Michael Kron's recent column was critical of my 10-point spending reduction plan. As we cut, a certain number of workers would no longer be on the payroll. I wish to explain its effect on the economy in terms of cash spent and restraints on entrepreneurial activity.
Keep in mind what drives an economy. Production does. Production occurs in the private-sector and is the creation of a good or service the public voluntarily buys. Food, shelter, clothing are examples of private sector productivity. Small businesses are in the same category. Grocery stores, mechanic shops, lumber yard operators, bakeries, all are productive activities.
They exist because people value the product or service more than its costs. They're all part of a grand marketplace where justice is found in voluntary exchange.
With government, there's a different value awareness. No longer is the ethic voluntary. Government is compulsory, whether you want its service or not. If you don't pay your income tax, you're subject to a heavy fine. If you don't pay your property taxes, your home is subject to seizure. That's the sad but very true underbelly of government. Since most grudgingly accept this, we go about our daily lives as if its legions of workers are just another factor in the economy, when in fact they're quite different.
First, the cost of government is a net drain on the segment of the economy creating wealth. There are many dedicated, hard-working people who serve us well as state employees that contribute to this cost. But that's not the issue. It's the over-abundance of people running way too many social programs, spending billions.
Second, government typically doesn't produce things. Instead, it controls and orders, which is what governing is all about. This has always been the case throughout history. There are colorful Egyptian pictures on stone unearthed from 2,500 years ago that depict a man being beaten for not timely paying his taxes.
Our Founding Fathers, clearly understanding government's nature, purposely created a limited republic, wherein people as individuals would possess rights and liberties, with government's role being restricted mostly to keeping the peace and defending our borders.
That was over 200 years ago. Slowly and ineluctably, the giant engine that is free enterprise has been eroded through more and more laws. A "feel good" program here, a "protect the kids" program there. Wars, economic upswings and downturns, each has given government a reason to expand its reach, giving rise to the number and cost of its workforce.
We're now drowning in government's excesses and its effort to "help" us - but it's not the fault of the workforce. It's of the Legislature passing a mountain of laws since statehood, creating the bloated Leviathan we see today. We're being "helped" almost to the point of bankruptcy. Yes, a sudden reduction of 25 percent of the non-essential (not entire) government workforce as I've recommended, would affect cash registers - but only temporarily. As our economy adjusts from a government-based economy to a private-sector one, we'll gradually learn to live without the gargantuan costs and deficits we're saddled with.
There's a dramatic precedent for this. At the end of World War II, about 9 million Americans were in the military or working for the U.S. government as part of the war effort. With the war over, liberal economists warned if they were discharged all at once, there would be a repeat of the Great Depression. But free market economists, Milton Friedman among them, argued if all or most of the war-time controls were removed, reverting back to a free market, it would not only absorb all the men and women of the armed forces, there would be a boom.
A boom there was! One of our country's greatest economic expansions lasted from 1946 to the late 1960s. The market was freed, rationing dropped and wage and price controls removed. The great engine of prosperity was economic freedom.
All this to illustrate that if we reduce spending as outlined in my budget plan, state workers will eventually find even better job opportunities in a newly energized private market. And local cash registers will again ring to the sound of money exchanged by people who have quality, decent paying jobs.
Kohring is a four-term conservative Republican from Wasilla.
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