, of Paul Martin’s recent comments about not cutting
taxes. According to the fairie land at the Parliament Buildings, we are
fortunate because it seems that the budget deficit will be lower this
year than projected. When faced with calls from many, including Reform
Party boss Preston Manning, to cut taxes, Martin demurred, stating that
it was too early to start cutting taxes. Fitting that the words ‘politics’
and ‘arena’ fit together, because we got to see one during a
hearing of sorts. Martin and Manning faced off as each explained why his
was the responsible course of action. Martin, as usual, was completely
wrong. His plan will reduce the deficit to be sure, but the moment that
an economic downturn occurs, spending will balloon and his projections
will become as real as the federal Progressive Conservative’s chances
of winning the next Federal election.
So what is wrong with Manning’s plan of reducing the deficit? Nothing,
if you believe that the government has a right to tax you. Manning’s
clever plan will lower tax rates, which will allow more money into the
real economy, creating both jobs and increased revenues for the Fed. It’s
been done before and worked, and it will be done again and work. At the
heart of Manning’s philosophy, though, is the belief that he has
a right to tax you. Fine thinking from someone who’s always portrayed
himself as anti-government.
Well, here then is a gift to all the Commerce students. I don’t know
what your professors are teaching you, with today’s political climate,
no doubt you’re being taught all sorts of garbage. Here then is something
you can take to the bank.
Pay attention! Raising taxes places a drag on the economy and increases
deficits. Lowering and eliminating taxes increases your revenues and cuts
that pesky deficit.
Some of you will of course be reading that statement with a healthy disbelief.
You, of course, are the leftists of the world. Feel free to leave now.
Good, the secret will remain with us. It works and there are two stellar
examples of how tax cuts can create prosperity.
The first occurred under the stewardship of the Liberal’s liberal.
John F. Kennedy cut taxes by a third in 1964. The result? The United States
saw the unleashing of the economy. Revenues doubled in eight years and
helped to reduce unemployment to three percent. The Democrat controlled
G.A.O. screamed that the tax cuts would destroy the economy and create
a third world state. Oh, how history proved them wrong. Of course it took
another liberal to destroy Kennedy’s accomplishment; Lyndon Johnson’s
"Great Society" massive spending not only screwed everything
up, but created more poor and made them worse off.
We all know that Ronald Reagan applied the same principles to even a greater
degree. With a massive tax cut, revenues doubled between 1980 and 1990
(the last true year of supply side economics, according to Rush Limbaugh),
from $517 billion to $1 031 billion.
No doubt if you’ve watched Dan Rather or Peter Jennings, they told
you that the rich got richer and the poor got poorer, and that the bad
old deficit went through the roof. For them, here are some facts:
- For the poorest fifth of Americans, real family income increased 15 per cent
- The number of families earning $50 000 or more increased
- The number of poor dropped. Between 1983 and 1989, the total U.S. population under the poverty line dropped by $3.8 million people.
- The rich actually paid more income tax.
- The deficit actually dropped, at one point, to $150 billion
- 96 months of uninterrupted economic growth occurred.
So why did the deficit increase? In order for Reagan to get those tax cuts,
he forced by the Democrat controlled Congress to increase social net spending.
Even with those spending increases though, the deficit fell for three
years.
In Canada, tax revenues as a percentage of G.D.P. rose from 38.4 per cent in 1983,
to 42.7 per cent in 1993, with the deficit 7 per cent of G.D.P. By comparison, tax revenues
in the United States were 29.9 per cent in 1983 and 30.8 per cent in 1993 (and 31.6 per cent in
1994), with the deficit sitting at 3.6 per cent of G.D.P.
Obviously the economy of Canada is not as dynamic as that of our southern
neighbor. They like entrepreneurs, we look at them as uppity. Be that
as it may, the principles of capitalist economics hasn’t changed.
Increasing taxes places a lead weight around your neck, cutting them gives
people the money to start doing things.
If Martin really wants to start cutting the deficit and get Canada back
into the black, here are some easy starting points:
Cut the social net. Each of these programs is a huge albatross dragging
both the economy and individuals. More importantly, it is immoral to rob
the efforts of production from individuals to support those who will not,
or cannot, produce themselves. Need does not create a right.
Start cutting taxes across the board. Let those who are most likely to
invest money do it. Let them create the jobs, not wasteful and inefficient
government programs. As above, it is morally wrong to take property from
people without their consent. Money is the material manifestation of a
person’s productive potential. How an individual earns their is a
symbol of what they hold philosophically. Money then, is a symbol of their
intellect. We charge a government to protect our rights, not to deny the
freedom of the mind and take forcefully the proceeds of that intellect.
Cutting taxes creates an increase in revenue…of course, only while
taxes are collected.
Start cutting down on the regulations that tie up the hands of people
for no good reason. There is no government regulation in existence today
that the free market itself could not regulate. If individuals in a market
place value something, then they will not engage in commerce with a business
who holds interests contrary to that value. All regulations are an infringement
upon property rights, something that the government has no authority to
do. Let the marketplace regulate itself and stop all government intervention
in the economy. Now. Screw the I.M.F.
Martin believes, as many leftists do, that the economy is a zero sum game.
If the rich are earning more, then the poor are being robbed. If the deficit
is to be reduced, Martin must think at night, then we have to wrest more
money away from the people.
The economy is not a zero sum game. It is an ever-growing pie. The more
people who are not stopped from fully participating, the larger it grows.
Instead of punishing people for wanting, and getting more, we should be
rewarding them. Cutting taxes and spending will enable more people to
have an honest attempt at becoming successful.
So what can you do? I suppose if you want to waste some paper you can
write to Martin and tell him that you won’t stand for sending your
money away any longer, but you know you’ll get a letter thanking
you for your valuable insight and nothing more. All you can do is to try
to do your best, regardless of what the leeches in Ottawa do. Good luck.
