Saturday, January 26, 2008

"Huckanomics" and Fair Tax More "Vertical Politics"

The Mike Huckabee for President Campaign website, on Saturday, posted a useful explanation of Governor Mike Huckabee’s economic perspective which justifies The Fair Tax: What is Huckonomics?

The principles of trade discussed here, could be put in a lined yellow cover and called, "Adam Smith for Dummies." The point of course, is not literally that people are "dummies." It is that the immediate social context is one where the perception of reality is distorted by the very assumption of government "commanding" an economy, from either a supply or demand prejudice.
The summary is that we should pull our heads back from the immediate social context and apply common-sense principles to American society.

What 18th century Scottish philosopher Adam Smith wrote about, was the natural human and social moral principles that underlie the creation and distribution of wealth. America was founded as a nation that respected the natural and unadulterated respect of freedom and the economic forces of supply and demand. Of course, this also led to the creation and accumulation of great wealth, which accrued to the general benefit, though more extravagantly among the investing minority.

In concert with the accelerating development of macro-communications, first through widely distributed print and literacy, this cultivated a great development of the natural human tendencies to horde among the wealthier minority and to envy among the more modestly rewarded minority: this was the seed of class identification and the “demand-side” economics that this Huckanomics article speaks of.

Democracy developed governmental means to impose supposed fairness (in reality it calcified economic divisions) for a dissatisfied majority. These “socialist” developments dominated most of the 20th century throughout Europe and less extensively in America. Its most extreme manifestations were in the ostensibly rightward (see Jonah Goldberg’s recently released book, “Liberal Fascism”) National Socialism (or Nazism) and the acknowledged leftward socialism of Karl Marx (communism), that spread even to the East with the expansion of communications.

This acceleration was intensified with the spread of the electronic communications of radio in the early 20th century and television in the mid-twentieth century. With this electronic couriership, the majesty of the economic “commander” became the status quo social understanding in America, embodied in Roosevelt’s New Deal in the 30’s. As marginal tax rates reached 90% in the sixties, production incentives waned and libertarian impulses swelled. In the early sixties, Democrat John Kennedy cut taxes to provoke economic growth, and Arizona Senator Barry Goldwater insolently repudiated expanding and intrusive government, suffering a landslide defeat at the hands of the still status quo stewed public. Goldwater was defeated by Lyndon Johnson, who introduced new government activism with his “Great Society.”

But of course, Goldwater’s campaign was the birth of the National Review-driven conservative movement. Ronald Reagan had recognized the excesses of the New Dealism that he had supported as a young man, had come to harm the America and its people that he had grown to love. After he had risen with this message to the presidency in 1980, he introduced the command reaction of “supply-side” economics, to which establishment conservatism now frantically clings.

“Huckanomics” and The Fair Tax represent the true economic conservatism that would remove the command element of the economy, returning it to the natural and dynamic unsullied forces of human commerce. Though untamed and potentially volatile, these principles restore the fertile soil of prodigious production and the broad expansion of wealth and economic prosperity. The century of command economics was not just one of muzzled production, but one that also provoked unprecedented acrimony and bloodshed. It is a legacy the passing of which should not be mourned.

It is true that, as many challenge, Congress could never be expected to voluntarily cede its massive its power to negotiate and manipulate the tax system, and implement The Fair Tax. That is why an executive is required to inform and inspire the public to hold Congress to account. The Fair Tax is well-named, because taxation would be imposed on the level of consumption rather than the level of production. More extravagant consumption means more extravagant taxation. The poorer are untaxed by a universal “pre-bate” which monthly provides each household with the tax rate of the poverty level. So, you start the month with that AND you receive the entirety of your earnings.

Using rough current numbers, each family starts the month with over $5000 dollars. If of four earns $8000/month, there is $13,000 to spend for the month. Retail tax on spending will be 23%. Burt remember that the average 22% taxation will be removed from the imbedded cost of goods produced in America, lowering those prices dramatically, and making them more competitive with imported goods, which would be taxed equally. This represents a huge boost to American commerce, which also may sell their untaxed goods in foreign markets. Additionally, the untaxed underground economy is eliminated. Illegal members and illegal earners like pimps, prostitutes, drug-dealers, and gamblers will pay taxes on purchases like everyone else. Of course people will barter and bootleg around the system. But at least then, cheaters will be cheaters, not just expert gamers of an arcane system: street-corner hustles not luxurious tax-exemptions. This is no upper-class bonanza.

One very important thing is left to say. And, if we should embark upon this change without resolute attention to it, I fear that it is inevitable that the hording, envy, and acrimony will surely rise again. The mass-culture dampened uninhibited commerce in an effort to impose a social morality. But, an “imposed morality” is an oxymoron. And along with economic limitation, a macro-morality brought a dereliction of personal morality. What Americans must tend even more urgently than free and un-commanded markets, is the resolve to become better people. Even more important than the heightened creation of wealth, is that we support and encourage each other as moral and considerate people in the face of the irregularities of such an unregulated society.

In addition to the market-liberating principles of what the article calls, “Huckanomics,” Mike Huckabee strives to exemplify a model for such consideration that is the provocation of many of his “conservative” critics who have come to hear the idea of compassion only in terms of expanding and intruding government. That disposition is also illustrated in Huckabee’s frequent statement that “I’m a conservative, but I’m not mad at anyone about it.” Conservatism recognizes the value and prudence of personal and market freedom while commending an empathetic application of that freedom. In Christian terms, it respects but exhorts a virtuous rather than errant expression of a God-given freedom.

Huckabee also advocates what he calls a vertical rather than horizontal politics that is directed not at the triumph of the left or right but at the elevation of American society. Conservatism is virtuously applied to this objective, and ignobly applied to the conquest of fellow Americans.

1 comment:

Anonymous said...

Mike has so many great ideas for America. Besides his traditional conservative views, his fair tax ideas are revolutionary, it's amazing to see how much economic potential we're losing because of this drag on our economy. I found a petition which is trying to get Congress to change the tax codes, and as we get more signatures, money is donated to the Fair Tax interest group.
We must stay strong in our innovative ideas to keep America the leading economic power. Good luck, Mike!