Grassroot Perspective – Aug. 7, 2003-Citizens’ Budget Update; Free Market Healthcare; A Letter from Rev. Robert A. Sirico; The Good and Evil of Taxation

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”Shoots (News, Views and Quotes)”


Editor’s Note: City Council Budget Chair Ann Kobayashi and State, Chief of Staff Bob Awana both have budget info described below. It is pertinent to Hawaii.

– Citizens’ Budget Update

Two new organizations have endorsed Reason Foundation and Performance Institute’s Citizens’ Budget approach. We are pleased to welcome the Valley Industry and Commerce Association (VICA) and the Economic Alliance of San Fernando Valley to the coalition that believes the state should balance the budget through structural reform, performance measurement, and innovative service delivery rather than drastic cuts, tax increases, or new debt. For more information on the Citizens’ Budget please visit

– Free Market Healthcare

To the extent a healthcare “crisis” exists, it’s because nobody in the healthcare system, least of all the patients, feels that they are in control. Reason Science Correspondent Ronald Bailey asks whether politicians and policy makers are courageous enough to fix this.

– Private Water, Public Interest
Public benefits can flow from private water. In this new Reason policy brief, authors Alexei Tsybine and Don S. Evans, P.E. demonstrate how public-private partnerships can result in lower water rates while providing the same or higher levels of services.

Above articles are quoted from Reason Foundation, Reason Alert 5/29/03

– A Letter from Rev. Robert A. Sirico

President of The Acton Institute

Dear Friends,

During the 1920s a young man (we will call him Dale) purchased his father’s dairy farm in Allendale, Michigan, and started a business as a milkman. The early and long hours he dedicated to running the dairy provided a good living for himself and his family. But through no fault of his own, the market for milk changed. Grocery stores began to sell milk at a fraction of the lowest price that Dale could offer. The dairy quickly went bankrupt. Now middle-aged and unemployed, Dale felt like this life had reached a dead end. Not knowing what else to do, Dale began to meet with the pastor at his church.

Dale’s pastor proved to be not only empathetic but also wise. He recognized that working as a milkman for years inculcated Dale with extensive sales experience. The pastor prompted Dale to contact a real estate agent in their church. The real estate agent agreed to give Dale a chance, and Dale’s aptitude for salesmanship took over. He became much more successful as a real estate agent than he ever would have been if the dairy had remained solvent.

It went well for Dale, but the character in this story who impresses me is the pastor. Rather than feeding a resentment of the market based on its perceived unfairness, confusing business failure with moral failure, blaming Dale’s misfortune on capitalist supermaket owners, or convincing Dale that he deserved a handout from the government as compensation, this pastor reminded Dale of his creative potential and indicated opportunities that might have been otherwise overlooked. A wise pastor, indeed!

Through our programs at the Acton Institute, we work hard to prevent these sagacious pastors from becoming extinct. Your financial support makes our efforts possible. Thank you.

Sincerely yours,

Rev. Robert A. Sirico

Above article is quoted from The Acton Institute Newsletter May 2003

”Roots (Food for Thought)”

– The Good and Evil of Taxation

By David Hogberg

In the first chapter of POLITICS, TAXATION, AND THE RULE OF LAW, a new book available from Public Interest Institute, Donald P. Racheter and Richard E. Wagner establish some fundamentals in the relationship between government, taxation, and individual rights. They state that “government is not the source of our rights of person and property.”1 Rather we establish government to preserve and protect our rights. This is part and parcel of democratic ideology.

They acknowledge that taxation is the price we must pay to have a government that protects our rights. But they note that this justification for taxation is often abused to pay for things that have nothing to do with protecting rights. In one hypothetical example, the authors encourage us to imagine a small town with only three residents. The first two enjoy playing tennis, while the third does not. Yet because the first two comprise a voting majority, they decree that the building of a tennis court is a town activity. They are able to compel the third resident to contribute to the provision through taxation. This lowers the cost of building the tennis court for the first two residents.

Racheter and Wagner note that “democratic ideology” often conflicts with “democratic practice.” A government rooted firmly in democratic ideology would not use taxation as a means of robbing Peter to pay Paul. But as the authors state, “taxation may be a necessary means of preserving and protecting rights of person and property, but it might also operate in various ways to undermine, abridge, and erode those rights.”2 That which preserves our liberty can also be used to undermine it.

The authors then trace the intellectual history of public finance, particularly the major theoretical division. They focus on two theorists, Francis Edgeworth and Knut Wicksell. Edgeworth “construed taxation as something that a ruler does to improve the lot of his people.”3 Edgeworth assumed that a ruler could improve the general welfare of a nation via redistribution of income. He theorized that a person had less need for income the more income he or she had. To satisfy the needs of those with low incomes, the ruler was justified in redistributing income from those with a lot to those with little. This way, the ruler improved the general welfare of the nation. The authors note that this theory of public finance is more suitable for a nation “where the state or ruler was treated as a smart and benevolent means for improving society.”4 This theory is better suited to a despotic form of government than a democratic one.

Wicksell, on the other hand, disliked a theory of public finance that was based on near absolute power of a ruler. He preferred a “catallactical approach” to public finance, that is, an approach based on the institutions that govern “political and fiscal relationships.”5 Instead of concerning itself with how a ruler can improve society, the Wicksellian approach to public finance focuses on the social interaction of people. This approach might lead to a system that benefits all citizens. However, “it might involve cases where some people gain at the expense of other people.”6

The authors explain that the extent to which a system of taxation works for the benefit of all as opposed to bringing gains to some by imposing losses on others, is largely “controlled by the constitutional framework”7 of a society. They note that taxation is the price we pay for government and civil order. They also note that this does not justify unlimited taxation and state power. Taxation can be destructive if “it is too high or wrongly imposed.”8

1Donald P. Racheter and Richard E. Wagner. “The Constitutional Framework for Democratic Taxation,” in Politics, Taxation, and the Rule of Law: The Power to Tax in Constitutional Perspective, Kluwer Academic Publishers, Boston, 2002, p.1. 2Ibid., p.2. 3Ibid., p.2. 4Ibid., p.3. 5Ibid., p.3. 6Ibid., p.3. 7Ibid., p.4. 8Ibid., p.4.

The authors of this chapter of POLITICS, TAXATION, AND THE RULE OF LAW are Dr. Don Racheter and Dr. Richard Wagner. This summary of Dr. Racheter and Dr. Wagner’s chapter was written by David Hogberg, a Research Analyst with Public Interest Institute.

Above article is quoted from Public Interest Institute at Iowa Wesleyen College, Institute Brief Vol 10 #17

”Evergreen (Today’s Quote)”

“Outside of the killings, Washington has one of the lowest crime rates in the country.” — Former Mayor of Washington D.C., Marion Barry

”’Edited by Richard O. Rowland, president of Grassroot Institute of Hawaii, 1314 S. King Street, Suite 1163, Honolulu, HI 96814. Phone/fax is 808-591-9193, cell phone is 808-864-1776. Send him an email at:”’ ”’See the Web site at:”’