A couple of things on my mind tonight….
It is clear that in a population of 300 million where 70% of the taxes are paid by 10% of the people (don’t believe me – click here) that the 10% cannot out-vote the 70%. The math is not there. Given the clear message coming out of the new administration that if you are productive you’re effectively theirs to squeeze, the 10% are going to slow down. Along with these new policies will come a brain drain and a money drain. The moves are already in place. Capital and talent is flowing out of this country and going elsewhere. It is a simple matter of action and consequence. A government that encourages growth and development attracts investment, talent and employment. A government that punishes achievement ends up with a broke and hungry society.
On February 28th I put up a blog entry called Buyer’s Remorse talking about how if a government implements overly burdensome taxes on the most productive group in its society those people will look for alternative places to set up shop and I used New Zealand as an example. Well funny enough out comes this article on how New Zealand Prime Minister John Key is going to cut personal income taxes and also corporate taxes to be more competitive in the global economy and effectively attract brains and investment. In the global economy many companies have many options when it comes to deciding where to set up shop, why not New Zealand? In fact, I would bet right now in board rooms across the USA companies are looking at these sorts of contingency plans looking at a list of countries on the short list of friendly places to employ people. One of our states should stand up and do the same and be the shining example. What a boom it would be for those states that give companies a way to offset what’s coming out of Washington right now.
Is there another option? Around the USA these days the concept of “Going Galt” seems to be taking shape. Galt, for those who don’t know is the main character of Atlas Shrugged by Ayn Rand who when tired of the government endlessly meddling in the affairs of the private individuals that have created so many core pillars of modern society (shipping, mining, the sciences, railways, aviation – even music etc…) convinces the capitalists to simply go on strike and leave everything behind for the population to do with as they please. The producers of the world vanish without a trace and take nothing with them. Society then proceeds to systematically fall apart. The workers did not go out on strike – the employers went out on strike. Ultimately the bureaucrats beg John Galt to bring back the capitalists and tell him they will do anything he asks if he would just make things work again. He tells them he will bring back the capitalists on a single condition… that they get out of the way. I won’t give away the rest of the story but it is uncanny in its similarity to what is going on right now in the USA (and even around the world).
So many producers will either go someplace where they can produce without being punished, or they will cease to produce, or at the very least they will slow down. In any case, it all leads to harming the very people Obama says he will help.
Here are some select links touching on “Going Galt”
Real Clear Politics
Wall Street Journal
There are many more examples out there and given that the people in the new administration are not dumb, I can only assume that they are simply not trying to genuinely help out a struggling economy but rather the opposite. It must be deliberate because they know where these policies lead just as well as anybody…
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