I keep hearing a certain phrase in reports on the economy, and it has been grating on me every single time. And I finally figured out just why it was bugging me.
“…and government services are being cut back for the neediest — ironically, just as they are needed the most.”
It’s not always the same words, and it’s not always the same government (federal, state, county, local), but the the sentiment is always the same.
But this is not an irony. This is a sign that our system is working as designed.
Oh, it’s not a deliberate result, but an unavoidable consequence. And it is a constant reminder that so, so many people don’t understand one of the most fundamental truths of our political, social, and economic system.
The government has no money of its own.
The only money the government has is that which it takes from us, by threat of force.
Oh, you can call them taxes, fees, levies, duties, surcharges, licenses, tolls, or any of a zillion other euphemisms we’ve invented to disguise the reality, but that’s what it all boils down to: the government taking our money, almost always by some sort of explicit or implicit form of duress.
Oh, there are exceptions, of course. For example, my own state of New Hampshire gets a healthy dose of its revenues from liquor sales. They maximize this by, naturally, force — the state has a monopoly on hard liquor. If you want to buy hard liquor, you go to a state-owned and state-operated liquor store and give your money to a state employee. And don’t even think of going into competition with the state — if you try selling hard liquor openly, they will arrest you and shut you down.
Oh, there are some who don’t approve of this. But there’s not much they can do about it. They can abstain from liquor entirely, or they can travel to a neighboring state where private enterprise can openly sell liquor.
But almost no one does. On the contrary — people from other states come to New Hampshire to buy their liquor. That’s because New Hampshire uses its monopoly to keep its prices significantly lower than those of other states (who tax liquor sales quite exorbitantly.) It also strategically places the liquor stores — the four busiest ones are located in rest areas along interstate highways.
In fact, this summer, Massachusetts chose to extend its sales tax to liquor sales. This was especially rich — liquor is already taxed in and of itself, so the sales tax applies both to the liquor and the tax already paid on the liquor. This led to a most entertaining story when one of the Massachusetts lawmakers who championed the tax hike was caught stocking up on booze at a New Hampshire liquor store.
So, it only follows logically that when the people have less money, the government will have less it can take. An economic downturn leads, inevitably, to a government revenue downturn. And an economic downturn leads, inevitably, to a greater demand for government services and assistance. It’s an unavoidable paradox.
Is there a solution? Yeah, but it’s not an easy one. Fix the economy. There’s an old saying that “a rising tide raises all boats.”
But even that isn’t foolproof. A boat that is too tightly anchored can be swamped and sunk by a rising tide. And in this metaphor, the anchor is government regulation and control.
We’re already seeing it. During the recent “cash for clunkers” fiasco, the automakers who surrendered their sovereignty to the government got almost no boost in sales. On the other hand, Ford did rather well. And foreign automakers did even better.
So the next time you hear someone talk about the “irony” of cuts in government services coming as more and more people find they need them, note it carefully — someone has just shown just how little they understand the fundamentals of our system. And when they have no clue on how it works, they have no clue on how to make it work better.