Wednesday, March 11, 2015

How To Fix Connecticut, Three Steps


Stop financing failure. Rather than providing tax and regulatory relief to all businesses in Connecticut, Governor Dannel Malloy’s progressive government is content with boosting taxes on all businesses in the state – the highest taxed state in the nation, by the way --  and then parceling out to select businesses special exemptions, temporary tax relief and loan forgiveness; a select business is one selected by government officials for special favors, often in return for compensating favors such as campaign contributions or assistance. Campaign finance regulations, a gift offered by incumbent politicians to themselves, obscure the quid pro quo determinant in such transactions that would in a sound and ethical system of government send all involved to a stretch in the slammer.


There are two kinds of businesses that take advantage of such state aid programs: a) businesses that would fail without special favors not enjoyed by their competitors, and b) businesses that are successful and therefore do not need state handouts.  Beggar a), a failing business that, for whatever reason, finds it unlikely to borrow money from the usual sources – Connecticut is plush with banks, lending institutions and investment companies – should be allowed to fail; it likely will fail in the future if the state props it up with tax funds that should be put to better use elsewhere. Beggar b) should under no circumstances receive state aid, because beggar b) is self-sufficient and state support in this case is redundant.

Bill Buckley, the founder of National Review, the premier conservative magazine in the country,explained why failing enterprises should be permitted to fail in a 1981 address to students at the Cornell University Graduate School of Business:

"I desire, perversely, to sing a song of praise to failure; as well as, of course, to success; and to urge that we reappraise the dialectical voltage generated by these two polarities… Public policy must tolerate, indeed anticipate, economic failure (italics original).” 

Reduce spending. In the non-political economy, it is quite true that increasing revenue is the seed corn for profitable and universally beneficial economic activity. However, progressives manning the barricades on the left continually remind us that there are important differences between business and government. They are right. Here is an important difference: Despite the progressive bumper stickers, government cannot create wealth; it can only collect and distribute wealth – to the poor and needy, one always hopes, rather than to the CEOs of international mega companies hinting they might bolt Connecticut if they are not graced with tax money that, given to them, will not be distributed to the deserving poor. The distribution of governing revenue is a zero-sum game. What you have disbursed to A you cannot disburse to B. Tax distribution is a zero-sum game for another reason: The “ability to pay” taxes depends ultimately upon a healthy and growing private economy. Economic activity in a private economy and the growth of government, businesses and young entrepreneurs fleeing Connecticut may have noticed, are inversely related. Large tax consuming regulatory states kill business activity.

Reward right behavior. It is the culture of communities that determines the nature of government. This is a truth so common as to be commonplace. Mark Twain used to say that you may break a law with impunity, if you are clever enough, and get away with it; but break a custom and you are done for. It is men without chests – an inborn sense of right behavior – that produces destructive social engineering and tyrants, C. S. Lewis believed.

The broad culture here in the United States is atomizing; it is devolving into multiple cults largely because government, both state and national, is removing the unum from e pluribus unum. Laws should reinforce right behavior, here defined as public action that advances the general good of the state or nation. That is why laws ought to be general rather than specific; such are the provisions of both the U.S. and Connecticut Constitutions.

A good means to a good end produces a good society. A politics directed to good long term ends – solvency, independence, self-reliance, religious affections, moral governance, solid and loving family affiliations -- rather than to short term advantages would speed us on our way. A politics that seeks to separate economic and social ends cannot succeed because the two inform each other. The goodness of the laws and the goodness of the people are indivisible, which is why the forefathers of our national independence closely linked in their writings the twin springs of liberty – virtue and intelligence.


"Human rights can only be assured among a virtuous people. The general government,” George Washington said, “can never be in danger of degenerating into a monarchy, an oligarchy, an aristocracy, or any despotic or oppressive form so long as there is any virtue in the body of the people.”
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