The inherent problem of socialist liberalism is being demonstrated with a vengeance in the form of the budgetary crises visiting nearly all the states. For Hawaii in particular this inherent flaw in contemporary liberal theory is starkly demonstrated.
When times are good and the economy performing well, programs are expanded with the justification that the people can afford it, since they are doing well. Thus government spending is increased in favor of pet programs that subsidize the poor, promote social programming or supposedly assist and augment private enterprise. This is typically at the expense of properly funding and administering crucial areas that are within a government’s purview.
One example is raiding money acquired for Waste Treatment expansion to fund general city services, which then is spent on programs like the “Parties On the Beach” functions. Thus when the time comes to actually build the sewer project, the Mayor must propose a large sewer fee increase to finance a project that should have already been properly funded.
One fallacy in such socialist thinking is the idea that government ever is capable of “producing” anything. This tired old Keynesian theory that desperately needs to be retired is government spending “stimulates” economic growth. To the contrary, it must be remembered that all government spending, without exception, can only be financed by taking a portion of the profit, “created” by free enterprise. Government can only spend wealth that was created by others, those in the private sector. In other words, government does just the opposite, it inhibits economic growth.
Thus the money spent by Honolulu Mayor Jeremy Harris for his “Parties On the Beach” functions does not “create” any increase in commerce at all.
The millions of dollars spent by the city to organize, promote and service these events would have created far more commerce and economic growth by being left in the hands of those who earned it in the first place.
Claiming that such functions “create” commerce never factors in the loss of spending by the individuals and companies that the city has taxed to support these public functions. If this cost were factored in, such functions would always represent an overall loss. The process of wealth redistribution always carries a high bureaucratic administrative cost, so it always loses more than any eventual gain.
The money taken from the people for such functions means there is that much less money in the hands of those who earned it to drive economic growth: to hire employees, buy equipment, open stores or expand services. Thus the whole engine of capitalism is hampered. The business owner must then save an equal compensatory amount of capital before increasing or expanding services. With a requisite loss in time.
The economic doldrums Hawaii continually experiences are directly due to this state’s extremely high tax burden. The taxes, which together make Hawaii the fourth highest taxed state in the nation, is a continual drag on the effort by individuals and companies to get beyond breaking even and to make a profit. Money taken by the government is no longer available as capital to increase economic production. That’s why so many businesses fail here, when they should flourish.
Further, since those resources were spent elsewhere, they weren’t available to fund legitimate public works: repairing roadways, for example. So while “Brunch on the Beach,” which the Mayor steadfastly refuses to cut and continues to promote despite our dire economic situation, our roads become a pothole nightmare.
There is a direct connection between the plethora of “feel good” projects such as these, and the recent assessment that Oahu has some of the worst roads in the nation.
The overall reduction of capital available because of feel good projects or socialist programs means there is less to address the serious requirements of roadway improvement or sewage treatment.
In the good times, government always figures there will be plenty of money to shift to crucial requirements when the time comes, so it spends on social programs and feel good programs first. Then when times turn bad there isn’t enough money to fund anything, let alone crucial functions, like police or roads. Another socialist fallacy.
Accordingly, when the government increases spending in good times, it is setting itself up for crisis when times turn bad, as they are now.
As we have seen, members of the public and special interest groups who have benefited from the government subsidies and programs, scream bloody murder at the mere mention of actually cutting any spending. Thus the alternative, raising taxes, becomes the rallying cry during downturns. Yet raising taxes will only further rob more productive capital from the private sector, the very thing that stifles economic growth, but this is never considered by those proposing the increases.
A panoply of tax increases is now being proposed. Everything from increasing the general excise tax to property taxes to sewer connection fees to a city sales tax to raising Hanauma Bay visitor fees. The result of all these tax increases will be to impoverish the people in the name of benefiting the people. This is the fallacy that socialism simply cannot contemplate. Every raise in taxes, any taxes, is a direct loss to individuals and businesses that can never be compensated. The loss of income that taxes represent is a real loss at that time, and any compensations later, like an increase in the personal deduction, is but a partial return, minus inflation and interest lost, of that immediate loss.
Increased spending in good times therefore becomes increased taxes in bad. When the good times return, taxes are rarely returned to former levels and more increased spending becomes again justified.
Government continually grows, continually takes increasing amounts of “created” capital from the hands of those that created it. At some point the cycle cannot continue, the economy sinks as it simply cannot grow beyond its tax load.
This is the situation Hawaii has been in for more than a decade. In the face of an economic downturn there is no consideration given to cutting programs that were grown during better economic times. There is no way out of this conundrum. The real problem here is the laws of economics will assert themselves at some point and the result of all this government foolishness will be economic depression. This is what is happening in Japan presently as their economy experiences deflation. It is the only way that the cycle can be broken, but it is at a severe human cost. This is what Hawaii can look forward to the government doesn’t change these policies.
Last year, bankruptcies were at a record high in this nation. This year stands to be on track for yet more.
What this represents is the complete loss of wealth on the part of individuals who can no longer maintain economic integrity. This is loss of houses, cars and other personal items that represent real tragedy for those involved. This liquidation of capital is the cost required by a tax load that so heavily penalizes individuals that they sink.
The average individual works to somewhere in late May to meet their share of the total tax burden of the various branches of government, nearly half slave to a system of taxation that is all pervasive.
So while our economy is facing severe crisis we are presented with more of the same. The Mayor allocates over $3 million dollars to turn Young Street into a bicycle, pedestrian dedicated thoroughfare. This despite all logic to the contrary. This is the pet project of one man who stated during an interview on KHVH’s Mike Buck radio show recently that his goal is to “get people out of their cars.” Who appointed this guy to get me out of my car? As one who uses Young Street regularly on a daily basis this idea is utterly ridiculous. This two way street is the necessary alternative to the one way streets of Beretania and King. Otherwise the left hand turn lanes accessing the streets that cross them are going to be even more jammed than they already are. Ever try to turn left from Keeaumoku onto King?
It is social planners like this who are precisely the problem. The city should not, at this time, be raising taxes to fund projects like this. Especially with the track record of cost overruns, fraud, waste, and corruption that this administration has. Anybody recall the difference between the projected costs of Hanauma Bay, for example, and its true cost in the end? Do we really have to keep repeating these mistakes again and again?
The fact is government spending is wildly out of control. There isn’t a budget submitted that reduces spending. Even Gov. Lingle’s budget with its much touted 5 percent spending reduction is really just a reduction in spending growth. Real dollar expenditures are in fact increasing. At a time of depressed economic activity this can only be funded by increasing taxes.
These budget crises are a warning that something is very wrong with the way we are doing things. The various branches of government cannot continue to keep raising taxes to fund ever increasing expenditures. The airlines are going broke, businesses with generation long histories are bankrupt and gone, other major players have pulled out of Hawaii completely. The signs of economic danger are clear and yet we never question the wisdom of the current method of doing things. This is simply a disaster in the making.
The socialist paradigm is never questioned by liberals, they just keep doing the same thing over and over and over and over until the economy crashes altogether. Socialist liberals then blame the one system they never let be from the start, free enterprise, for the problem they created in the first place through government intervention.
This pattern keeps repeating until the truth cannot be ignored.
Hawaii is poised to travel further down this failed path with these proposed tax increases.
If passed years will pass before it will be possible to unravel the damage. The only question is how many people will be impoverished in the process. With so many Hawaiian teetering on the brink the numbers are too depressing to contemplate.
”’Don Newman is a free-lance writer living in Honolulu. He can be reached via email at:”’ mailto:email@example.com