Friday, March 17, 2017

Quote of the Day -- AND -- The Budget Cut/Border Tax Contradiction...

Here's Don Boudreaux responding to a reader who can't see through the understandably-presumed negative effects of a government budget cut on certain groups to the positive effects on others:
When budgets are cut, it’s easy to see the likes of government employees who lose jobs, farmers who get smaller subsidy checks, arts exhibitions that must now survive exclusively on private contributions, and poor people whose welfare payments fall.  But the analysis and conversation nearly always stop there.  If cutting funding for some government-funded activity is found to cause some hardship (and which such activity isn’t so found?), cutting government funding of that activity is typically deemed cruel and wrong.  But what is too-seldom asked is: As compared to what?  What will those who now keep more of their incomes spend this money on?  In what ways will the money now left in the private sector be invested?  What new products, businesses, and economic opportunities might be created now that the state no longer seizes these resources from those who create or earn them?  And how will system-wide incentives change when government reduces taxes and spending?
I know for certain that no small number of my readers sympathize, passionately, with Don. I also strongly suspect that no small number of that no small number will fail to apply the very same logic to a proposal that would levy an across-the-board tax on foreign imports.

If you believe that society is harmed when government taxes one group to subsidize another, how in the world can you believe that society benefits when government forces higher goods prices (via a border tax) on all groups to subsidize a few ginormous politically-powerful corporations?

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