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Wednesday, September 14, 2005

Sacrifice Should Come From Government

We read a lot about price gouging, especially during a disaster when goods and services become scarce. Showing economic ignorance, politicians warn that price gouging will be prosecuted. Their foolish supporters applaud.

But what I am most fearful of is tax gouging. The costs of war, damage caused by natural disasters or a new crisis discovered by an Ivy League professor result in public approval of higher government spending. The call is made that we all need to sacrifice to alleviate the problem. Then, never ones to check on the progress or value of the program, politicians keep on subsidizing it forever. Was the crisis ever really a crisis? Who knows.

If the people sought private enterprise to deal with the crisis, that new industry or entrepreneur would remain in business so long as there was demand for those goods or services at the prices charged. They would either make it rich or flame out. They can become the next GE or IBM or they can make some money and then try something else. But the people who need the goods or services will make that decision.

The Katrina event shows that philanthropy can provide the financial assistance for many of the needs. Individual effort can take care of the rest. For those forlornly unable to cope, there are churches, family and temporary government provends. The last can be supported by revenues already received by government without additional taxes. Rather than raising taxes, there are significant elective programs within the current budget that must be cut at the same time.

Veronique de Rugy estimates there is $24 billion of pork in last year’s Omnibus bill for bridges and to and from nowhere. She found another $56 billion of cuts easily made in the budget. $80 billion is an excellent start. Note that these are cuts that keep on giving. Besides diverting this money this year, it can be done next year too. Then, when New Orleans and other areas are at the point of self-sufficiency, the spigot can remain closed and the money can remain (not go back) in the hands of the citizens.

In other words, the government needs to make the sacrifice this time. As de Rugy states:

Being compassionate should not prevent lawmakers from being responsible leaders.

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