Wisconsin Takes a Step Forward, the UK Takes a Step Back

Posted by PITHOCRATES - March 9th, 2011

 A Foul Stench Wafts across the Rheine

Empires come and go.  But one truly transformed the world.  And still is today.  The British Empire.  Their representative government, property rights and economic policies unleashed unimaginable growth and prosperity.  They gave us the Industrial Revolution.  And we’ve never looked back.  Great nations started as British seedlings.  Canada.  Australia.  India.  New Zealand.  To name a few.  And, of course, the United States.

Sadly, the UK strayed in the 20th century.  As many nations did.  Including the US.  Thanks to a foul stench that wafted across the Rheine.  Karl MarxFriedrich Engels.  They wrote a book.  The Communist Manifesto.  And their goal was to replace capitalism with socialism.  And then replace socialism with communism.  The ultimate welfare state.

The British government exploded in the 20th century.  They nationalized industries.  Raised taxes.  And empowered unions to the point that the nation was at their mercy.  If they didn’t get the pay raise they wanted you didn’t have any electricity.  Their strikes were notorious.  People called them the British Disease in the Seventies.  But help was on its way.

Thatcher and Reagan cut Taxes to Economic Prosperity

Margaret Thatcher was prime minister during the Eighties.  And she started turning the UK around.  Like her counterpart did in the US.  Ronald Reagan.  Both cut taxes.  And nearly doubled their tax receipts (see High income tax will cost the country dear by Telegraph View posted 3/9/2011 on the UK’s Telegraph).

Between 1979 and 2009, UK corporation tax rates fell by half, even as the revenue from the tax rose by half – hard evidence that lower taxes encourage economic activity and boost Treasury receipts.

People deride ‘trickle-down’ Reaganomics in the US but it worked.  And it worked in the UK, too.  Because jobs are everything.  If you don’t have jobs your economy goes into the toilet.  If you have jobs your economy soars.  It just doesn’t get simpler than that.  And how do you create jobs?  You give people a reason to be brilliant.  Give entrepreneurs an incentive to create something.  Let businesses be profitable and they will take every opportunity to grow their businesses.  To be even more profitable.  All the while creating jobs.  Every step of the way.  The more they grow the more jobs they create.  And the better life gets for everyone.

Of course, remove that incentive and it’s the opposite.  If you raise taxes you reduce profits.  And that removes incentive.  Well, they are raising taxes again in the UK.  And what will the genius entrepreneurs do?  Well, what would you do?

Behavioural changes prompted by the higher rate – with entrepreneurs departing for more benign tax regimes or devising ways of avoiding the new tax – are set to flatten economic growth and lead to a collapse in tax revenues. The think tank estimates that the cost to the Treasury over a decade could be as much as £350 billion… Why should wealth-creators stay here when almost two thirds of their income is taken from them? The answer is that they won’t.

History has shown that higher tax rates rarely bring in the money the government expects.  While lower tax rates bring in more money than any of the naysayers ever dreamed.  So why, then, do they keep raising taxes?  Politics.

The Deed is Done in Wisconsin

Big Government needs supporters.  With the wane of private sector unionization, it’s getting harder and harder to get people to support Big Government.  Because people who work and enjoy life have no need for government help.  So they need to find people who do.  Or create them.

Enter the public sector unions.  These people beg for high taxes.  Because they are paid with tax dollars.  So the more people in the public sector, the more people there are to support big government spending.  It’s a little of the old you scratch my back and I’ll scratch yours.  And to sweeten the deal, public sector workers not only get pretty decent pay, they get outrageous benefits.  All paid for courtesy of the taxpayer.

And this is what is at issue in Wisconsin.  The union was ready to cave on everything but the collective bargaining.  Because that’s how they pass the full cost of their benefits onto the taxpayer.  Without the taxpayer having any say in the matter.  Until now, that is (see G.O.P. Tactic Ends Stalemate in Wisconsin Union Fight by Monica Davey posted 3/9/2011 on The New York Times).

The bill makes significant changes to most public sector unions, limiting collective bargaining to matters of wages only and limiting raises to the Consumer Price Index unless the public approves higher raises in a referendum. It requires most unions to hold votes annually to determine whether most workers still wish to be members. And it ends the state’s collection of union dues from paychecks.

So now if they want a raise larger than the Consumer Price Index (as a lot of raises are determined in the private sector for COLA raises), they have to ask the taxpayer to approve the raise.  And you can see why they are against this.  They want to keep getting big raises without the people paying them having any say in the manner.

And the whole choice thing about staying in the union?  And making people write checks for their union dues?  Why, if people do that, some are not going to stay in the union.  Not all union members vote Democrat.  But nearly all union dues go to Democrat candidates.  So, of course, the unions don’t want any of these changes to come to pass.  Or government.  Because the little arrangement they had was a nice way to dump bushels of taxpayers’ money into Democrat pockets.  Often against their will.  Or without their knowledge.

Public Sector Union – A Vehicle to Steal Money from the Private Sector

Everyone knows what we need for economic prosperity.  Thatcher and Reagan showed how to do it in the Eighties.  And they turned around nations that were in a pretty sorry state.  Tax cuts spurred that economic activity.  And filled government coffers.  However, Thatcher cured the British Disease.  And Reagan fired the air traffic controllers.  They stood up to the unions.  And that choked off a lot of money funneled (i.e., laundered) to the opposition parties.

And this is what the Left fears in Wisconsin.  That responsible government beholden to the taxpayer may waft out from Wisconsin and infect other states.  Thus turning off the great spigot of coerced political contributions.

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