http://online.wsj.com/article/SB122541237504586451.html
Only Economic Growth Can Provide Positive Change
"I think the answer to Alan Reynolds's excellent question and article
("How's Obama Going to Raise $4.3 Trillion?," op-ed, Oct. 24) is that
Barack Obama is not going to raise $4.3 trillion, and he is not going to
perform on his rhetoric. He excels as a rhetorician -- common to both
the great and the least of past presidents -- but performance cannot
run on that fuel. Inevitably, I think his luster will fade even with
his most ardent supporters as that reality sets in. We also have seen
luster fade time after time with Republican presidents. The rhetoric
of a smaller and less invasive government always leads to king-size
performance disappointments. This weakness is as central to the reality
of our political economy as are its strengths. With all its foibles, its
strengths become transparent when you compare it, not with our various
idealizations, but with the litter of human experiments in political
economy that have delivered far more suffering and murder than human
betterment to the citizens of those economies.
Of course it is entirely likely that Mr. Obama will succeed in going
for higher business, capital gains and income taxes, but it is an
economic illusion to think for a minute that this will benefit the
poor. All our wars on poverty have been lost by failing to help the poor
help themselves. Higher business taxes, which ultimately can only be
paid by individuals anyway, will simply export more economic activity
to the world economy. Higher capital gains and income taxes will
primarily reduce savings and investment at the expense of greater future
productivity, which is at the heart of cross-generational reductions in
poverty. A dozen countries, including the third largest economy, already
have zero taxes on capital gains, and eight of them score high on the
Economic Freedom Index and high in gross domestic product per capita.
I favor making all individual savings and direct investments deductible
from income for tax purposes. In that world there would be no need to
make any distinction between ordinary income and capital gains. By
adding a negative feature to such a net consumption tax, the poor would
not only receive redistribution benefit, but have an incentive to save
and accumulate capital. Some poor will see this as an opportunity to
help themselves."
Vernon L. Smith
Chapman University
Orange, Calif.
Dr. Smith was awarded the Nobel Prize in economic sciences in 2002.
~
_______________________________________________
http://www.mccmedia.com/mailman/listinfo/brin-l
