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Putnam County Republican Party or its members. They are about subjects related to Putnam County and are placed here
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Commentary
Government Programs are Like
Shattered Glass
An economics professor walks into the lecture hall the first day
of class. In his right hand is a brick. Rather than walking to
his desk, he heads for a large window that overlooks the campus
and heaves the brick through the window, shattering the glass.
The students are stunned. The professor, knowing he has their
utmost attention now begins to speak.
“You are a shop owner downtown and you arrive this morning to
find that some jerk has broken one of your windows. Later you
are equally shocked to find out that the lowest bid by a glass
repair shop down the street to replace the window is $1,000.
What are the economic ramifications of this event for the local
economy?”
Still shocked, one student in a timid voice says, “Well, the
owner of the repair shop is now a thousand dollars richer.”
“Yes, and what does that mean,” responds the professor.
“It means that he can purchase the new $400 tires he needs for
his SUV from the local tire shop,” shouts another student in the
class.
“Very good”, says the professor.
“And then he can buy the $600 necklace his wife has been wanting
at the local jewelry store,” says another student. Other
students, catching on to the wave of sentiment begin pointing
out that the owners of the tire and jewelry stores will now be
able to make purchases as well thanks to the revenue earned from
the glass doctor. The students are very pleased with themselves,
thinking that they have recognized the lesson that the professor
was attempting to illustrate.
“So what you’re saying then, is that it was a good thing for the
local economy that some jerk threw this brick through our window
then,” the professor rhetorically asked the class. The students
nodded half heartedly.
“Well then, if this broken window of ours was such a good thing
for the local economy, why don’t we meet all tonight in the
local square and each of us bring a brick? We can smash a window
in every store front and really get this economy roaring then,”
he said sarcastically.
“That would be stupid,” shouted a student from the back row.
“But according to your thesis that this broken window is such a
good thing, logic would say that fifty broken windows would be
even better would it not,” answered the professor. The class now
senses that they have been played and are stumped at where to go
next.
“The problem is that the thousand dollars came from us, which
means that we’re out a thousand dollars and thus we can’t
purchase the new flat screen TV that we were planning on,”
exclaimed a student after minutes of uncomfortable silence.
“Which means that the owner of the TV store won’t be able to
spend that thousand dollars he would have had, etc. etc.” said
another student anxiously.
“Precisely,” said the professor with a grin. Wealth was not
created, it was simply redistributed. “Class dismissed!”
Such is the case with government programs. Yes, a bailout will
help industry X, but at the expense of other industries that
would have received the money through the natural behavior of
the market. Farm subsidies do help farmers, but the tax dollars
used to create them come from millions of individuals who then
cannot spend that money at local retail stores. A new
infrastructure project that will supposedly create thousands of
new constructions jobs will most likely eliminate jobs from
other sectors of the economy that would have received those
dollars from normal transactions. This is the lesson that all
citizens need to learn. There is no free lunch from the
government. The government doesn’t create wealth, and the
opportunities that it seems to create come at the expense of
others. The analogy, by the way, is by Don Fredrick in his book
Colony 14, a modern day version of Atlas Shrugged.
Brad Rudisail
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Jan
21, 2008
The stock market is falling.
Energy prices remain high. Housing values are contracting.
Credit card defaults are increasing. Unemployment is up and
financial experts are predicting a lengthy economic slowdown,
perhaps even a recession.
Politicians at the national
level are considering sending the federal government further
into debt by mailing a one-time check to every American taxpayer
and the Fed is lowering the cost of money in order to spur the
economy.
At the same time all of this is
happening, millions of taxpayer dollars are languishing in low
interest savings accounts held by our county government. This is
money that could be used by residents of Putnam County to pay
off credit cards, make house payments or invest in our
community.
The sad fact is, if 4th
District Commissioner Billy Webster’s motion to set Putnam
County’s property tax rate at 5.3 mills had been approved by the
Board of Commissioners last fall, Putnam County taxpayers would
now have an additional two million dollars to help them ride out
the current slowdown. But that’s not all that we had to gain
from Commissioner Webster’s proposal.
Lower taxes not only directly
help the taxpayer, lower tax rates also enhance property values,
increase investment in our community, improve the tax digest and
create jobs from the increased investment. Everyone wins with
lower taxation.
When setting the 2007 property
tax rate, our Board of Commissioners could have fully funded the
budget, retained an adequate contingency fund and still allowed
the taxpayers to keep an additional two million dollars.
Perhaps the taxpayers should
consider supporting additional fiscal conservatives like
Commissioner Webster during this year’s elections.
Alan Foster
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