French citizen Alexis de Tocqueville wrote the book “Democracy in America” back in 1835. To this day, it is still considered the best book describing the American political system and its social structure. The advantage de Tocqueville had was that he visited America and viewed our country as an outsider. Unlike us, he managed to see the forest in spite of the trees.
Similarly, my friend Ashok Vaish came from India 40 years ago, obtained his Ph.D. from Berkeley, and built a major nuclear engineering company from scratch. Retired today, he has some insights to offer. In his blog www.ayecapitalist.com, Ashok makes the case for why our taxes should be high and reminds us of the value they create. Why should we love our taxes? Ashok counts the ways — as follows:
Prosperous societies are built on infrastructure, education, public health and safety nets along with support of the arts, national parks, space programs, research and development, clean air and water, and of course, defense. The blog goes on and on, listing safe air traffic, power grids, satellites, and especially, a legal framework. The latter forms the underpinning of contracts, adjudication of disputes, interstate business and conservation of natural resources.
Beyond the basics, the government is full of prosperity-producing institutions like university systems, the National Science Foundation, National Institutes of Health and various defense-related research organizations. These are the institutions that have given us the atom bomb, the internet, the Global Positioning System and a preponderance of the technologies that have contributed to our prosperity.
As if this all hasn’t been enough, the government also steps up as the insurer of last resort. No single entity even comes close to covering the risks as large as, say, the 2008 collapse of the entire banking system, or even the cost of this year’s hurricanes and fire disasters. If, in fact, these events are attributable to global warming, the so-called “100-year” events could start arriving on an annual basis along with their attendant costs. Government will bear that burden as well.
Then, of course, there are the “entitlement programs” — Social Security, Medicare, disability, unemployment, Children’s Health Insurance Program and other safety net components. In simple terms, we are said to be “a giant insurance company that maintains an army.”
Nothing wrong with that. It’s the mark of a civilized society where quality is measured by how well we treat our old and our disadvantaged — coupled with the ability to protect ourselves from adversaries.
As it turns out, all of this costs money. Vaish goes on to point out, with charts and graphs, the fact that we have a flat tax in this country — a concept for which many have been clamoring is right there in front of them. To get to the current flat tax realization, we have to consider all the taxes people pay. There are regressive taxes like sales taxes, and payroll taxes that are paid on every dollar people earn or spend. Then there are the progressive income taxes that rise exponentially as people earn more.
The final message of the www.ayecapitalist.com blog amounts to, in effect, a stem-winding political speech urging us all to recognize that it takes both public and private enterprises to build a free-market society.
Our government isn’t cheap to run, but it’s worth every penny.