What Went Wrong? Identifying Root Causes
Their Lips Are Moving—Requiem For The Income Tax
Part 1 of 6
 

For many years the political theme of “more jobs” has echoed across the country. Candidates for national office consistently focus their speeches on the subject. It is a cornerstone for both the Democratic and Republican party platforms. It is also a lie.

The nation currently has far too many jobs, the excess probably exceeding 30 percent. Does this sound strange? Disregard for a moment the incessant barrage from the lawyer-politicians, the Washington think-tanks and the media. Weigh the following scenario on the scales of your personal knowledge and experience:

Recently the Fly Wright Aircraft Company sold out to a South American organization based in Brazil. It was not coincidence that the board of directors voted in that same meeting to approve out-of-court settlements on two legal actions against the company. One involved charges of sexual harassment of a former employee by her supervisor. Most board members agreed during their discussion that the charges were ridiculous but all knew that settlement was cheaper than going to court.

The other case had been in the courts for years and needed no discussion. It was a wrongful death suit. An aircraft manufactured by the company more than fifty years earlier crashed on takeoff killing the pilot. The plane was a flying relic, six years past its design service life and relegated to hauling cargo on bright sunny days. Investigators found maintenance on the aircraft was less than inadequate; it was nonexistent. Just before takeoff its fuel tanks had accidentally been topped off with the wrong grade of fuel.

Ignoring a finding of pilot error, a sympathetic jury awarded the beautiful young widow $15 million in damages. Wright Aircraft was judged to be 1 percent responsible for the crash, but, as the only defendant with resources, the law required the company and its insurance agency to pay the entire bill. With a choice of appealing the case to a higher court or paying $9.8 million immediately, the insurance company insisted on settlement. This was their third loss of this type in as many years. Reluctantly, they increased the premiums for product liability insurance on Wright Aircraft to three times its former cost.
 

With the patience of Job, Wright Aircraft executives had labored for decades, successfully complying with thousands of bureaucratic rules and regulations including some never intended for their industry. Ironically it was a decision by a minor official at the Environmental Protection Agency (E.P.A.) denying the company a permit to extend its north-south runway that ultimately persuaded the board to throw in the towel. The runway was hastily constructed during World War II using fill dirt from the north side of the property. In the rush to complete the project, storm drainage ditches were never completed. During the rainy season, runoff covers the old excavation site. Now the E.P.A. has declared that site to be a protected wetlands area although it remains arid four months of every year.

Members of Congress, enthusiastic about righting perceived wrongs, fire legislative bullets randomly into the air like celebrating third-world gunmen, not knowing where they will land. Surely Congress never intended to eliminate the jobs of fourteen hundred Wright Aircraft employees, or the jobs of its subcontractors and suppliers, or the jobs of people in the surrounding community, indirectly dependent on the company’s payroll and local tax payments. If true, then Senator Hatch’s alternate, the accusation that Congress legislates without knowing what it is doing, prevails.

Dad lost his $87,000 a year middle-management executive job at Wright Aircraft with its last shipment of production tools and equipment to Brazil. After fourteen months of searching, and spending all of the family savings, he took a job at his brother’s hardware store earning $27,000 per year. Mom, in an attempt to maintain at least some of the family’s usual standard of living, took a secretarial job at $20,000 per year. This is the only time she has been employed since the children were born. Sissy missed going to a private college with her friends last year, and now, for the first time in her life, works at a fast-food service job earning $10,000 per year. She hopes to attend a tax-supported state school next year by saving most of the money she earns and getting either a scholarship or a government-guaranteed student loan. Junior, seeing the handwriting on the wall, obtained a part-time after-school job. He averages $65 per week including occasional weekend work.

Just how many more people in this family does the establishment think should be working? The lawyer-politicians and their minions, the economic political consultants, preach the gospel of better times to come through self-sacrifice now. But it was the micro-management of the economy by these same regulators, their unwarranted intrusion into the lives of every citizen, that placed society in its now perilous condition. Is there anyone left who seriously believes that more of the omnipresent government-mandated programs that reduced the nation to its current sorry circumstance are the appropriate medicine for recovery?

Many people remember better times. In the late 50s and early 60s the standard of living for most Americans was quite high and steadily rising. Productivity increased rapidly. Some magazine articles proposed reducing the work week to 32 hours. Others worried about an overabundance of leisure time leading to moral decay. Manufacturers complained about labor shortages and about ‘shoppers,’ workers who left one company and went to work for a competitor for more money or benefits. Foreign nations, subjected to a ‘brain drain,’ protested U.S. policies that allowed their most highly educated citizens to escape socialist governments and find immediate employment and acceptance in America.

Our current predicament traces almost directly to the widely held belief at the end of World War II that we, as a nation, were smart enough and rich enough to accomplish any goal and to the selection of national goals based on an altruistic philosophy. America would finance the rebuilding of the world in its own image and serve as its policeman. At home we would build a Great Society and make war on poverty. In the process our government’s monetary and fiscal policies devastated our national productivity and standard of living, not to mention our pride.

The federal income tax system is by far the worst element of the nation’s fiscal policy. For the last half-century it facilitated government expropriation of enormous sums of money from the American people. The availability of this “government money” induced Adam Smith’s “invisible hand” to establish primary residence in Washington, D.C. There the hand became more visible and subject to manipulation by special interest groups who found many government officials for sale at all price levels.

Public perception of special interest influence as government corruption and an increased realization of the size of the problem resulted in mass appeals for new moral leadership. A knight on a white horse would ride to the rescue and clean out the barn. The big problem with this plan—individual personalities rarely shape public policy. Political systems are ideologically driven; ideas always precede actions.