- Last July, the French government dropped the value added tax to 5.5% from 19.6%.
- Since then, the industry has added 5.300 jobs even as the national unemployment rate rose.
- Salaries by those employed in the industry went up 5% on average despite a very weak economy.
- The industry also invested in job training for its workers, as promised to the French government in exchange for the tax relief.
- While average prices went down only 1.2%, less than the 3% hoped hoped for, the question that needs to be asked is what would have been the prices without the tax decrease since more restaurants would have gone out of business, reducing competition and probably increasing prices. The good news is that prices did go down and if more restaurants stay in business, the free market and competition will help keep prices down.
Now consider the opposite phenomenon, this one where government funding (i.e. taxes go up) and the government takes over and increases its control and management of part of a market. This story comes from the July, 2010 issue of Reason magazine and was described in an article written by Michael C. Moynihan. In December, 1998, Britain Mavis Skeet was scheduled for cancer surgery but the National Health Service postponed the surgery this time and four subsequent times. The last postponement was actually a cancellation in January, 2000 when the National Health Service declared her cancer was now inoperable.
As a result of this major screw up, the British government, led by Prime Minister Tony Blair, decided that spending for national health care was too low and "requested a new infusion of cash to shore up the faltering system by adding doctors, nurses, and beds." According to the reporting of the Daily Mail newspaper in March, ten years later, after increased government spending, and theoretically the increased taxes to pay for the spending, it turns out that the volume and quality of health care in Britain did not change for the better. However, the infusion of more government control and taxpayer money did result in the number of bureaucrats in the organization growing six times faster than the number of nurses and the number of management employees doubling.
So lets review. Less taxes, less government control results in positive outcomes. More taxes, more government control results in negative outcomes. Seems pretty simple, except to someone in the political class who continually needs to prove their self worth by taking more of the Tony Blair approach and less of the French tax reduction approach. When will we learn that like the British example above, government and the politicians who run it rarely improve our lives, our pocketbooks, or our safety:
- while BP and others in he industry have to shoulder the majority of the blame for the current Gulf oil slick debacle, it was government regulatory employees who were lax, lazy, or completely derelict in their duty to make sure those drilling platforms were safe.
- while the economic crisis and financial collapse were occurring, at least dozens of SEC employees were busy patrolling the Internet for pornography and downloading the smut they located to their government computers or to discs.
- while Americans were dying due to faulty Toyota products, the government safety watchdogs started and prematurely stopped a series of safety investigations, not able or not wanting to find anything amiss with Toyota products even though we now are told 89 Americans died as a result of their lax investigations.
- several years ago, the government watchdogs for children's toys were lax in their vigilance in allowing imported toys into the country that had been manufactured with lead based components, endangering the health of American children who may have ingested the lead when the put the products in their mouths. Eventually, the government watchdogs finally woke up and got the lead based products off of the market. However, their lax of vigilance continued when the foreign manufacturers just replaced lead with cadmium, an equally dangerous heavy metal in the latest wave of imported products.
Second, and we keep coming back to this step, Step 34 needs to be implemented which would remove existing members from Congressional committees who screw up in their oversight. Thus, in the above examples, those committee politicians overseeing the inspectors who did not do their job on the oil platform inspections, overseeing the pornography searchers in the SEC, and overseeing the auto safety and toy safety failures wold be booted off of their committees for dereliction of duty. Less government, less taxes, more effectiveness, more accountability.
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