Guest comment: Minimal economic power of government breeds prosperity | Guest columns
People often take sides when it comes to the US economy. Are we a capitalist or a socialist society? Both sides are correct. One could accurately describe the American economy as being both capitalist and a weaker form of socialism.
Americans can profit from the businesses they create and operate.
But sometimes the government is, in reality, a financial actor. Think of a 380 convention (local economic development incentives). Would it exist without taxpayer money provided by, or subrogated by, the tax revenues of a local government authority? In these cases, the government provided funds for setting up a for-profit business. Policy, not financial analysis, determines who receives these funds. A financial professional would ask only one question regarding the funding of any economic development agreement – “Which will produce a better financial return for our community – invest taxpayer money in the proposed business, or leave the money behind.” in the pockets of our citizens to spend as they see? The next time you meet an economic development professional, ask them what the internal rate of return is on taxes returned to their community.
Those who claim that America is a capitalist and non-socialist society are not living in reality either. In 1970, public spending represented more than 34% of our economic activity. In 2010, that figure was north of 43 percent and is now over 44 percent. By comparison, last year the Government of Canada’s spending represented about 52% of its gross domestic product and that of France represented more than 62%.
Americans who want a Nordic-style quality of life neglect to include the fact that the Nordic countries have abandoned stronger forms of socialism to achieve prosperity. Fifty years ago they were all in economic turmoil, if not worse, until they followed the UK’s lead. Prime Minister Thatcher was the first, followed by President Reagan, to quickly and decisively abandon unnecessary socialist policies and return the economic power once held by the government to its citizens. Record economic prosperity followed. Even so, to this day, these countries still cannot match America’s job creation numbers.
Society could not survive without some socialism – such as regulations designed to hold entities to account or provide necessary services that would normally be unavailable in a purely capitalist society. Read about the American meat industry in Upton Sinclair’s “The Jungle”. Review the 2008 credit crunch. Try to quit your job at age 65 and find health insurance that won’t bankrupt you. Or what about the goods we import from countries with corrupt management?
However, not a single nation has gone from a weak form of socialism to a strong and prosperous form – but the US government strives to be the one exception to this historical truth.
A benevolent society needs order and provides for those who are unable to provide for themselves through no fault of their own. Apart from these efforts, a review of history shows us that elected leaders who wish to maximize the prosperity of their community can best achieve this by minimizing the economic power of government.
Norman Pappous lives in League City.