Monday, November 10, 2008

President Coolidge on Taxes and Government Efficiency

A friend of mine brought the following short address by President Calvin Coolidge to my attention.

I recommend that you all watch this. A few pleasantly surprising sound bytes made by President Coolidge includes:
the cost of government is forced upon all citizens ... every tax dollar taken forces everyone to work, part-time, for the government.
The emphasis is mine. I find it truly impressive to hear a 20th century U.S. president acknowledge taxes as a use of force instead of an admirable sacrifice or a moral duty. Of course, President Coolidge is not calling for the abolition of taxes; he is just honestly stating the reality of what they are. Here is another refreshing quote:
I want the people of America to work less for the government and more for themselves. I want the people to have the rewards of their own industry. This is the chief meaning of freedom.
From what I recall from Robert Sobel's Coolidge: An American Enigma, Coolidge viewed taxes as a necessary evil to fund the basic functions of government. Needless to say, Coolidge's perception of what was necessary went beyond police, military and a court system as it included public works and schools. However, as a general standard, he seemed to strive to avoid expanding the government's role beyond its current functions, he seemed to work to improve the overall efficiency of government so as to reduce the tax burden on America and he tried to let the "business of America [be] business". Of course, it would have been much better had the Coolidge Administration actively fought to undo the Pure Food and Drug Act, the Interstate Commerce Commission or the Anti-trust laws. Nevertheless, Coolidge's Administration still sounds very good relative for the early 20th century.

The address that I have posted ends with a general call for more efficiency in government spending. I have no idea to what extent Coolidge delivered on this last point. Every politician calls for more efficiency in government spending. None are going to (explicitly) call for the government to be more wasteful. However, this still sounds more believable when Coolidge calls for it.

Contrast the overall spirit of Coolidge's speech (to the extent we can tell with limited context) to the various speeches of modern politicians. Most politicians today never acknowledge that taxes are forced upon Americans. Most politicians today also insist that their economic policies will only negatively impact the wealthiest of Americans as opposed to affecting all taxpayers. Most importantly, politicians today brag about how many new government programs they have helped create, as if they are bragging points to be itemized on a resume. Almost no politicians today call for less government. How far things have fallen.


Anonymous said...

This was an excellent post. But I would look even further at what Doug's point implies. Doug writes:

"Most politicians today never acknowledge that taxes are forced upon Americans. Most politicians today also insist that their economic policies will only negatively impact the wealthiest of Americans. . . . politicians today brag about how many new government programs they have helped create. . ."

The last two points are true because the first one is not. Taxes are not forced on Americans in general, they are forced on certain Americans.

Almost half of Americans are, quoting Steyn quoting Henninger, "on the dole." And according to Steyn that percentage will soon be increasing to over half.

Steyn argues that this is America's tipping point. Past this point, those on the dole can outvote those who produce, and this will lead to the end of America as we know it (or knew it). He writes: "how do you tell an electorate living high off the entitlement hog that it's unsustainable and you've got to give some of it back?"

But do people really vote according to cost-benefit estimates of their own individual relationship with the government? In other words do people on the dole vote for more gov't programs, and producers vote for fewer? Actually, as Bryan Caplan has pointed out in his book The Myth of the Rational Voter, no.

For example, social security is just as popular among young people who will probably never see a social security check, as it is among current recipients of those checks.

The trouble is, this phenomenon of expanding government is largely the result of producers clamoring for their own destruction. This is worse than the sanction of the victim, it's self-victimization.

How do we explain this? I think Ayn Rand said it best: we're in the Age of Envy. It's not the poor who are voting to steal from the wealthy, it's the poor and the wealthy together who are voting to destroy wealth and its source.

Consider this: For almost 60 years economists have been arguing that the minimum wage doesn't help poor workers, it hurts poor workers by putting them out of work. Why has this insight gained so little ground in over half a century? I think it's because those who support the minimum wage are much less interested in helping poor workers than they are in hurting big corporations. As long as the minimum wage does this, they are satisfied. If it hurts poor workers in the process, that's just the price we have to pay to achieve this goal.

For evidence look at how the Republicans have argued (with some success) to create opposition to raising the minimum wage: it hurts small businesses, not large corporations.

Coolidge spoke the way he did because he was speaking to a different America. That America is dead now. Welcome to the Age of Envy.

Doug said...

Thanks for the great reply. I think your reasoning reasserts why arguing for a proper moral foundation for capitalism is absolutely essential for any sustainable cultural change. There are many pro-free market think tanks and there are numerous pro-free market professors in academia. However, both are insufficient towards permanently moving the culture towards laissez faire capitalism.

TJWelch said...

After looking at the Wikipedia (yes, I admit it) entry on Coolidge, my sense is that although he had some sense of the proper limits of government, he thought in terms of degree, rather than absolutes.

Nonetheless, he did take positions that would be unthinkable for a politician today, such as refusing to visit a flooded area because it would be political grandstanding, and maintaining that flood mitigation is the primarily the responsibility of the property owner, not the federal government.

He probably represented the last spark of freedom to illuminate the Presidency, but the age that he was living in (and possibly his New England Puritan roots) prevented him from grasping the logical conclusions of freedom.

Michael Smith said...

Coolidge actually managed to decrease federal spending by 10% during his 6 years in office , dropping it from $3.289 billion in 1922 to $2.961 billion in 1928.

And even though he cut taxes, he ran a budget surplus every year he was in office.