Though California’s budget for fiscal year 2004 will not
be released until Friday, there are clear and certain expectations
as to its contents ““ especially if Gov.
Schwarzenegger’s pledge to not raise taxes is to be kept.
The only viable option in consideration of the tax pledge is to
cut the annual budget in general and social programs in particular.
Various commentators and politicians have derided this
belt-tightening as everything from a “foolish fantasy”
to a “futile political ploy.” They mock the
governor’s accent and underline his movie-star career (and
everything that goes to impeach his erudition), but they fail to
understand economics while the governor has proven he does.
The straightforward answer to California’s economic
problem is this: Taxes need to be lowered and budgets need to be
cut.
George Bernard Shaw once observed that “a government that
robs Peter to pay Paul can always depend on the support of
Paul.” It can also depend on John who feels bad for
Paul’s dismal condition and thinks Peter should help Paul.
Thus, being supported by both Paul and John, California’s
government has, in recent times, slipped into the dream of
socialism. It has levied taxes, added programs, and otherwise
inflated the role of government.
One might be tempted to explain this trend by citing the
freeloader mentality of the average layman. But what of the
statistics, the nuanced analyses, the multidisciplinary studies,
the economists that supposedly prove government intervention
actually helps the economy? Any such calculation invariably is
rooted in a myopic view of economics.
Frederic Bastiat, a 19th-century French economist, established
this in his legendary essay, “What Is Seen and What Is Not
Seen.” He pinpointed the faulty premise on which Marx and
company had built whole systems. Bastiat writes: “When a
government official spends on his own behalf one hundred sous more,
this implies that the taxpayer spends on his own behalf one hundred
sous less. But the spending of the government official is seen,
because it is done; while that of the taxpayer is not seen, because
““ alas! ““ he is prevented from doing it.”
In short, the benefits of taxation are seen. The homeless man
gets more food, the farmer gets more money, the senior citizen gets
health care, and the child gets an education. Yes ““ beautiful
things. But this is only what is seen. What is unseen are the new
jobs, budding businesses, innovative medication and first-class
private schools that could have been but are not. To raise taxes is
simply to transfer the fruits of production from efficient
individuals to an inefficient state. Many economists neglect this
logical point: In any movement of wealth from man to government,
there must be some loss.
California in no way can continue to increase taxes to overcome
each economic obstacle. This inevitably will lead to communism. Nor
can it cut taxes and borrow. As the governor put it, “We have
no choice but to cut spending, which is what caused this crisis in
the first place.”
The government must manage the money it has and distribute it
with the utmost efficiency and care. There are those who agree with
this, but only reservedly. They call program cuts a
“necessary evil” or “the lesser of two
evils.” They dislike cuts but tolerate them.
But, as Schwarzenegger points out, spending cuts are not
necessarily evil as they result in government reform: “The
good news is that the spending crisis forces us to bring badly
needed reform to government,” he said during the traditional
State of the State address Tuesday.
Government is inherently a spendthrift institution. With no
checks on its actions and no oversight, it is capable of colossal
squandering and incalculable waste. For the greater part of the
last decade, the California government has been left unrestrained.
It has spent tirelessly, with no regard to the boundaries of sanity
or frugality. In effect, it has produced the monster we wrestle
with today.
Sporadic cuts in programs are not only healthy but also helpful
to the state. They send a severe message to the many programs:
Perform, produce and deliver, or be cut. Health insurance programs
have been notably useless in the past. So has welfare. Count on
them to be slimmed in the upcoming budget.
California’s financial crisis has given the new leadership
the prospect for change. For the first time in a long time, the
government isn’t taking the easy way out ““ it
isn’t demanding more money. Under Schwarzenegger,
California’s government is acknowledging its carelessness and
is trying to correct it. It is maintaining programs that work and
trashing those that do not.
Centuries ago, our founding fathers rebelled against a tyrant
among whose transgressions, as they wrote in the Declaration of
Independence, were “imposing taxes upon us without our
consent” and “(erecting) a multitude of offices and
(sending) hither swarms of officers to harass the people, and eat
out substance.” The taxes in question were a few pennies on
tea and stamps. The offices constituted a miniscule
bureaucracy.
Of course, I am advocating neither violence nor revolution. I
only hope you support our governor in his present effort to
reinvent ““ if only to a tiny degree ““ the long, lost
American dream. The war must be won inch by inch.
Hovannisian is a first-year history and philosophy student.
E-mail him at ghovannisian@media.ucla.edu. Send general comments to
viewpoint@media.ucla.edu.