by Brian Brady
Those of us in the limited government camp, who subscribe to the Austrian School of Economics, have a message for Governor Jerry Brown; cut, cut, stop, reform !
The historical precedent for cutting government is conspicuously absent from high-school history books but government-funded schools aren’t going to bite the hand that funds them:
Why you’ve never heard of the Great Depression of 1920 (Ton Woods)
The (never referenced) Great Depression of 1946 (Glenn Beck)
We know it worked in the past despite the Krugman/Keynesian narrative, which elevates FDR, LBJ, and BHO to economic demigods. (Note that Harding, Coolidge, and the Republican-led Congress of the post-war era are hardly referenced at all in high-school hisory books.)
Forget history though, just look at Europe and Canada. While Greece and Spain founder, despite serial stimulii, some Europeans have taken their lumps and moved on. I have four suggestions (cut, cut, stop, reform) backed by evidence cited in this National Review article:
1- Cut regulations to business. (Estonia):
Among other measures, the Estonian government cut public-sector wages by 10 percent, gradually raised the retirement age from 61 to 65 by 2026, reduced eligibility for health benefits, and liberalized the country’s labor market, making it easier for businesses to hire and fire workers.
2- Cut government to essential services (Latvia):
Latvia embarked on the toughest budget cuts in Europe. Half of all government-run agencies were eliminated, the number of public employees was reduced by a third, and public-sector wages were slashed by an average of 25 percent.
3- Stop trying to raise taxes (Canada)
Canada has also cut taxes. Corporate tax rates at the federal level were slashed from 29 percent in 2000 to 15 percent today, less than half the U.S. federal rate. Capital-gains taxes were also cut, as were, to a lesser degree, income taxes.
When Canada — led for so long by the ultra-liberal Pierre Trudeau — has smaller government and lower taxes than the U.S., something is seriously out of whack.
4- Reform the legislative model with real discipline for tax hikes, spending, and borrowing (Switzerland):
Switzerland’s constitution includes provisions that limit the country’s ability both to run debt (the growth in government spending can be no higher than average revenue growth, calculated over a multi-year period) and to increase taxes (taxes can be increased only by a double-majority referendum, meaning that a majority of voters in a majority of cantons would have to approve the increase)
It’s working in Switzerland, Investors are actually PAYING the Swiss to borrow money.
I’m not holding my breath for Governor Brown to convert to the Austrian School. I doubt he’ll wake up one day and realize that real growth comes from savings and investment rather than induced spending. I just thought I’d pen this essay with the hopes that the budget crises find him surfing the internet, one sleepless night.
The unrestricted internet is a cogent instructor because it allows for competing philosophies to the ones espoused in the State-sanctioned text books. Most of us, older than 30, are chained to the models we learned in high school, college, and business school. The younger generation however, is watching the failures of Keynesianism in real time. Younger voters want to State out of the marriage business, the recreational drug business, the banking business, and out of business in general.
Governor Brown might do well to respect his youngers. We all might.