Why Can't Government Be More Creative?

Published 12:50 am Wednesday, March 5, 2003

By By Lloyd Albritton
An oil man called upon a poor ignorant farmer one time to purchase the mineral rights on the farmer's land. He offered the farmer the standard one-eighth interest in any oil production that might derive from the property.
Determined not to be taken advantage of by any big-shot city slicker, the farmer stubbornly refused the oil man's offer. "I won't take it!" the farmer boisterously declared. "To get my mineral rights, you're going to have to give me a full one-tenth."
The oil man promptly agreed to the farmer's terms and a contract was completed and signed on the spot. Some time later the farmer was heard to whine that he had been sorely taken advantage of by the crooked oil man. "I should've never taken that one-tenth interest," he complained, "because another feller came by not long afterward and offered me ONE-TWELTH!"
Like the poor farmer, I too am suspicious of things I don't understand and I occasionally protest when I think I'm being taken advantage of. Two things which arouse my suspicions the most are price increases and tax increases. I'm against both of'em! Well, uhhh, I don't exactly mean I'm patently against them under any circumstances, for higher taxes and higher prices are sometimes necessary, but I do think we need to be vigilant on these matters because business and government alike often resort to price and tax increases as a first-line-of-defense against income erosion.
Many a sale has been lost by a price bid too high. Businessmen sometimes thoughtlessly say, "The customer will have to buy at my price because nobody out there is going sell this product to him any cheaper." All businessmen learn the folly of this attitude soon enough, for if a business takes its customers for granted by raising its prices too high, there is every likelyhood that a more creative competitor will arise who has learned to cut his costs through improved efficiency and is able to offer an equivalent product at a cheaper price and even greater profitability. The end result is that an unwarranted price increase may lead to reduced, not increased, revenues, and ultimately to bankruptcy.
Government, however, is much slower to learn this lesson than business. When government revenues drop, politicians IMMEDIATELY start talking about tax increases before exploring any other alternatives. Though government at every level has grown to mammoth proportions over the past few decades, politicians and government bureaucrats are unable to comprehend doing their jobs on anything less. They believe increased tax rates will necessarily mean increased tax revenues and that they can continue to do business as usual, while they ask the poor taxpayer to wait another year to paint his house, replace the carpet or take a vacation. Politicians are quick to preach the gospel of "sacrifice" to the choir.
Government may raise the tax rate to one hundred percent, but they will always learn that one hundred percent of nothing is nothing! This simple economic principle is called "The Law of Diminishing Returns." Government may raise the tax rate from 10% to 20% and take in more money. Or, they may raise the rate on up to 30%, 40% or 50% and still take in more money. Eventually, however, when the tax rates reach a certain point, the working people, the actual producers in the economy, will not see the sense in working harder for less and they will slack off in their productive labor. In the end, they will quit producing entirely and government will take in less revenues, not more.
Government is running short of money these days precisely because taxpayers are running short of money. When we taxpayers run short of money, we cut back. We cancel our vacation plans and put planned purchases on hold. We buy less stuff. We do without. The thing that I do not understand, and that I am suspicious of, is the logic of many leaders at all levels of government who believe the health and welfare of government is supreme to the health and welfare of the citizenry. Why is it more important that we have new carpet installed down at city hall than at my own house? Who is really "the boss" in this system of ours? Isn't it us, the people? Shouldn't we be calling our "employees" on the carpet and demanding that they take some pay cuts along with us, instead of giving them a raise?
History has revealed time and time again that when business and government are put to the task, they find a way to make miracles happen. A shortage of rubber at the beginning of World War II inspired our scientists to develop artificial rubber for much needed tires practically overnight. When our scientists gathered at Los Alamos, they developed the atomic bomb in a few short months. When Japan started dominating the U.S. automobile market in the 1970's, Detroit quickly figured out how to manufacture a better, more efficient car. Is it possible that our valiant leaders in city government might come up with some creative ideas for rejuvenating the economic health of Atmore beyond raising taxes on an already depressed local economy and buying 400 acres of land and waiting for someone to come here and build a factory? I guess I just don't understand.

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